There are numerous no-money-down business loans available to help you get out of a bind. In exchange for collateral, higher interest rates, and other fees, these loans waive the down payment. No-money-down business loans aren’t always cheaper in the long run, but they’re a great option if you don’t have enough cash on hand for a large down payment.

Keep in mind that no-money-down business loans aren’t always the best option. While a loan with no down payment may sound appealing, keep in mind that nothing is free—you’ll have to make up the difference somewhere else in your loan. If you have the funds to make a down payment on a loan, that may be the best option for your company.
These loans are best suited for businesses that cannot currently afford a down payment. If your cash flow is tight or you require a cash infusion to achieve a healthy return on investment (ROI), there’s a good chance a no-money-down payment can help you out.
Although it can be difficult, and you may not get the best interest rate, there are some ways to get a business loan with no money down that can benefit your company. Learning a little bit about each one can assist you in determining the best fit for your situation and starting your search.
Term Loans
Small businesses’ most common long-term funding solution is business term loans. They enable you to borrow large sums and repay them over time.
One of the advantages of term loans is that they do not always require a down payment.
- If your lender examines your credit and the rest of your application and determines that you are a good fit, they may only require you to put up collateral.
- If you are using the funds to purchase commercial real estate or equipment, they may even use that asset as collateral.
- If your business profile does not match and you do not have enough money for a large down payment, you may need to look elsewhere.
These financing products typically have lower interest rates than other options and are reserved for qualified borrowers.
Equipment Financing
If you’re a new business or haven’t yet established good business credit and need equipment, equipment financing may be your best bet for a no-money-down business loan.
You may not need to put money down if your funding is to buy or replace equipment for your business. Equipment financing can cover up to 100 percent of the cost, which means that the value of the equipment itself can be used as collateral.
It is also one of the easier types of financing for which new businesses can qualify because lenders know they can always take the equipment to satisfy their loan. This type of financing is less risky for lenders because they can recoup their money in the event of a default by seizing the asset.
However, if the equipment depreciates rapidly, they may not fund the entire amount, leaving you to provide 20% or more for a down payment.
Invoice Financing
In contrast to other types of loans that use fixed assets as collateral, invoice financing, a type of accounts receivable financing, does not require a down payment.
This is because when you use invoice financing, you sell your unpaid invoices to the lender, and the invoices serve as collateral.
Invoice financing is an excellent option for small businesses with long payment cycles and cash flow issues while waiting for customers to pay them.
Using a Business Line of Credit
Although business lines of credit are not considered traditional business loans, they can be an excellent alternative if you lack collateral or funds for a down payment.
Most lines of credit are structured as revolving financing and function similarly to business credit cards. This is how they work:
When you are approved for a business line of credit, you are given a pool of money from which you can borrow. When you need cash, simply transfer it into your checking account.
When you draw money from your line of credit, you’ll have to begin making payments to your lender to cover the interest on the money you’ve used. Any extra money you pay each month is applied to your loan balance.
As you repay your line of credit, your pool of available funds replenishes, and you can draw on it again as needed. This method does not require you to apply for a new loan each time you use a line of credit, nor does it require you to make monthly payments above the interest you owe.
SBA Loans
There are various SBA loan programs, some of which require a down payment and others do not. SBA microloans, export working capital loans, and disaster loans, in general, do not require down payments.
SBA microloans are available to startups and other small businesses that do not meet the requirements of traditional SBA loans or cannot afford the down payment. These loans are for amounts up to $50,000, and they frequently require no money down.

The SBA does not guarantee microloans like it does conventional SBA loans, which makes them difficult to obtain. They may also not require a down payment, but you will be required to provide some type of collateral to secure funding.
The federal government also offers small-business grants and other non-lending programs to help businesses grow. Its SBA 8(a) program, for example, certifies disadvantaged business owners so they can bid on set-aside government contracts.
Start or expand your business with Small Business Administration-guaranteed loans. Lender Match can help you find lenders who can provide loans for your business.
Substitutes for Government Assisted Loans
There are alternatives to government small business loans. Government small-business loans are an excellent option for qualified borrowers. However, depending on the qualifications and needs of your company, a different type of business loan may be a better fit.
Well-qualified borrower
If you have excellent credit, many years in business, and high revenue, you should consider bank small-business loans before considering government options. Banks typically offer the lowest rates on business loans, whereas SBA loan rates have set ranges based on federal government rules.
Loans in a hurry
Obtaining a government small-business loan requires approval from both a lender and the SBA, which can take time. If you can’t afford to wait, consider using an online lender. Some companies provide funding as soon as the same day or the next day. However, the convenience will come at a cost: a higher interest rate.
If you’re just starting out
Most government loans are not available to businesses that have not been in operation for at least two years and do not have strong financials, though lenders set their own criteria. Until your business matures, you’ll have to rely on startup business loan options like credit cards or personal loans.
Finally, if you make it far enough to receive an offer from a lender and are comfortable with the payments, don’t be concerned with the loan or advance’s annualized percentage rate. The only thing that matters is whether your projections clearly show that you can handle these payments without going into the red with your bank balances.
You’ve made it this far. You’ve gotten the loan or cash advance, and you’re making the payments with ease. It’s fantastic if you can pay it off early! Carry it out. If not, simply ensure that you continue to make consistent payments.
After your loan or advance is fully satisfied, work with your lender to lift the liens they filed on your company (they will file them) and receive confirmation that all obligations to them have been fully satisfied.
The foregoing information provided herein is not intended to be investment, tax, or financial advice. You should do your due diligence to seek advice from a licensed professional regarding your specific situation.