How Can a Startup Raise Funds Without Offering Collateral?
Starting a business is exciting — but let’s face it, getting funds without collateral can feel like a mountain to climb. Most traditional lenders, especially banks, demand security like property, assets, or equipment. But what if you don’t have any?
The good news is: collateral-free startup funding is not just possible, it’s becoming more common in India — thanks to NBFCs, government schemes, and alternative financing models.
Let’s explore realistic and practical ways a startup can raise funds without offering any collateral.
1. Unsecured Business Loans from NBFCs
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Non-Banking Financial Companies (NBFCs) have emerged as a strong alternative to banks. They understand the startup ecosystem better and are more flexible when it comes to approvals.
Why it works for startups:
- No collateral required
- Faster processing (10–15 days)
- Minimal documentation
- Custom loan offers based on business model and cash flow
Pro tip: A decent credit score and a solid business plan can often convince NBFCs, even if you’re just 6–12 months old.
2. Government Schemes for Startups
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The Indian government is actively supporting entrepreneurship. Several schemes offer collateral-free loans and grants:
MUDRA Loan (Under PMMY)
For micro and small enterprises — up to ₹10 lakh without collateral.
SIDBI’s Startup Schemes
SIDBI (Small Industries Development Bank of India) supports new-age businesses with soft loans and low-interest working capital—all without security.
Stand-Up India & CGTMSE
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Both designed to promote entrepreneurship with guaranteed loans without needing collateral.
These schemes may take slightly longer in processing, but the interest rates and terms are startup-friendly.
3. Angel Investors
Angel investors are private individuals who financially support new startups in their early stages — and usually, they don’t ask for any collateral in return.
4. Revenue-Based Financing (RBF)
One of the newer models in India — RBF is when a funder gives you money, and you pay it back as a small percentage of your monthly revenue.
No equity, no collateral.
Just your sales performance. Best for:
- Startups with recurring monthly income
- D2C brands and online sellers
- Service businesses with predictable cash flow
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If your sales are growing steadily, this is one of the smartest ways to raise funds without security.
5. Peer-to-Peer (P2P) Lending Platforms
P2P lending connects startups directly with investors or individuals willing to lend small business loans without asking for collateral.
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Although interest rates can be higher than banks, the entry barrier is low and disbursal is fast.
6. Startup Accelerators & Incubators
These are programs run by VC firms, government bodies, or corporate companies. If selected, they may offer:
- Seed funding (collateral-free)
- Free mentorship
- Co-working space and tools
- Networking with investors
While competitive, these platforms are goldmines for new founders looking to grow without debt or security.
7. Trade Credit from Vendors
Not all funding needs to come in cash. If you work with vendors or suppliers, negotiate longer credit terms (30–60 days).
This gives you breathing room to sell your products/services and generate revenue before you pay them — essentially cash flow funding without loans.
Final Thoughts: No Collateral ≠ No Funding
If you’re a startup founder without property, gold, or other assets to offer as security — don’t lose hope. Today’s financial ecosystem is far more flexible than it was a few years ago.
From NBFCs and government schemes to angel investors and revenue-based loans, multiple collateral-free options are available. All you need is:
- Clarity of your business model
- Basic financial hygiene
- Right guidance
Looking for help with unsecured business funding?
At NKB Kredit, we specialize in helping small businesses find the right loan — even without collateral. Whether it’s through financial institutions, NBFCs or government schemes, we guide you at every step. Talk to our funding experts today.
FAQs on Startup Funding :
Absolutely. Today, many non-banking lenders and government initiatives support startups by offering loans that don’t require any property or asset as security.
Schemes like MUDRA, SIDBI’s startup loan programs, Stand-Up India, and CGTMSE offer financial support to startups without demanding any collateral.
Eligibility typically includes:
- Minimum 6–12 months of business operations
- A decent credit score (usually 650+)
Proof of business registration and revenue flow
Some lenders may also accept early-stage startups with a good pitch and vision.
In revenue-based financing, you repay a percentage of your monthly revenue instead of fixed EMIs. It’s flexible, requires no collateral, and suits startups with consistent sales.
Yes, most NBFCs are regulated by RBI and are startup-friendly. They are faster, flexible, and more open to collateral-free lending compared to traditional banks.