A guide on small business loans no credit check
Most of us tend to overlook our credit scores – not until a financial need arises that may require a business loan. This is the time you realize that credit scores are not only important when you need to purchase a home or your dream car, but it is also essential to have good credit when you want a loan to pay for business expenses. So whether you have been denied a business loan in the past due to poor credit or you are still looking for the best business funding option and you are aware that your score isn’t that attractive, you may have this question in mind – How can you find a small business loan with poor credit?
Getting a small business loan with no credit check
There is no denying in the fact that finding small business capital loans with poor credit can be difficult. When it comes to bank loans, lending institutions try as much as possible to reduce the risks involved when issuing a loan. Borrowers with good credit can easily qualify for these loans compared to their poor credit counterparts. Lucky enough, the emergence of online lending has made it possible for business owners to take out small business startup loans, no credit check. In fact, some of them to do not have credit score as a requirement to qualify for a business loan. For instance, you can easily access a small business loan through invoice financing. With this option, the lender does not perform any credit check before approving the funds. Most of them will require you to be in business for at least 3 months, generate a specified amount of revenue and issue your customers’ outstanding invoices as collateral when providing the loan. This works well for established business. There are several other startup loans no credit check options available for new small businesses.
Types of small business loans with no credit check
Now that you already know that there are different financing options available for small businesses that do not require a credit check, we suggest that you find an option that will suit your business needs. Here are some of the options you can consider without worrying about a poor credit report.
- Merchant cash advance
This is a business lending option that provides businesses with a lump sum amount that is repaid back with a percentage of the business daily credit card receipts. You can easily qualify for a merchant cash advance if you have bad credit. Just like invoice financing, this is a perfect way for businesses to access fast cash to improve their cash flow.
Crowdfunding has recently become a popular option for small businesses that want to introduce a new product or service in the market. With this option, you can easily raise business capital from customers, friends, family members, and individual investors. This is done by hosting an online campaign and reach your target group through social media and email. You can also get views about the product or service through feedback from backers.
- Small business grants
This is also an awesome small business financing option since unlike business loans, you won’t have to worry about paying the money back. You only need to qualify for the funds, which may be difficult for small business owners. The loans are also reserve for certain industries to fund specific projects like medical or scientific research among others.
- Microloans for nonprofits
If you are from a less advantaged background and want to start a small business, you can qualify for a microloan or funding from nonprofit organizations. With these options, no credit check is required so a poor credit history won’t hinder you from securing the funds. The lenders are not in the business of making money. Their main purpose is to assist traditionally marginalized groups to improve their lives.
- Business credit cards
If you have poor credit or the business is still brand new with no credit history, you might also consider a business credit card. As much as credit cards are overlooked by business owners, it is actually a good funding option for individuals who need small business startup loans. For business startups, lenders consider your personal credit score rather than the business financial history for approval.
4 best small business loans with no credit check
While accessing small business loans no credit check in a traditional bank is almost impossible, the above sources can work well for such business owners. Microloans, invoice factoring and are some of the business financing options that do not require a credit check. Here are the top companies that provide these 3 financing options:
- Kiva U.S
Kiva provides peer-to-peer microloans without performing a credit check. It can be a good option for people who have compelling business ideas and require a small loan. The money is paid back with no interest and fee charges. Businesses can borrow up to $10,000 with a loan term of 6-36 months.
- PayPal Working Capital
This is also an easy way to get a small business loan with no credit check. Besides, the loans are available at affordable rates. To qualify, you need to have a PayPal premier or business account that has been active for at least 3 months. You can borrow up to $97,000 with a loan term of 10 months. The loans have a one time fixed fee.
- Square Capital
Square Capital provides bad credit business loans for amounts up to $100K. The loans have a term of 18 months. The company lends to businesses that generate an annual revenue of at least $10,000. The loan is paid by a portion of daily credit card transactions.
This is a rewards-based crowdfunding that helps entrepreneurs with creative projects. Backers are not repaid with money, but a reward which you promise to give in your Kickstarter campaign. Just like other crowdfunding options, no credit check is performed.
While getting a traditional bank loan with no credit check can be tricky, there are several other ways you can receive business funding with poor credit rating. The only limitations are the maximum amount you can qualify for and the extra fee charges. You also have the option of improving your credit and qualify for loans with affordable rates like SBA and other term loans.