For a new business, getting approved for traditional business loans or SBA loans can be a challenge. Banks and other small business lenders often want businesses to have been in business for at least two years and have good credit.
Even for businesses that have been around for a while, if they don’t have good credit, they can also be left behind when it comes to traditional lending programs.
If your business is new or you don’t have good credit, are there any types of business loans you may qualify for?
The Best Business Loans No Credit Check
In this article, we’ll explore business loans without a credit check and look at four examples you might want to consider.
Can you get a business loan without a credit check?
What if there were loans that didn’t look at your credit report? Hasn’t that penalized you just because you made some financial mistakes in your past?
In fact, there are no credit check loans that do just that. These lenders offer small business loans to startups and businesses with poor credit, instead looking at other qualifying criteria like annual income to approve applicants.
Advantages and disadvantages of getting a business loan without a credit check
The obvious advantage of no credit check loans is that you do not have rigorous credit checks with personal or commercial credit bureaus. But what other advantages do they have… and what disadvantages?
Not qualifying for financing can prevent you from growing your business. But short-term loans, merchant cash advances, and loans without a credit check still give you the working capital you need to maintain cash flow and invest in the future. of your company.
These loans, often granted by online lenders, often have quick loan approval and disbursement of funds, whereas traditional loans can take weeks or even months to be approved. If you need cash fast, this might be the way to go.
On the other hand, no credit check loans tend to have higher interest rates and shorter repayment terms, so factor that into your decision.
They may also require a personal guarantee, which means that you will be personally liable for the loan if your business cannot repay it. And some of these loans may require collateral to secure the loan.
Why do small business loans require a credit check?
Lenders often apply for credit to see your personal and business credit scores and credit reports to verify your creditworthiness, which can be an indicator of your financial responsibility. If you have a negative credit history, such as late payments, non-payments, or bankruptcies, lenders may consider you at high risk of defaulting on your loan.
But there are no credit check loans and bad credit business loans that provide financing to businesses regardless of their credit history. It can be a relief!
Why consider business financing without a credit check
Maybe you need a loan to start your business or launch a new product or division, or maybe you are dealing with the unexpected, like a drop in income, expensive repairs and renovations or staffing needs. Whatever your reason for needing the extra capital, there’s one thing that will likely determine how easy — or hard — it is to get it: your business credit.
Unfortunately, for some business owners, a credit check might be out of the question. Some simply don’t want a serious inquiry to come along and subsequently damage their existing business or personal credit score, and others know their credit score intimately and know that in some cases it can immediately disqualify them. . Whatever the reason, it can be difficult to find a financing option that suits your needs, but it’s not impossible. There are a variety of options, including working capital loans through your payment processor, merchant cash advances, invoice factoring, and equipment loans.
4 Business loans with no credit check (or bad credit)
Let’s look at some of the best bad credit business loans you should consider.
PayPal working capital: loan
PayPal has long been considered a popular payment processor, but it also offers working capital loans which can be used to fund day-to-day operational expenses, e.g. payroll, accounts payable, etc. If you use PayPal as your payment method, online or in-store, a PayPal working capital loan may be an option.
To be eligible for a PayPal working capital loan, you must have had a PayPal Business or Premier account for at least three months. Business account holders must process at least $15,000 per year, while Premier account holders must process at least $20,000 per year.
This working capital loan is based on your PayPal account history, so you’ll be able to borrow an amount that fits your business.
Rates and Fees
Eligible borrowers will pay a one-time fixed fee which is determined before accepting the loan. There are no interest payments or additional fees. The fixed commission is on the total of the loan; your PayPal sales history; and the selected payback percentage, which is the percentage of each sale deducted and paid for your loan.
Payments are automated and deducted from each PayPal sale, called “refund percentage”. Although percentage repayment rates can vary depending on the loan amount, borrowers can generally select a repayment rate between 10% and 30% per transaction.
If no PayPal sales occur during a specific period, no payment is made; however, all borrowers must pay 5% or 10% of the total loan amount over a 90 day period. In addition to the repayment percentage, borrowers can also make manual payments.
Quick financing: cash advance
Although this cash advance company can check your credit, you can still qualify for business financing with lower credit scores because Rapid Finance also reviews your time in business, income, and accounts receivable.
To qualify, you must have accounts receivable. You will need to provide your last three credit card processing statements, as well as your last three months of business bank statements when applying.
With Rapid Finance, you can get a cash advance from $5,000 to $500,000.
Rates and Fees
As it is not a loan, you are not charged any interest rate. Instead, your receivables are purchased at a discounted price and a fee may be charged and deducted from the advance amount.
You’ll make automatic payments based on a percentage of your company’s credit card sales or other revenue receivable.
BlueVine: line of credit
BlueVine offers a business line of credit that can help you build your credit over time. BlueVine does a soft credit check, so although they “check your credit”, it will not reflect or impact your credit score.
To qualify, you’ll need a FICO score of at least 600, at least 6 months in business, and $10,000 in monthly income.
Eligible applicants can borrow up to $250,000.
Rates and Fees
Rates start at 4.8%. There are no monthly or maintenance fees.
You will repay each draw with fixed monthly or weekly payments over 6 or 12 months.
Kapitus: short-term loan
Another option if your credit scores are low is a short term loan from Kapitus. The company also offers equipment loans and revenue-based financing.
To qualify, you’ll need to be in business for at least a year, have annual revenues of $120,000 or more, and have a FICO score of 500.
Eligible applicants can borrow from $10,000 to $500,000.
Rates and Fees
Rates vary by loan product, but as an example you may see a factor rate of 1.05 to 1.39 on some short term loans.
Kapitus works with you to set up a payment plan that works with your business.
Alternative financing options for bad or no credit
In case you want even more loan options, here you are!
Business credit cards
If your credit prevents you from qualifying for a traditional business credit card, explore
business credit cards for bad credit. They may have higher interest rates, but if you pay your bill on time each month, you can increase your credit and get better deals.
If you’re specifically looking to buy equipment, like heavy machinery or a computer, equipment financing is designed for that purpose and you don’t usually need a high credit rating.
There are alternative lenders who advance money to you on unpaid bills through bill financing. They pay you a percentage of the invoice value now and the rest, less a fee, when the invoice is paid.
Find no credit check options that suit your needs
Finding a traditional loan that doesn’t require a credit check can be difficult, if not impossible. However, today’s modern lending economy has opened the door to other financing options, some of which don’t require a credit check. If you’re looking for one, you might want to check with your payment processing company first, like PayPal, and then look to other alternatives like cash advances, factoring, or invoice financing and equipment financing, depending on your needs.
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