No — most small business loan products under $500,000 do not require specific collateral. Unsecured term loans, working capital, and revenue-based financing are approved based on cash flow and credit. Collateral becomes a factor for larger loans and asset-based products.
| Financing type | Business Financing |
|---|---|
| Typical amounts | Term loans $25K–$2M; equipment financing $10K–$500K |
| Decision time | As fast as 24 hours |
| Credit | All credit profiles considered; soft credit pull to start |
| Cost to apply | Zero cost to apply |
| Who we are | A business financing broker. We compare offers from our lender network; we are not a direct lender. |
In detail
Working capital, short-term loans, revenue-based financing, and most term loans under $500,000 are unsecured — meaning the lender does not take a specific asset as security. Lenders rely on your credit score, cash flow, and personal guarantee instead. A UCC filing is standard practice but does not give the lender possession of any specific asset.
In detail
Equipment financing always uses the financed equipment as collateral — this is what enables the lower rates and longer terms. Loans over $500,000, SBA loans, and commercial real estate loans typically require hard collateral. Businesses with challenged credit may also be asked to pledge specific assets in exchange for better terms.
In detail
Most unsecured small business loans require a personal guarantee from any owner with 20%+ equity. This means you personally promise to repay if the business cannot. It is not a pledge of specific assets, but it does create personal liability. This is different from collateral but similarly significant when evaluating your risk.
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Loans with no collateral
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A UCC-1 (Uniform Commercial Code) financing statement is a legal notice that a lender has a security interest in a borrower's business assets. It is filed publicly. It does not mean the lender owns your assets — it establishes priority in case of default. It is released once the loan is paid off.
It is unusual for businesses under 3 years old or loans under $500K. Larger, well-established businesses with strong balance sheets sometimes qualify for non-recourse financing, but this is more common in commercial real estate than small business lending.
Only if you default. In the event of default, the lender can repossess the financed equipment. As long as you make payments, the equipment is yours to use. Most lenders only act on collateral after extended non-payment — they strongly prefer workout arrangements over repossession.
Written by lendfloCapital Editorial Team · Last updated
lendfloCapital is a business financing broker, not a lender. This page is general information, not financial, legal or tax advice. Rates, amounts and terms depend on the lender and your business.
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