Some business owners want to avoid the credit check part of the loan application process for a variety of reasons. They may have no personal credit, or their low scores will disqualify them from traditional loan options, or they may prefer to separate their personal and business finances. Regardless of the reason, there are funding solutions available to help them get the capital they need to grow their businesses.
Small business loans no credit check are rare, and the lenders that offer them typically have a very high bar for eligibility requirements, like excellent personal and business credit histories or significant business experience. They also often charge more in terms of interest rates and fees than conventional loans for those with good credit. However, the recent economic climate has led to stricter standards for qualifying for most types of lending, and many business owners find it challenging to meet those requirements.
Invoice financing. This type of financing is based on the value of unpaid invoices and allows business owners to borrow up to 90% of the total value of their outstanding receivables. This type of financing is typically short-term and requires frequent repayments, but each on-time payment can help improve a credit score.
Equipment financing. This type of financing helps finance large purchases, such as new machinery or software. It typically requires a down payment and can be secured with collateral. Some equipment financing companies allow borrowers to use their existing accounts receivable as collateral, but other lenders require that the borrower provide a security deposit of up to 25% of the equipment purchase price.
Small business credit cards. Most business credit card providers check personal credit, but there are some that don’t and can be used to build or repair a credit profile. These typically have higher interest rates, but they can be a convenient way to fund short-term cash needs.
Online lender marketplaces. These marketplaces bring together a large number of small business lending options and provide convenient applications with fast approval and funding times. They may also offer flexible financing terms and low to no minimum credit score requirements.
Alternative lenders and online marketplaces that specialize in helping business owners with poor credit have a wide range of financing options for them, including unsecured business loans with lower requirements than conventional loans. While many of these lenders do perform a credit check, some will waive it or only do a soft inquiry that doesn’t affect credit scores. These lenders are an ideal option for borrowers who have been turned down for traditional loans because of their credit history or for borrowers who don’t want to risk hurting their personal credit scores by a hard credit inquiry. For example, National Funding has a program for startups and business owners with bad credit who have no business history or are not able to prove their income. This can be a great option for those who need to buy inventory or make payroll, but otherwise would struggle to qualify for other types of financing. small business loans no credit check