Small business startup loan, let’s keep this simple. If you are trying to get a larger loan (one over $100,000), then you will probably need collateral. You probably already knew that. But what you may not know is that for some smaller loans, you may be able to get by with several other alternatives—home equity and unsecured loans. You may even be able to negotiate your accounts receivable as a form of collateral if none of the other options work. The government provides several programs to help you as well.

USE THE MONEY IN YOUR BACKYARD

If you have no collateral and your lenders require it, you may be able to convince them to use your home equity as collateral. This should be exciting news for all of you homeowners that are starting businesses with less than sterling personal credit. However, this tactic will not work if you have already borrowed significantly against your home equity.

TAKE THE THIEF APPROACH (LIKE BANKS DO)

You may not understand why you need collateral for smaller small business startup loan amounts when you are already paying interest for borrowing the money. This is a perfectly good question. And the answer is simple: for small amounts, they don’t. So either find a lender that provides unsecured small business startup loans or convince traditional lenders to give you money without requiring collateral. If you are looking for $15,000 or less and your preferred lender will not do the deal without collateral, make like a thief and run (to the next lender.) Just don’t do anything illegal on your way out.

TAKE THE MONEY FROM YOUR CUSTOMER’S POCKETS

Instead of trying to use assets you don’t have, try using the cash that customers already owe you. Some banks let businesses use accounts receivable as a form of collateral instead of real estate or other assets, so if your bank’s primary objection is your lack of collateral, negotiate to see if they will accept accounts receivable. This may reduce the amount a lender feels comfortable providing, but any number is better than zero when you are desperate.

CALL YOUR UNCLE SAM

If all else fails, ask lenders if they can distribute SBA funding. The 7(a) Guaranty program can help allay their doubts for larger small business startup loans, and the Microloan program can help for start up loans. You must qualify for these programs, so do some research about the SBA loans to make sure you are eligible. Be aware that even if you qualify and are approved for an SBA loan, banks can still choose not to loan money to you.

Some states have grant programs to foster business growth. Consult your local chamber of commerce for information about those or use the internet for additional information.

DON’T GIVE UP

If you are completely out of options, keep a positive attitude. Learn from your mistakes and do everything in your power to correct them as soon as possible. If you do this, the small business startup loan check will appear in your bank someday. In the meantime, maybe one of your family or friends will decide your business is great and provide some funding. You never where a pot of gold may be hidden!