Is It Possible to Get Small Business Loans With No Credit Check?

Small business loans can help your business run smoothly.

Yet, qualifying for this type of loan can be very challenging. If your credit status is relatively low, you may opt to consider taking out a no-credit-check small business loan.

Understanding No-Credit-Check Small Business Loan

You can get a small business loan without a credit check if you have low personal or business credit. Most lenders will rely on your personal credit and your business credit as a form of guarantee. They will most likely assess your business loan application based on several factors.

This includes capital, capacity, conditions, character, and collateral. On the other hand, small business loans that have no-credit-check work differently.

Small business loans with no-credit-check tend to look beyond your credit standing. They typically require other ways that can ensure your ability to repay the amount you borrowed. That’s why this type of loan is considered as an alternative financing option.

What Is The Minimum Credit Score Small Business Loans Require?

The credit score you need to qualify for a business loan will depend on the lender and the loan type. If you opt to get an SBA loan, they typically require a credit score of at least 680.  But, other loans might have higher or lower credit score requirements.

As mentioned, lenders usually look at your personal and business credit score when it comes to business loans. Your personal credit score tends to show your credit habits, such as your credit payment history, how often you get credit, and your total debts compared to your credit limit. On the other hand, business credit scores typically focus on your business payment history.

Advantages and Drawbacks for Small Business Loans with No-Credit-Check

The most significant advantage of getting a small business loan with no-credit-check is access to funds when your credit score might actually prevent you from having. By using this type of loan and making on-time payments, you might improve your credit score. This could improve your chances of borrowing in the future.

The drawback of this type of loan is that you will have to pay more than traditional business loans.  Having bad credit is riskier for lenders. That is why they often charge higher interest rates and fees.

Higher interest rates mean a higher total borrowing cost. It will help if you set realistic expectations if you plan to borrow with bad credit. Also, you can try other alternatives that best fit your current financial situation.

Where To Get Small Business Loans With No-Credit-Check

Online lenders who specialize in people with bad credit offer small business loans with no-credit-check. They tend to consider other factors besides your personal and business credit score.

The following are types of small business loans with no-credit-check that online lenders usually offer and the factors they consider in approving your loan application:

Type of Financing What Online  Lenders Typically Look Into
Merchant Cash Advance ●        Credit and debit card sales (daily, monthly, and annual)

●        Revenues (monthly and annual);

●        Type of business;

●        Time in business.

Inventory Financing ●        The value (current and resale) of the inventory you plan to purchase;

●        Annual revenue;

●        Time in business.

Accounts Receivable Financing ●        The value of outstanding accounts receivable;

●        Revenues;

●        Business cash flow

●        Time in business

Purchase Order Financing ●        Current profit margin

●        Your supplier’s and customer’s credit history

●        The value of the outstanding purchase order

Equipment Financing ●        The value (current and resale) of the equipment you plan to buy

●        Downpayment

●        Time in business

Payment Processor Working Capital Loans ●        Processing accounts status

●        The number of payments processed using your account

 

Other Financing Options You Can Consider

Just because you have bad credit doesn’t mean you have no chance of getting a business loan with a credit check. There are still other options you can consider. Many lenders work with people with bad credit and help them with their financing needs.

You can opt to choose business loans for bad credit. However, you might need to pay more in interest and fees than those with good credit. If you think bad credit business loans and other types of business financing is not right for you, you can consider these options:

  • You can research personal loan information online to see what you can qualify for your current bad credit standing.
  • You can consider secured and unsecured small business credit cards.
  • Opt to look into secured and unsecured personal credit cards
  • You can try loans from friends and family members.
  • You can consider equity financing.
  • You can give crowdfunding a go

Takeaway

If you think a small business loan with a no-credit-check is not right for you, then you may consider working on your credit. The higher your credit score means, the wider your financing options will be. Plus, you might end up getting the best loan deals for your needs.

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Michael launched Your Money Geek to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.