When running a business, you will encounter plenty of situations where you will have a sudden and immediate need for funds. A piece of equipment might get broken, in which case you have to pay for repairs or make a new purchase.
Business Loans with No Credit Check
You might get overwhelmed by the cost of day-to-day operations during a particularly low off-peak season. Or it can be something really good, like coming across a massive sale where you can get your merchandise at great discounts.
In any of these situations, you will need a way to get extra money fast, which is typically solved by taking out a business loan. But what if you have bad credit? The majority of loans that are available to small business owners today come with a minimum credit score requirement. If you fail to meet this minimum score, there is a good chance that your application will be rejected. So what can a small business owner do?
No need to despair because nowadays, it is not that hard to find business loans with no credit check. That’s right – you can now apply for a small business loan even if your credit score is in the 600s or even lower. In this post, we will discuss the requirements for these loans, their pros and cons, and where you can find them should you need to apply for one.
What Are the Advantages and Disadvantages of Business Loans with No Credit Check?
Obviously, there are notable advantages to business loans that do not require a credit check. But just like with any other funding solution, it also has its disadvantages. You need to weigh all of these very carefully in order to make a decision on whether these loans are the best option for your business or not.
The biggest advantage of these loans is that you can get funding even if you have a really bad credit score. Since the lender will not even check your rating, you can have a credit score of 300 and still qualify for a loan.
Another advantage is that they will give you the opportunity to improve your profile. Since no inquiry will be made into your credit record, taking out a loan will not harm your score. But if you are able to make timely repayments towards your loan, this can give a slight boost to the credit profile of your business.
The easy application process is another great thing about business loans with no credit. Not only is it quick but there are also fewer requirements to submit. Most of the time, you can get funding within a couple of days to a week after you submit your application.
Since you can’t offer lenders the credibility that comes with having a high credit score, your loan will come with a higher interest rate than other kinds of small business loans. There might also be other fees involved, depending on the requirements of the lender.
When you compute the overall amount that you will spend on repaying the loan, it will add up to a hefty amount. Comparing this to the benefits of taking out the loan in the first place, many business owners have second thoughts since the cost usually outweighs the pros of getting the loan.
Reasons Why You Might Apply for Business Loans with No Credit Check
Business loans with no credit checks are not the best solution to all funding problems, but there are certainly some situations where they are the best option.
You have bad personal credit
If you already know that your personal credit score is low and your business has not been established long enough to have its own credit history, then getting a no-credit check business loan would be highly recommended. Attempting to apply for other types of loans would likely be just a waste of time since you will not meet their minimum credit score requirement anyway. By going directly for business loans with no credit check, you can save a lot of effort and time.
You want to preserve your credit rating
If the amount of money that you need is small enough that you will be able to easily repay it within a short period, then you should consider taking out a short-term business loan with no credit check. Not many people realize it but frequent credit checks can harm your overall credit score. You might not feel the effects now but later on, a lower score will make it much harder for you to get approval or good terms on a traditional business loan. With a no-credit check loan, the lender will not make a credit inquiry, and so your current rating will be unaffected.
You don’t want to provide a personal guarantee
When applying for traditional business loans, you would typically need to provide a personal guarantee, which should not really be a problem. But if you don’t like involving your personal life with business matters, you might not want to give such a guarantee.
You had been rejected for other business loans
If you have already tried your luck with other kinds of business loans but have only gotten rejected, then it’s definitely time to try alternative business loans with no credit.
Examples of Business Loans That Do Not Require a Credit Check
You may forget to go to the bank or other traditional lenders because they will always require a credit check before approving any loan. Don’t worry though because there are plenty of other options that you can consider. Following are some of the most popular financing options that you can try, and none of them will mind your credit score too much.
Short-Term Business Loans
Because of the shorter duration of the loan terms, lenders are able to provide these loans without requiring a credit check. The amount that you can borrow can be smaller compared to other loans, and the duration for repayment rarely extends longer than 2 years.
Short-Term Lines of Credit
These are very similar to how credit cards work. You can spend variable amounts depending on your current need, and you only need to pay back the amount that you had used, plus the interest on that amount.
If you have a lot of outstanding invoices that you expect to collect sometime in the future, you can give these invoices to a lender as payment for the funds that they will provide to you upfront. When your clients finally make payments toward the invoices, the amount will go to the lender as your repayment for the loan.
Merchant Cash Advance
If a large portion of your sales comes through credit card transactions, merchant cash advances are a viable type of business funding for you. MCA lenders don’t really care about your credit score. What they are concerned with is the volume of future credit card sales that you will generate because this is where your repayment for the loan will come from.
Basic Qualifications for Business Loans with No Credit Check
With traditional loans, lenders will want to look at a potential borrower’s credit score to figure out whether they are capable of repaying the loan or not. With business loans that do not require a credit check, the qualifications are somewhat different. The exact requirements are different across lenders but the following make up the basic qualifications.
Lenders will want to know how you run your business and more specifically, how you intend to spend the money that you plan to borrow. This will give them an idea if it is feasible to lend you the money or not.
Although not required by all lenders, many do prefer if you put up collateral. This significantly reduces the risk of the lender because they can just easily claim your collateral in case you fail to pay back the loan. Thus, you need to be sure that you are indeed capable of paying the loan before you decide to put up any of your assets as collateral.
Get a Co-Signer
Having a cosigner can significantly increase your credibility as a borrower, especially if you have bad credit. A co-signer guarantees that they will continue making the repayments in case you become incapable of doing so. This will guarantee that you are getting approved for the business loan.
Where Can I Find the Best Business Loans with No Credit Check?
It’s not necessarily like finding a needle in a haystack but looking for reputable lenders that offer business loans without credit checks can be a challenge, if you don’t know where to look, that is. Yes, there are now plenty of these lenders, especially online, but there are a lot of them that are not very reliable. You need to protect your business and your money from these dubious lenders, so you really need to search carefully.
Alternatively, you can simply partner with us here at Booster Financial. We can link you up with the best business loans that do not require a credit check. We guarantee that all the lenders on our list are trustworthy and guaranteed to be of great assistance to your financial situation.
Our financial specialists can also provide you with any advice you might need with regards to your funding options. We can help you figure out whether these no-credit check business loans are indeed the best option, or if you can do much better with other funding solutions.
FAQs about Business Loans with No Credit Check
It is very important to have a thorough understanding of business loans before you make an application for one. Here are some of the most commonly asked questions about business loans that do not require a credit check.
What are the types of business loans that do not require a credit check?
It might surprise a lot of business owners to know that there are actually several types of business loans that do not require a credit check. Some of the most popular ones are invoice factoring, business lines of credit, microloans, equipment financing, merchant cash advances, and many others. Each of these loans have specific functions so you should choose very carefully so that you can get the one that is best for your business.
Can I get a loan for my small business even if I have bad credit?
Qualifying for a traditional business loan will be next to impossible with bad credit, but there are many other types of small business loans that you can consider.
What interest rates can I expect on business loans that do not look at credit rating?
The interest rates on these business loans can vary widely from 5% to 50%. But since lenders do not take a look at your credit rating, they make up for it by jacking up interest rates. You can expect to be charged interest that is much higher than what would usually get on a traditional business loan.
What are the common reasons for applying for a small business loan without a credit check?
Either you have a really bad credit score, or you do not want to damage your credit score with frequent inquiries into your credit report. Otherwise, there are many other kinds of funding solutions that would prove to be better for your business.
How much can I borrow on a business loan if I have bad credit?
The amount that you can borrow will depend on the decision of the lender. On average, it can be anywhere between $1,000 and $50,000. Do keep in mind that the more you borrow, the higher you will have to pay in interest as well.
How long does funding take on no-credit check loans?
Since the lenders of these loans are usually quite lenient with the requirements and do not ask for much paperwork either, you might expect to get your funds within just a few days after you submit your application.
There are some situations where taking out business loans with no credit check can be the best thing you can do in order to get much needed funds for your business. It’s not really the ideal solution, with the high interest rates and all, but if there are no other options, you just have to make the best of the situation and find the best lender you can for this type of loan. The Booster Financial team can definitely help you with that.
On the other hand, you have to keep in mind that there are plenty of funding solutions out there and some of them might be a better fit for your needs. It is crucial that you understand all the options and that you carefully weigh all the pros and cons so that you can do right by your business.
If you need more information on business loans with no credit check, feel free to contact us and will provide you with all the assistance you need.
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