Can You Get a Startup Loan with No Revenue? Here’s How!

It might feel disappointing to see your business has not yet started generating revenue. These earnings are fuel for motivation to work harder. Besides, they are a source of money that you can use to get new inventory stock and operate daily.

Thus, revenue is the prime ingredient for continuing production and other major operations in the business. Again, if you have to take out external funds, the financial potential of your venture will be assessed. How much revenue it produces can influence the approval decision.

There is no denying this fact, but there might be other factors that influence the decision. Otherwise, start-up business loans for bad credit businesses might not have been made available. You can see how poor credit scores get the least attention when this is one of the decisive factors.

At times, the loan providers are keen to know your future plans as a business owner. They would like to explore how you plan to earn money using your business idea. Suppose your venture specialises in working on a market gap where the chances of growth are quite high.

Therefore, considering you have zero chances of getting a start-up loan with zero revenue status, it needs some exploration. This blog is ready to help you in this endeavour.

How to acquire loans when your business lacks revenue?

Generating an income from a business is not like getting a salary from the first month of a job. Until people buy your products or services, there will be no profit for your business. However, there will be expenses that you should keep covering, no matter the status of your revenue.

You might even have to take out loans as well to cope with an urgent necessity. In such scenarios, getting approval with no revenue needs some smart steps to be included from your end.

·       Use assets of your business

Using equipment or any tool, you can get equipment finance. Suppose you need to purchase new equipment and have insufficient cash. In that situation, this financing option can be considered.

Here, you will pledge collateral that will be the tool or machinery you want to purchase. Until you complete its payment, you are not going to be its ultimate owner. However, you will not be barred from using them for your business.

·       Start building the business credit history

When your start-up has just launched, it is supposed to have no credit history. This is because no financial transactions, timely or delayed, have been attempted. However, it is a good idea to begin with building credit scores.

You can opt for business credit cards as one of the steps towards creating a positive credit history. There are other financing options as well that let you fetch funds without showing any credit score track record. Then, once you repay them on time, favourable credit scores will start and you can utilise them to get start-up loans without revenue.

·       Get financial help from a reliable lender

A loan provider who operates online and has years of experience will be aware of the financial challenges you are facing. Their experience can help them decode the possibility of getting loan payments from you on time. Get information about them offering small business loans from the responsible broker.

Thus, here, you are asked to approach an intermediary who has already been working with a network of lenders. You can meet different lenders and understand their conditions. The more you compare, the higher your chances of getting a suitable lender are.

·       Build a solid business plan

Having a concrete business plan is like a blessing. You can take advantage of it in various ways. It should include all the planning and predictions you have regarding the lender.

How you imagine generating revenue through your business should represented clearly in the business plan. This is a crucial document that a genuine lender will want to verify before offering financial assistance.

It should have a roadmap on how you will manage cash flow to ensure the growth of your business. Market analysis, after thorough research, should be another vital element of the business plan. Once taking a tour of it, the loan provider should feel confident about the financial potential of your business.

Since you are a newbie start-up, revenue statements are not there with you. The reason is your business is not able to generate revenue. This gap can be filled by a business plan.

·       Bring a guarantor (if possible)

If you are desperately looking for funds and need them immediately, you should find someone who can be your guarantor. This person will be responsible for repaying the loan debt on behalf of your business if you do not turn up. This is not going to be a simple equation, as a huge financial burden needs to be accepted.

Finding such a person who is willing to accept your liability is difficult. However, if you are able to spot someone, you can get start-up loans even if your business generates zero revenue. That person should have a stable income status and should be able to show savings that can cover the loan payments.

Above all, a guarantor is someone who should have a clean credit history. Given the credentials, getting someone fitting the criteria is what you must try.

The bottom line

Now, you can be assured that there is a likelihood of getting loan approval with no revenue. However, there are pros and cons of trying out this step. You must get acquainted with the positive and negative points you have to deal with.

Of course, you can put money to ensure the progress of your venture. However, loans can easily transform into loops of debts if you do not manage them well. One of the biggest commitments you would face with loans is timely repayment.

Besides, you will have to pay back money that equals the principal amount plus interest rates. Thus, the repayment amount will be more than what you borrow. There will be late charges and encounters with accrued rates of interest in the case of delayed payments.