If you are a startup or an up-and-coming company, having small business loans with no credit check is a great way of maintaining your cash flow. It’s understandable that a new enterprise may not have a good credit profile. If that happens, you will have a difficult time accessing financial products with attractive terms.
Small Business Loans with No Credit Check
A suitable alternative is to seek lending agencies like Booster Financial that offer no credit check loans. Our firm has different products that can provide extra working capital for your business. It often requires a steady stream of funds for your company to take off. To do so, you should partner with a reliable lender that can assist you with your financing needs.
There are several funding options that don’t necessarily entail a business credit check. Here’s a comprehensive guide on this type of loan to help you see whether it’s the best decision for your company.
Personal loan vs. business loan
Some startup owners apply for a personal loan to realize their business plans. It is generally easy to qualify for one rather than a business loan. The lender will only typically check your credit history and income. On the other hand, a business loan requires several criteria, including cash flow, profitability, financial statements, and even your personal credit score.
Most personal loans don’t require collateral or any asset of value to lessen the risk for the lender. However, some small business loans can be unsecured, too.
How do you know which of these two financing options will work best for your business? You must answer these questions to start:
What is the purpose of the loan?
How much money do I need?
How fast do I need funding?
Am I capable of paying it back?
Can my cash flow handle the debt?
Do I want to build a lasting lender-borrower relationship?
Essentially, the loan that makes the most sense for your business should become your priority. You cannot take out debt that will not solve your problems. It’s almost like applying sunblock at nighttime. You should choose the loan product that will benefit your company in multiple ways. If you want to keep business and personal finances separate, it’s ideal to seek small business loans with no credit check.
Challenges of securing business loans
Some great business ideas or dilemmas spring randomly, and the only way to handle them is to have enough funds. Business loans are a great solution to this dilemma. The catch is that credible lending agencies are unlikely to approve you for a loan without checking your credit profile first.
Lenders often check the five Cs when granting loans: Capacity (to pay), Capital, Collateral, Character, and Conditions. The Character portion of the checklist includes your FICO or credit score. Traditional lending firms prefer borrowers with a score of 690 or above. However, startups and small businesses often have less stellar credit scores since they don’t have an established track record yet.
Additionally, banks perform hard credit inquiries before granting a loan. This process investigates your credit history in detail. It may sound harmless, but this type of credit analysis can hurt your scores further. If, after you accept a loan offer, the lender performs a hard credit pull, then you can expect to see a five-point drop or less in your score.
Small business loans with no credit check
Lending firms, specifically traditional banks, want to minimize the risk when granting loans to a borrowing business. They often require collateral such as your commercial property, equipment, future invoices, and another business asset of value. They also perform a credit check before granting a low-interest loan.
The bank often investigates both business and personal credit scores when evaluating applications. If either of these numbers is low, the borrower can get disapproved or given excessively high rates if approved.
Not all small businesses can offer collateral or have a strong credit history. It’s likely difficult to find a bank loan if you cannot meet strict qualifications. This situation will limit your options, but that’s not to say that you should lose hope of securing financial help.
Small business loans with no credit check are available for startups and companies that haven’t been in the market for a long time. There are alternative funding choices you can explore to boost your working capital. Online lenders can look beyond your credit scores to determine whether you can afford and manage a loan satisfactorily.
No credit check loans: when do they make sense?
If you are in a situation where you need financing but don’t qualify for a traditional loan due to a poor credit score, you have other options to discover. No credit check business loans are an ideal funding option for you.
You can save time and energy trying to secure money only to have your application rejected if you go for business loans that don’t dig deep into your credit profile. If your FICO score is bad or you simply don’t have a robust credit history, you can turn towards loans that don’t prioritize these qualifications.
Suppose you need money to buy property or equipment, or if you need to seize an investment opportunity for your business. You might find that short-term business loans with no credit check fits your needs without affecting your score.
Most financing lenders perform a soft credit check on the pre-qualifying phase of the loan application. This process will not lower your credit score. It only allows lenders to find the most appropriate loan type for your business.
How to get a no credit check loan
When you pursue a business loan without a credit check, you should first understand that not all lenders can offer it. This type of financing product is not popular in the market, so it’s best to shop around before saying yes to an offer.
Lenders might ask for your business plan on top of basic requirements such as your financial statements and time in business. This information helps the lending agency provide the most suitable loan package for your needs.
In some cases, the lender will ask for collateral to reduce the risk should the borrower default on the loan. You might lose your asset if you fail to repay your loan. Before you go into debt, you need to make sure that you can meet the loan terms. Otherwise, you could lose your valuables and hurt your credit score.
You should take note, however, that some small business loans with no credit check come with higher rates than bank loans. It’s best to budget your finances accordingly so that you can maintain a good cash flow despite having debt.
If you don’t need funding immediately, you might want to improve your credit score in the meantime. Doing so allows you access to loans with better terms and interest. You can also build a better financial relationship with your lender, which will bode well for your future.
Types of no credit check business loans
You can have a variety of options when you decide to apply for a business loan.
Business line of credit
The as-needed basis of business lines of credit makes this loan type ideal for borrowers who want instant access to funds. Much like credit cards, LoCs are revolving funds. You can draw money from the credit account and repay it to replenish your balance. The funds become available to borrow again as soon you pay your debt back.
Interest only applies to the amount you borrowed. For example, if your LoC limit is $50,000, you can withdraw $20,000 and repay the principal plus interest on your due date. Regardless of your payment thereof, you can still borrow the remaining $30,000 at any time. Once you pay the amount fully, your credit line returns to $50,000.
Merchant cash advance
A merchant cash advance or MCA refers to lump sum financing offered to owners in exchange for a cut on sales. The repayments are made via automatic deductions on future debit and credit payments. This type of funding gives you faster access to money and flexibility. However, you might have to shoulder higher interest rates.
MCAs are a useful kind of small business loans with no credit check, although experts suggest treating them as a last option.
If you struggle with unpaid invoices, you might consider getting invoice factoring. This financing type involves selling some or all outstanding invoices to a lending agency that can pay you about 80% of the amount due upfront. It can help free up money tied to the invoices to stabilize your cash flow.
Lenders usually don’t dig into your credit score when applying for invoice factoring. They will instead evaluate the creditworthiness of your non-paying customers.
Startups can benefit from microloans, which are designed mostly to provide financial help to small businesses. These loans generally have less stringent requirements, such as revenue or time in business. As such, they make a great option for newer companies.
If you need to add new pieces of equipment or machinery, you can seek equipment financing from a trustworthy lender like Booster Financial. It’s easy to qualify for since the asset you purchased serves as collateral, minimizing the risk for the lending agency.
Pros and cons of no credit check business loans
Any sort of funding can deliver several benefits for your business if you know how to manage your debt. Here are some of the advantages of getting a no credit check loan.
No credit analysis. Traditional loans almost always hurt your credit score due to the obligatory credit reporting. Lenders that offer no credit checks often look at a business’ current financial health and not the past.
Fewer requirements. Since there is no credit check, these loans may also require minimal documentation.
Faster approval. You can have quick access to funds unlike traditional loans, which helps you make important business decisions more promptly.
Higher rates. To mitigate the risk for lenders, they usually offer higher rates for this type of loan, making it more expensive to get.
More fees. No credit check business loans can hurt your long-term growth since they might come with extra costs and fees.
Frequently Asked Questions
Is it possible to acquire a loan with bad credit?
Most people assume that once you have a poor credit profile, then you cannot apply for any loan. That’s entirely true, though—several lenders are happy to assist borrowers, even those with bad credit. However, you might have to provide financial statements and other documents to prove that you can afford a loan.
Can I still apply for a loan even with no credit score?
Some lenders understand that not all businesses have a healthy credit history. Startups and newer companies will likely have no sufficient credit to help them generate a credit score. Even so, the lender may still offer small business loans with no credit check.
How do I check my credit score?
You can search for a free credit score website to check your credit score. You might be asked to fill up a form with your information. The process is typically fast, easy, and free.
Where can I get a no credit check loan?
Online lenders provide different financial options for borrowing enterprises, which includes no credit check loans. Many of such lending firms don’t weigh credit scores heavily and instead focus on the current business performance.
What are the drawbacks of these loans?
No credit check commercial loans can have high interest rates, short-term lengths, and lesser borrowing amounts. Some can also have additional fees or stipulations like using a payment platform exclusively for repayments.
Do banks offer these loans?
Traditional lenders like banks have strict requirements for their loan products. They usually prefer borrowers with at least a 700 credit score and a minimum of two years in business.
You don’t have to feel down if you have little to no credit history yet want to try applying for a business loan. Our team of experts at Booster Financial is willing to work with you in exploring your options. We offer small business loans with no credit check that offer fast funding for your company. You only need to fill out our form and we can get started with your search today!
Understand Your Options
Find out more about the different finance opportunities available in your area and get funded today!