Getting Small Business Loans without Cash Flow or Collateral


January 10, 2023

Many startup and early-stage businesses struggle to qualify for small business loans. Banks and traditional lenders often decline their applications because they don’t have cash flow or collateral, which can be frustrating for businesses that can’t get either of those things without capital. But there are alternate options available.

The Problem With Cash Flow and Collateral

First, let’s look at why banks and traditional lenders require cash flow and collateral for small business loans. Cash flow shows how much money is coming in and how much is going out. It’s an indicator of future performance, so businesses who generate more in revenue than expenses are more likely to be able to repay the loan. Lenders also typically require collateral, meaning assets owned by the owner or business, as security against small business loans. Assets may include a home, vehicle, equipment, etc. that may be repossessed by the lender if the loan is not repaid.

These requirements perpetuate a cycle of inequity. Because banks and lenders require 3-5 years of cash flow history, businesses that have been operating for fewer years don’t qualify for their small business loans. But it takes money to make money, so many businesses won’t survive that long without capital to pay the bills. Additionally, many entrepreneurs do not have the generational wealth or other resources that would allow them to put up collateral, particularly BIPOC and women entrepreneurs. As a result, certain small businesses are automatically excluded from receiving small business loans despite other indicators of success.

Alternative Solutions

So how can startup and early-stage businesses get the small business loans they need? They can apply through Community Development Financial Institutions, or CDFIs. These mission-based lenders provide fair, responsible financing to populations who are unable to get financing from mainstream institutions. You can use Opportunity Finance Network’s CDFI Locator to find one that suits your needs.

In the Baltimore metro area, Baltimore Community Lending provides financing for entrepreneurs who have insufficient collateral or face other credit barriers to traditional small business loans. Rather than focusing solely on cash flow and collateral, Baltimore Community Lending focuses on the owner’s experience, the management team, and the business plan. Applicants receive free, one-on-one training from our business coach to complete a written business plan with reasonable financials. The coach meets business owners where they are whether they own a startup, emerging, or existing business.

A Real Life Example

We know that numbers don’t tell the whole story, so we work closely with entrepreneurs to understand the story behind the numbers. That’s how husband and wife Clifton and Shanequa Stafford got a loan for their courier and delivery startup, His Business Transportation, LLC. Clifton was ready to operate his own courier and delivery business after working in the field for over eight years. He started saving money while working full-time but needed additional capital to launch and sustain the business. Despite Clifton’s extensive experience and the couple’s reasonable credit scores, the startup couldn’t qualify for any small business loans. That’s when Clifton and Shanequa turned Baltimore Community Lending. Loan officer Angella Aizire helped the couple strengthen their business model and develop reasonable cash flow projections that ultimately resulted in the approval of their loan application. Clifton says, “Angella helped me look at scaling opportunities. She made me think bigger than I was thinking.” Clifton and Shanequa were able to purchase a vehicle for His Business Transportation, LLC and they’re currently generating more cash flow than initially predicted.

The way Baltimore Community Lending sees it, providing training and support to small businesses is the best way to mitigate risk. Our small business loans are secured by the assurance that our clients have the knowledge and resources they need to succeed. If you’re a small business owner in the Baltimore Metro area who has insufficient collateral or faces other credit barriers to qualifying for traditional small business loans, feel free to reach out to Baltimore Community Lending through the contact information below:


Phone: 410-319-0732