Are you looking for a business loan that doesn’t check your credit? If so, you’re in luck because these loan options do exist.
However, keep in mind that these types of loans typically have higher costs and other requirements. Still, they’re a great option for small businesses that may not have strong credit histories.
1. Access to Funding
Many business owners don’t meet the minimum credit requirements for traditional loans. Lenders typically want to see at least a 700 FICO score or higher. Even then, lenders may require a personal guarantee from the borrower to protect their investments in the case that the loan can’t be paid back. Thankfully, there are financing options that don’t focus on your credit history or score to determine eligibility.
Square Capital offers small business loans no credit check for companies that use the payment processing platform for daily card sales. The lender’s approval criteria is based on these daily card sales, and it’s possible to qualify for up to $250,000.
Other financing options like a business line of credit from Kiva or alternative lenders like Fundbox don’t use your credit score for pre-approval. Some of these lenders also offer revolving lines of credit and charge interest only on what you withdraw from the line of credit, similar to a business credit card. In addition, many small business owners turn to friends and family for funding. This can be a strain on relationships, so it’s important to establish clear financial agreements upfront.
2. Easier to Qualify
Obtaining business financing with bad credit can be challenging for entrepreneurs. It takes time to assemble tax returns, bank statements and other documentation that will allow lenders to assess your credit history. It can also take months to have your application reviewed and approved or rejected by a lender.
Fortunately, there are some lending companies that offer small business loans no credit check. These lenders typically assess your business’s cash flow, profitability and industry to determine eligibility rather than relying on credit reports and scores.
You can also find funding sources that don’t require a credit check, such as investors and equity crowdfunding. However, these options can come with higher costs and additional requirements.
If you’re looking for a lender that does not perform a credit check, you may want to look into invoice factoring and ACH loans. These lenders place more emphasis on a business’s current invoicing and income, allowing you to qualify for a loan even with a low credit score. Additionally, these lenders are more transparent about their rates and fees, making it easier to compare your options.
3. Faster Approval
While many lenders will still use a credit check to determine approval, there are some options that require no personal or business credit checks. These loans typically have higher interest rates and a shorter term, but can be an excellent option for small businesses in need of funds fast.
For example, Square Capital, a small business loan no credit check lender that uses a company’s daily card sales to determine eligibility, can offer funding in as little as a day. This option, which is only available to companies that already use Square’s point of sale platform, offers near-instant approval and doesn’t impact a business’s credit score.
Other lenders that don’t use a credit check for business financing include PayPal Working Capital, American Express, and FundThrough. These lenders will look at other factors, like a company’s revenue and financial health, to approve funding. However, they may also charge high interest rates and fees for this flexibility. Also, multiple hard inquiries in a short period of time can hurt your credit score. This is why it’s important to spread out the applications for business loans no credit check as much as possible.
4. Lower Interest Rates
Business loan providers that don’t require credit checks offer lower interest rates than conventional lenders. This is because they are able to take more into consideration your business’s current invoicing and sales history rather than just your personal credit. They also tend to have shorter repayment terms than conventional business loans, so your monthly payment is much more manageable.
Many small businesses find it hard to qualify for traditional loans because they have poor credit or are still in the early stages of their business. Additionally, the process of assembling several months worth of tax returns and bank statements is tedious and time-consuming. Lenders that require a credit check may also reject your application if your score is too low, which can be discouraging. With alternative lenders, you can get a no-credit-check business loan and have the funds disbursed within a day or two of being approved. Some of these lenders, like Kiva and Fundbox, are even able to provide a loan with 0% interest for qualifying businesses. The credit bureaus know that savvy entrepreneurs often rate shop for the best deal, so they will not penalize you if you apply for a no-credit-check business loan with multiple lenders in a short period of time.
5. No Collateral Required
Many small business owners struggle to obtain financing. Some have a lean or nonexistent business credit history, and others may have poor personal credit scores, which can make them less qualified for traditional loans. No-credit-check lenders like Fundbox look at your current sales and invoices to determine your eligibility for a loan, rather than your business’s past performance or credit score. However, this type of financing tends to be more expensive and come with shorter repayment terms compared to traditional business loans.
If you have a rocky credit history or want to avoid tarnishing your business credit report with frequent checks, no-credit-check small business loan options may be the right choice for you. Keep in mind that these options are usually more expensive, and they are typically only available to businesses that already use another product or service from the lender. For example, Square Capital is only available to small business merchants that have a point of sale business transaction history with the company, while American Express’s working capital funds are only available for companies that already use the payment processing platform. Other alternatives for business financing include microloans and equity crowdfunding.
