Traditional business loans often require collateral — real estate, equipment, or other assets the lender can claim if you do not repay. Many growing businesses are asset-light or do not want to pledge what they own. This guide explains how to fund a business without collateral.
Why collateral is a barrier
Service businesses, agencies, and many retailers simply do not have hard assets to pledge, and even those that do may not want to risk them. Collateral requirements are one of the most common reasons capable, revenue-positive businesses get turned away by banks.
How revenue-based funding works
Revenue-based funding (a merchant cash advance) advances a lump sum against your future collections rather than against an asset. Instead of collateral, the underwriting looks at the deposits flowing through your business. You remit a fixed amount or a small share of revenue until the agreed total is satisfied.
What replaces collateral in underwriting
The deposits in your business bank statements do the work collateral would. Consistent monthly revenue, time in business, and healthy cash flow matter more than asset value or credit score. That is why an asset-light business with steady revenue can still qualify.
The bottom line: a lack of collateral does not have to block funding. Y Millennial Funding is a direct funder of revenue-based funding for businesses doing $25,000 or more in monthly revenue, approved on deposits rather than collateral — a small business loan alternative, not a loan. Not all applicants qualify.