Disadvantages of Not Having Assets for Business Loan Collateral
There are several small business loan funding options available to you, which makes it important to conduct research and find out what is the most suitable one for you.
Is it possible to get a business loan without offering up collateral? Of course, it is. However, is an unsecured loan going to provide you with as much money as you would expect through a secured loan lender? Not quite. You will not be able to get as big a loan as you would with collateral to submit to the lender. That of itself is a disadvantage.
There are many other relative disadvantages of not having something to put up as collateral for a business loan. For instance, if you own a limited liability company, then applying for it without collateral comes with its own risks. If your business defaults on the loan, then the bank will come after your assets because you are the owner.
You may need to give a personal guarantee, meaning you are confirming that you will pay it back and that you will be held responsible in the event you do not repay your debts. So it is not a good thing if you do not like to make commitments.