The key to any startup business is to have a source of funding to maintain cash flow. However, getting startup funding for your company can be quite difficult because you are starting a new venture and have no financial track record. It puts you in a kind of catch 22 situation.

One form of funding you may want to consider is unsecured loans. These types of loans don’t require any cash down, personal assets, home equity or business assets. This type of business funding is valuable for startups because it does not imperil any assets or property you may want to protect. If you were to default on an unsecured loan, you would not lose your assets or have liens placed on your property.

Generally, unsecured loans for businesses take the form of an unsecured business line of credit. It is an extremely valuable financial tool, which essentially works like a very large credit card. It differs from a credit card in that it has additional benefits such as check writing and lower interest rates.

Banks and other types of lending institutions provide unsecured lines of credit loans. The dollar amount you can get in a line of credit is determined by the credit worthiness of your company and does not factor in your personal guarantee. Although unsecured business lines of credit loans have been around a long time, small business owners are often surprised to find that they exist and even more surprised to find out that they qualify for such a loan.

A question often asked by a businessperson is why banks or other lending institutions would make unsecured lines of credit available to a business? The simple answer is that they already make this type of lending available to you as an individual, so why would they not make it available in a business setting?

A more prescient example is the use of credit cards that almost all Americans have today. A credit card is an example of an unsecured credit loan but normally at a lower level of loan value and a higher interest rate. So if you’re like most Americans who have many credit cards, if you total the combined credit available with all your cards it could be a significant figure. It is not a wise way to start a business with maxed out credit cards but it has been done before.

Your credit cards and the terms – interest rate, credit limit – are totally unsecured loans and are provided to you based on your credit worthiness. For that reason, it makes good sense from a business perspective to offer an unsecured credit line program to corporations and individual proprietorships. In many cases, individual proprietorships and corporations are more financially stable than individuals and are likely to access the credit lines more frequently. If you are a brand new startup company, this gets a little trickier of course and requires using techniques that are beyond the scope of this article.

However, if you have a startup company and need to find capital credit lines, you should take a look at this option. Thankfully, just as with your credit cards, you only pay for the credit you use and as a new business, it is advisable to be very conservative. When you are approved for your line of credit though, your business will have access to the capital it needs when the time arrives.