Getting any type of business loan is a time-consuming process that requires many different financial forms and proof of eligibility. A personal credit check is a common thing that many lenders ask for, but it is invasive and can sometimes reduce your chances of getting the loan you need. But are there ways to secure business loans with no personal credit check?

Business Loans with No Personal Credit Check

Unfortunately, there are very few loans that you can receive without going through a personal credit check. The good news is that there are still some options! Let us help you to understand what a personal credit check entails, why they are commonly requested, and what options you have if you do not want to complete one.

What is a personal credit check?

There are two different forms of personal credit check: soft and hard. A soft credit check is essentially a basic search of your credit that only provides some information. This can be used to get pre-approval for a loan, but usually doesn’t give enough information to get your application accepted fully. Soft checks are visible to you only, not any other companies doing credit checks on you. Because of this, they do not impact your credit rating at all, so you can do as many as you need without negative consequences.

A hard check is slightly more invasive and includes more financial details, and is visible to any other party doing a credit check on you. This also stays on your record. Because these are visible to all others doing credit checks on you, unfortunately, they can impact your credit for up to 6 – 12 months, depending on the regulations where you live. It is advisable not to apply for too many credit checks in a short period of time, because the more you do, the larger their negative impact.

Why do business loans require personal credit checks?

Lenders enter financial agreements because they believe they have a high chance of recouping their investment. Most of the time, this is because the business utilizes the loan well and becomes more profitable, allowing them to pay the money back. However, sometimes this does not work, and the business struggles to pay back the loan it received. In these situations, the lender is the party that financially loses, and they must look for alternative ways to find the money.

If the loan is secured, it means that the business seeking funds has consented to assets being used as collateral. In the event that the business cannot meet repayments with its cash flow, the lender reserves the right to recoup its investment in the form of assets (this may be real estate, equipment, or other resources). Whether the business can pay the loan back or not, the lender is not likely to lose much.

If the loan is not secured, it means that the lender does not have the right to take assets to cover their losses. They have a greater risk of losing their original investment, compared to secured loans. In these situations, lenders will try to mitigate their losses by reducing the risk as much as possible. A common way of doing this is by mandating credit checks – only businesses with credit checks that meet a threshold may receive loans. A good credit score is certainly not the only way to measure financial success and the ability to pay off a loan, but it does give lenders more security.

Having good personal credit is also a great way to reduce the rates of some types of business loans, for the same reason. Lenders can be more confident in their investments, so don’t need to seek other forms of payment. Good credit may also open up more possibilities, in the form of larger loans, alternative loan types, or more exclusive lenders. It’s important to understand that while there are reasons for choosing to avoid a personal credit check, there are also reasons why it would be beneficial.

Why don’t you want to submit a personal credit check?

There are a number of reasons why business owners might not want to submit a personal credit check in order to access a business loan. As already identified, they can negatively impact your personal credit. Many people may not want to take the consequence of a credit check for their business, if they are also in the process of seeking financial support for personal reasons as well. Credit checks for personal and professional reasons will begin to stack up and start reducing their credit score. This can have unwanted personal and professional effects in the long run, which may not be worth the benefit of the original loan.

The most common reason is that you might have a low credit score. Unfortunately, personal finances are tied to your professional finances through a credit check, and this can harm your chances of helping your business. This is certainly true for some business loans, but not all. It’s important to remember that even if you have bad credit, you may still be eligible for certain loans. Different lenders have different minimum score thresholds that you need to meet, so you may want to shop around to find an option that works for you. Generally, online lenders are more lenient in comparison to traditional lenders such as banks (who have higher, stricter eligibility criteria). If you know that you have bad credit, you may want to consider this straight away.

Some people simply prefer to keep their personal and professional finances totally separate. Although most people treat their personal and professional finances differently, it can be discouraging if you are penalized professionally for personal choices you have made. Connecting the two can also lead to complicated financial situations in the future where you may have to sacrifice personal funds to repay a professional loan.

What kind of loans may not require a personal credit check?

Here is a list of some of the most common business loans that may not require a credit check as proof of eligibility. It’s important to check the requirements of each lender as they may have different eligibility criteria. This list is not designed to be exhaustive, and you may find alternatives that suit your needs even better than these options.

Invoice Factoring

If your business struggles with cash flow issues but has a solid amount of credit payments, you may be able to enter an invoice factoring agreement with a lender. The lender will pay you upfront a percentage of all of the credit sales that you have owing. In turn, you pass the invoices over to the third party to collect. This way the lender receives the money directly, as repayment for the advance.

This form of lending is focused on the number of credit payments that you receive – the more you have (and the more consistent they are), the less focus there needs to be on your personal credit. Therefore you should easily be able to find a number of different lenders that will offer you invoice factoring with no personal credit check.

Microloans

As the name might suggest, microloans are simply small loans designed to provide financial support in those tight moments. The loans are relatively small compared to other forms of business loans. As a result of this, the lender has the same amount of risk when lending to a business, but the amount they stand to lose is smaller. Therefore some lenders are likely to be more lenient when accepting microloan applications in comparison to loans of much higher value. This is great if you only need a small amount of funds, but may not work for all financial needs.

Equipment Financing

If you need to replace old equipment or buy new options, an equipment financing loan is a great way to do it. These loans will often use the equipment you purchase as collateral. If you are unable to pay back the loan as intended, the lender reserves the right to take the equipment back. Because this loan holds this guarantee for the lender, they do not need to place that much emphasis on your personal finances – you would never have to repay the loan out of pocket when the collateral exists in the form of the equipment.

Let Booster Financial help you secure business loans with no personal credit check

There are a number of great lenders who will be able to support you to access business loans without the need for a personal credit check. If you have the time, we always recommend that you do thorough research to find a lender that is reliable and can offer exactly what you need. You may experience some limited options, but they are available.

If you don’t have the time to find the right support by yourself, let us help you. Booster Financial is designed to support businesses of all sizes to grow and thrive. If you don’t want to undergo a credit check, we still want to help. Get in touch with one of our friendly team members today so that we can begin to understand what you need, and exactly what services will meet these needs. We know that our support needs to be fast, so we aim to have applications processed in a matter of days. Booster Financial supports small and large businesses in the New York area. We understand what our clients need, and we aim to be flexible enough to meet all of these needs.

FAQ

Do I need to provide a personal credit check in order to get a business loan?

For most business loans you will be required to complete a personal credit check, however, there are still some loan types you can receive without submitting one. Make sure that you do thorough research to find the right lender and loan type that meets the financial needs of your company.

Does Booster Financial offer business loans with no personal credit check?

Yes, we do. Some of our loans do not require you to provide a personal credit check as proof of eligibility. If you are interested in more information, please reach out to our team who can explain your options to you.

How long does it take to be approved for business loans with no personal credit check?

The time it takes to process a loan application will depend on the type of loan, and the timeframe that the lender has specified. The good news is that it should take the same amount of time to process your request as all others. Booster Financial can help you get sorted in as little as 48 hours.

Is it easy to get a business loan without going through a credit check?

Each lender will have their own specific requirements for different loans, and these will differ slightly. It’s important to remember that if you choose to not complete a credit check you may be limited to a smaller number of options, in terms of what loans are available. Some lenders may also have higher thresholds for minimum income, to account for the lack of credit checks. For some people, this may make it harder to get approved, but for many, it may just mean you have to search harder for the right lender.

Do credit checks impact your credit score?

There are two different forms of credit check – hard and soft. A hard credit check provides comprehensive financial information, and can be seen by third parties investigating your financials. It does hurt your credit score. A soft credit score provides less information and details, and is only visible to you. This does not hurt your credit score.

Do all lenders offer loans without credit checks?

No. The majority of lenders will still ask you to complete a credit check. If you are looking for a lender who will not ask for your credit, consider Booster Financial. We have a range of options designed to help.

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