There are some business financing options that don’t require a credit check. These are usually offered by nonprofit lenders or alternative business funding sources.
Most small business loans require personal guarantees and/or collateral. Many also have minimum credit score requirements or require a minimum number of years in operation and revenue.
Term Loans
Most business financing lenders require a credit check to approve loans. However, some lenders do offer small business loan options that don’t require a credit check. The terms of these types of small business loans are often more flexible and the loan amounts may be higher. The disadvantage of this type of business financing is that a loan with no credit check will likely come with a higher interest rate.
The business financing industry leans heavily on credit history when approving loan applications. This makes it difficult for some new and small business owners to obtain funding, especially if they have poor personal or business credit.
While it is important to improve your credit score before applying for a loan, many new and small business owners don’t have enough time or the necessary resources to do this. For this reason, it is a good idea to consider other business financing options that don’t rely on credit history to approve loans.
These types of business financing options include business lines of credit, invoice factoring, and merchant cash advances. These alternatives to traditional small business loans place more emphasis on current cash flow and the creditworthiness of your customers than the credit of your business. These types of financing are typically available to businesses with low credit scores or no business credit.
Secured Loans
Many lenders offer secured loans that allow you to borrow based on the value of an asset you pledge as collateral. Lenders may offer lower interest rates and longer repayment terms for secured loan borrowers than they do for unsecured borrowers.
In some cases, secured loans can help borrowers with bad credit obtain funding. That’s because the lender doesn’t need to worry about them defaulting on their debt and risking losing their assets — such as a car or home — in the process.
Secured loans typically require a higher credit score than unsecured loans to qualify, but that doesn’t mean it’s impossible to get one with bad credit. Typically, you’ll need to provide some form of collateral, such as cash in your bank account, a car or property, to secure a secured loan, which could be used to cover your debt if you aren’t able to repay it.
While secured loans can be an excellent way to cover expenses, they aren’t right for everyone. Before you apply for a secured loan, it’s important to review your budget and assess whether you can afford to make the required monthly payments. If you’re unsure, consider seeking the advice of a credit counselor to review your finances and come up with a budget that suits you best.
Equipment Loans
Equipment is often one of the most expensive investments a business makes, and many entrepreneurs need to secure financing in order to purchase necessary equipment. However, equipment loans typically require a credit check, and those with poor or limited credit scores may have trouble qualifying for funding. Fortunately, there are several alternative lending options available that don’t rely on your credit score, including invoice factoring and ACH loans.
Rather than requiring collateral, these types of financing options allow businesses to sell their outstanding customer invoices in exchange for a cash advance. This allows them to avoid pledging valuable assets that may be at risk of theft or other issues, and it also reduces the amount of time they need to wait in order to receive the full value of their invoices. Invoice financing is usually a less risky option for those with limited or poor credit than traditional equipment loans, and some lenders, such as National Business Capital, offer this type of financing without the need for a credit check.
Whether you need to secure equipment financing with no credit check or are looking for other options, be sure to shop around and compare rates before choosing a lender. Keep in mind that those with excellent credit will likely qualify for the best interest rates, while those with poor credit will need to offer more security or a cosigner to receive approval.
Accounts Receivable Financing
Unlike traditional business loans, which require substantial collateral and a strong credit score to qualify for, accounts receivable financing does not. Instead, it relies on a business’s outstanding invoices as collateral and an assessment of its ability to pay off those invoices. For this reason, most lenders that offer this type of funding don’t even check a business owner’s credit.
Invoice factoring and ACH lending are similar to this form of financing. Both provide immediate cash to businesses based on the value of its outstanding invoices. However, these lenders may still examine a business’s credit to ensure that it is able to pay off the invoices that it receives.
Most small business owners that apply for this kind of financing are able to get approved because of their existing customer relationships and their capacity to grow the company. Additionally, most invoice financing providers are flexible in terms of what a business can use its funding for.
It’s important to compare available options and approval odds for dozens of different small business funding products. Doing so can help you determine what type of funding is best for your unique business needs and circumstances. You can find and compare available business loan products, along with your chances of being approved for them, through Nav’s free business funding platform. You can also learn more about the specifics of each product to see how they might fit in with your goals and requirements.small business loans with no credit check
