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November 2020 - Probably

Startup Business Loans Without Collateral: Take Your Pick

Borrowing money is a sensitive matter, especially for banks that will always look for a guarantee that borrowers will repay them, plus interest. Without that guarantee, banks have little reason to grant a loan if they consider a borrower as a high risk.

Unfortunately, “high risk” is a stigma attached to startups; it doesn’t help that the statistics seem to agree with it, too:

Here’s the rub: most startups have little capital and no valuable asset to put up as collateral, and yet, they are the ones most in need of financing.

The Non-Traditional Route: Unsecured Business Loans for Startups

If you own a startup that needs an influx of cash, but you don’t have anything of value to offer as collateral, you can forget asking for a loan at a bank. Your best bet would be to apply at private lending institutions that provide startup business loans with no collateral. There might be compromises, like interest rates that are slightly higher than bank loans. But the payoff is getting the cash you need to keep the business running now so you can implement those plans to increase your revenues.

What are your options for unsecured loans for startup businesses? Take your pick from the following:

1. Working Capital Loans

These loans are meant to sustain a business’s daily operations by providing much-needed cash flow that owners can use to pay off working capital costs and operating expenses. Examples of these are inventory acquisitions, taxes, payroll, overhead, and accounts payables.

2. Financing for Equipment Leasing

Leasing agreements don’t need collateral. This is a sound alternative to financing for buying brand-new equipment: the loan and interest are much more affordable and the terms more flexible. There will be less pressure for the startup business to perform exceptionally high on year one because there are no absurdly high fixed dues to pay each month.

3. Merchant Cash Advance

You may qualify for a merchant cash advance if a large chunk of your revenues come from credit card sales. This loan is essentially an advance on the income you expect to get. There’s no need to repay or offer anything for collateral, too, because the lender will automatically deduct the payments (a specified percentage) from your future earnings. 

What if your startup hasn’t been in business long enough to have substantial historical data on monthly revenues? You may not qualify for a merchant cash advance, but you can certainly apply for a working capital loan. Moreover, if your need is specific to equipment upgrades, you can take the strategic route and seek financing for equipment leasing instead of the two other options.

Enjoy Collateral-Free Loans from Probably

All of the loans discussed above are available at Probably. We specialize in affordable financing solutions for small businesses and startups. Choose from the options above if you have no assets for collateral. If you have further questions, contact us through phone or email.


The Limitations of Government-Funded Loans for COVID Relief

The coronavirus pandemic has left an indelible mark on the global economy. Thousands of small and medium businesses immediately felt the crunch when cities all over the country imposed a two-week or longer mandatory quarantine and closed down all commercial establishments, to stop the spread of the COVID-19 virus.

Many would have recovered if they were able to return to business as soon as city-wide quarantines ended, but state governments deemed it best to lift restrictions by stages: essential services first (e.g., food and drink, personal care) and least essential businesses last (e.g., entertainment, museums, concert events).

Small businesses that belonged to the less essential categories had to wait longer to reopen, but bills from creditors and landlords did not stop. By the end of September 2020, nearly 100,000 establishments that were shut down because of the pandemic closed for good.

Poor Dissemination of Stimulus & Financial Aid Funds

Acknowledging that small businesses are vital to the economy and therefore need assistance during the pandemic, Congress passed a stimulus package in March to provide emergency financial relief for workers and small businesses. The CARES Act established four temporary loan options:

  • Paycheck Protection Program (PPP)
  • EIDL
  • SBA Express Bridge Loans
  • SBA Debt Relief

Small business owners looked forward to these programs. Unfortunately, the needs outweighed the available resources as the initial funding ran out in only days.

The Challenges Small Business Owners Face When Applying for Aid

In California, small business owners jumped at the chance to get affordable and lenient loans from the government. They might have found more success, however, if they sought small business loans from private California lenders.

The government-funded loan programs had numerous snags, which made it more challenging for business owners to apply. Here are some of them:

  • The programs all have limited funding, and the availability of the funding depended on whether Congress could agree on the budget, among other things.
  • The debt relief programs were meant to provide aid for small businesses, but loopholes in the section identifying the criteria for qualified applicants allowed large businesses and franchises to avail of the financial aid as well. Many big companies received millions in assistance, while the smaller businesses were left with little to zero funds as a result.
  • Businesses with long-established relationships with banks and lenders seem to have had an advantage even though the loan programs were meant to be awarded to qualified businesses on a first-come, first-served basis. This reportedly disproportionate prioritization led to manufacturers and construction firms getting approved for loans first, and restaurants, bars, and hospitality businesses last. There are also data to support this observation: Yelp’s recent Economic Impact Report revealed that approximately 163,735 businesses have reported to Yelp that they have closed for good. The restaurant industry had the highest number of permanent closures at 61%.
  • For the first rounds of the stimulus package, the funding went to the country’s largest banks, and not enough went to the smaller, rural banks that also served the smaller, rural business owners.
  • The small business owners who did get approved for these loans received just enough to see them through in the short term. In some cases, business owners were doubtful that, even with loans, they would be able to keep their business open for long.

Contact Probably Yes for Your Small Business Funding Relief

The pandemic has created unprecedented scenarios for which many of us, including the federal and state governments, were unprepared.

In the middle of all this uncertainty, reliable and indubitable solutions can give you financial relief and peace of mind.

That’s what we offer here at Probably. We offer working capital loans and small business loans to small business owners in California. Browse our website to learn more about what we do.

Contact us to apply for a small business loan today!


Starting a Business? Here are 4 Booming Industries Amid the Pandemic

The coronavirus pandemic left 20 million Americans unemployed, leaving people scrambling to find other sources of income. And many are considering opening their own small business.

But starting your own business is a daunting and risky feat, and aspiring entrepreneurs fear the potential fallout. Luckily, the pandemic has caused changes in consumer behavior that have resulted in lucrative business opportunities. And some industries are uniquely profiting from the coronavirus. First-time entrepreneurs can bank on these market segments to achieve their dreams of successful business ownership. 

Plus, many financial institutions are offering unsecured business loans for startup owners, allowing you to finance your business without collateral. 

Below Are Some of the Top Low-Investment, Pandemic-Friendly Business Ideas for Aspiring Entrepreneurs:

1. Health & Fitness 

The global health crisis forced people to be more conscious of their well-being. Many have started eating more healthily and working out to help their bodies fight off the virus. 

The health and fitness market is expansive, presenting a wealth of business opportunities. You can enter the market by offering exclusive workout programs online, healthy meals and snacks, and even reselling athletic apparel. Choose one that aligns with your skills and knowledge so you won’t have to learn the ropes of the trade once you start.

2. Home Gardening

Quarantined to their homes, homeowners and renters turned their attention to their houses, which led to a spike in gardening activities. Home gardening saw a massive surge across the globe during lockdowns, with seed sales jumping worldwide.

This sales boom is due to three reasons:

  • Food insecurity has prompted people to plant vegetable gardens to increase their food supply.  
  • People prefer organic food items more now than ever. It’s easier and more affordable to grow their own fruits and vegetables than look for produce suppliers. 
  • Gardening helps reduce stress and anxiety levels, which are higher now because of uncertainties and feelings of isolation caused by the pandemic.

You can enter this market by reselling seed packets, indoor plants, aesthetically pleasing pots, and other gardening accessories. With a few horticultural skills, you can also propagate your own plants to increase your revenues.

3. Meal Kits & Food Delivery

Food is always a good industry to join because people always need food. It all comes down to how well you market your brand and the quality of your products.

This market is incredibly lucrative during the pandemic since many still don’t feel comfortable going out to buy food and groceries. If you’re selling food, address buyers’ safety concerns by offering pick-up and delivery services.

You can join both the food and health/wellness industries at the same time by offering meal kit delivery services. Pre-portioned, ready-to-cook fresh ingredients satisfy consumers’ demand for healthy yet convenient food products.

4. Online Tutoring

When schools reopened last September, many included online learning in their curriculum. Distance learning is a challenge even for parents since they have to make sure that their kids follow the lessons and submit assignments on time. With household chores and professional duties to take care of as well, online classes add to parents’ daily responsibilities and time-commitments.

This problem created a massive demand for online tutoring for elementary students, a not-so-large market before the pandemic. You can offer one-on-one or small group tutoring services on various subjects for different levels. 

One of the best things about being an online tutor is that it requires a small capital. All you need is a stable internet connection and a reliable laptop or desktop computer, and you can already start earning from teaching. 

Jumpstart Your Business with Probably

Starting a business amid a pandemic is possible. Analyze the current demands in the market and figure out how you can provide that need by using your skills and knowledge. If you need assistance with financing, research first-time business loans that can help you jumpstart your business, like Probably’s many financing options.

Probably gives small businesses the financial support they need through startup loans and small business loans. We know how frustrating and time-consuming it is to apply for a bank loan only to get rejected in the end. This is why Probably helps aspiring entrepreneurs overcome these challenges through financing options that work for startups, expansions, and small businesses alike.

Contact us today and let’s talk about your small business funding.