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Situation

Business funding with no collateral: how it is read and what helps.

These products are not secured by real estate or equipment, which is why they are fast and why they cost more than secured loans.

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How this is read

These products are not secured by real estate or equipment, which is why they are fast and why they cost more than secured loans.

Without collateral, the funder relies on the future receivables and the owner's agreement. That is why the review focuses on deposits and why pricing reflects the unsecured nature.

What helps

What hurts

A sensible plan

Treat the absence of collateral as a reason to keep the request modest. If you have equipment or property, a secured loan may be cheaper, though slower, so compare.

Illustrative arithmetic

A regional trucking firm depositing about $120,000 a month asks for $50,000 for repairs. At a 1.22 factor the payback is $61,000, a cost of $11,000. Over roughly 6 months that is about $484 per business day, or close to 8% of monthly deposits.

  • Total payback: $61,000.
  • Cost: $11,000.
  • Payment: about $484 per business day, close to 8% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.
Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.
Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.
CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.
DocumentsA signed application and recent business bank statements, typically the last four months.
Existing advancesFiles with an existing advance can be reviewed, including second position.

Common questions

Do I need to pledge property?

Not for these products.

Is there a personal guarantee?

Terms vary by funder and file. Ask what the agreement requires.

Why does it cost more?

Because there is no security and the process is fast. Compare total payback.

Keep reading

Underwriting situationsCredit, NSFs, time in business and moreFunding requirementsTypical starting points for Canadian filesDocuments you needWhat to have ready before you applyBad credit business fundingHow files with weaker credit are readGlossaryPlain-language definitions

Educational information only. It is not legal, tax or accounting advice.

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