When you run a small business, there are times when you need an infusion of cash in a hurry. You might be having a cash flow issue or need money to buy a new piece of equipment. If you have poor credit or no credit, it can be challenging to find a small business loan with no credit check. You need someone to take a chance on you and help rebuild or establish your credit rating. A poor credit rating can block your business from expanding or even meeting everyday obligations. However, some small business loans with no credit check may help you get the funds you need to operate.
Can You Get a Business Loan With No Credit Check?
Yes, some lenders can provide you with a business loan without a credit check. However, these lenders may need to verify your business’s overall health or require some form of collateral when making the loan. In some cases, the repayment plan centers on your daily credit card sales. You might need to talk to a few prospective lending companies before finding the one you want to work with.
Also, finding the right small business loan with a poor credit rating may depend on how much money you need and the length of time you need to repay the balance and interest. Without a credit check, it might be easier to secure a short-term business loan than a long-term one. This gives you the benefits of the cash you need and the opportunity to establish your creditworthiness in the future, making it easier to secure more resources.
When You Should Look for a No Credit Check Lender
There are two main reasons for looking for a no credit check lender. The first is that you have a credit rating that is lower than average. This could be because of past accounts in collection or missed payments. It might be because you don’t have any credit at all. If you’ve just started owning a business, you might not have established credit yet. Another reason why your credit score could be low is that your debt is high.
The other reason is that you don’t want additional hard inquiries on your credit report. Each time a lender makes a hard inquiry on your credit, that information appears on your credit report. If you have too many hard inquiries, it can damage your credit. Also, it takes two years for each inquiry to fall off your credit report. Also, lenders can compare your hard inquiries to open accounts to see if you were approved for an account.
Types of Business Funding Without Credit Checks
While most loans require a credit check, there are a few that you can secure for your small business without one. Here are a few of the best types of business loans with no credit check:
Term Loans
You may also hear this called an installment loan. It breaks the principal and interest payments into set installments. Some lenders don’t require a credit check for this type of loan. You can select the term duration, which typically ranges from 3 to 10 years.
A lengthier loan term will reduce your monthly payments but keep you in debt longer. Shorter loan terms have higher monthly payments, but you won’t see them in your finances for as long.
Short-Term Loans
There are several options for short-term loans that don’t require a credit check, such as a merchant cash loan. These loans look at the overall health of your business instead of your credit score.
Personal Loans from Friends and Family
You don’t have to approach a bank to get the financing that you need. Friends and family may be happy to let you borrow some money for your business venture. Some family and friends may offer financing without requesting any interest, but it’s important to establish the repayment terms.
Crowdfunding
You can raise money for your small business by offering rewards based on how much money someone donates. For instance, you can offer exclusive access to an early product launch, a 1-on-1 call, or another perk, depending on the nature of your business. Your credit history doesn’t play a role in whether you can crowdfund or not.
Many crowdfunding websites make it easier to raise money. Some of these websites make it easier for your campaign to be discovered, but you will have to drive most of the traffic to your campaign. Telling friends and family and promoting the crowdfunding campaign to your customers and followers can give you a good head start.
Merchant Cash Advances
You can receive financing right away and pay back the cash advance based on a percentage of each credit and debit card sale. You won’t have to supply your business credit score or your personal credit score. While this financial product is available for companies with bad credit, it is one of the most expensive ways to borrow money.
Invoice Financing
Business owners who want to avoid higher interest rates may want to consider invoice financing. This method involves using your unpaid invoices as collateral. You receive money upfront and then pay back the debt once you collect the invoice payment.
This model still lets you communicate with your customers, while invoice factoring involves giving more control to the lender without having to worry about collecting invoice payments.
Equipment Financing
Some business owners finance their equipment so they can eventually own it. This decision frees them up from endless equipment leases, and some lenders won’t check your credit during the application process.
Microloans
These small loans are easier to get approved for and arrive in your business bank account shortly. These loans have smaller amounts that are typically up to $50,000.
Business Grants
Grants are the best way to raise money since you do not have to repay a grant. The U.S. Small Business Administration lists available grants, and you may want to check at your state and local level to discover additional business grants.
Business Credit Cards
While most credit card issuers will run hard credit checks, you don’t have to go through another hard credit check for a business credit card that you have already opened. Plus, you will receive rewards for everyday expenses that can add up in a hurry.
Business Line of Credit
Business credit lines follow the same logic as business credit cards. If you already have it, you won’t have to go through another hard credit check. However, it’s difficult to find business lines of credit that do not require credit checks. Some of these financial products are available for companies that have low credit scores.
A line of credit lets you draw funds when you need them. You’re given a certain dollar amount of credit, and you can draw any amount under the maximum whenever you need it. As you repay the money you’ve taken, the amount available increases back to the maximum amount when you pay it all back.
Pros and Cons of No Credit Check Business Funding
It’s essential to consider the advantages and disadvantages before pursuing no credit check business loans. No credit check business loans tend to offer convenience in exchange for a higher price than traditional business loans. Here’s what you should know before getting started.
Pros
- Faster Approval Process
- Accessibility for Poor Credit Histories
- Flexibility in Fund Use
Cons
- Higher Interest Rates
- Shorter Repayment Terms
- Potentially Complex Terms
The Best Startup Loans With Poor Credit
If you want to start a business, you need to find or have a large amount of capital to begin. In many cases, small business owners look for startup loans. The best startup loans with poor credit are:
- Rollover as Business Startup (ROBS) plan: This program allows you to use your retirement funds as startup capital for a small business.
- Crowdfunding: Online, you can pitch your business concept to a larger group of people and allow them to invest in your business to create the capital you need to get started.
Where Can You Get a Small-Business Loan With No Credit Check?
When you need a small business loan with no credit check, it can be hard to know where to turn. One of the easiest ways is to apply online to a lender with an extensive network of partners. This way, you can better your chances of finding a small business loan lender using a single application to save you time.
How to Qualify for No Credit Check Funding
You’re not guaranteed to obtain business financing, but you can improve your chances by knowing how lenders think. Here’s what they want to see.
Business Revenue and Cash Flow
Financial institutions will look at your company’s annual revenue and cash flow to gauge if you can make monthly payments. Improving these metrics can help you obtain higher loan amounts. Lenders will also appreciate consistency or a gradual increase over time.
Business Plan and Financial Projections
Traditional lenders want to know that your company is growing and you have a good plan for using the money. Some small business lenders do not require business plans, but it doesn’t hurt to have one. Not only will the lender appreciate seeing your business plan, but it can give you more clarity on your company’s next steps.
Collateral and Assets
Some small business lenders will require collateral in exchange for financing. Offering collateral will increase your risk, but it can also result in lower rates and better terms.
Alternative Document Considerations
You might not have to provide your tax returns for some types of business financing. In those cases, you may have to present business bank account statements, a list of assets, and other alternative documents.
How to Find Reputable No Credit Check Lenders
Small business owners can find many competitive no credit check lenders online. However, it’s important to read their online reviews to gauge if you are getting a good deal. Many no credit check lenders tell you that you’ll receive competitive rates and terms, but reviews tell a different story.
Companies should also apply for multiple no credit check loans to determine a good option for their finances. You can compare rates and terms to see which online lender or traditional bank is right for you.
How Can You Work on Improving Your Credit Score?
As you search for a small business loan with no credit check, there are ways to improve your credit score so you qualify for more loans in the future. Here are a few tips:
- Pay down your debt: If you have a few credit accounts with a high balance, pay down that debt to improve your credit score.
- Deal with accounts in collection: Sometimes, accounts in collections aren’t correct. If this is the case, you need to dispute the claims and get them removed from your credit report. When you owe them money, repaying it can boost your credit score.
- Make payments on time: Creditors want to know that you’ll repay any money you owe and pay it back on time. Make all of your payments on time to improve your credit rating.
An improved credit score can help you find more loan options with or without a credit check. Most lenders want to check your credit score, but it is possible to secure a small business loan with no credit check. You need to explore your options, and applying once to multiple lenders may be the answer you are looking for.
