When looking for small business loans, many entrepreneurs with poor credit or no credit look into alternatives to traditional financing. These include unsecured business loans, invoice financing and business lines of credit. Although these alternative loans typically have higher costs, they may be an option for those who need funding quickly. However, borrowers should be aware of the risks and limitations that come with no credit check business loans.
Business loans without a credit check are rare. However, some online lenders offer no credit check small business loans to borrowers that meet certain criteria. Most of these lenders require a personal guarantee from the borrower, and some will verify bank statements and financial documents. Some will also ask borrowers to provide a detailed business plan and other documentation.
No-credit-check business loans are usually offered by online lenders that specialize in providing small business funding to bad credit borrowers. They often have easier applications and more lenient credit requirements than traditional business lenders. In addition, they often do not perform a hard inquiry on a consumer credit report when evaluating loan applicants, so the impact on a borrower’s credit scores is minimal.
Another way to find no credit check business loans is by searching for loans on crowdfunding platforms like Kiva and Mainvest. These platforms allow family and friends to invest in a business, with investors receiving a fixed percentage of the company’s revenue each quarter until it is paid off. In some cases, the lender will also make a soft credit pull to ensure that the borrower can afford to repay the loan.
Other types of no-credit-check business loans are offered by peer-to-peer lending sites like Lending Club and Prosper. These sites allow borrowers to list their business needs, and potential lenders will bid on the opportunity to fund the loan. In some cases, a borrower can negotiate with a lender to receive a lower interest rate or other terms.
While no-credit-check business loans are an option for some borrowers, they should be viewed as a last resort for those with poor or no credit. Borrowers with strong credit should seek out financing from traditional lenders, which offer a wide range of products and typically have more flexible application requirements than alternative business lenders.
Business owners with poor or no credit should focus on building up their business’s cash flow and establishing good payment habits to increase the likelihood of qualifying for a business loan in the future. They should also consider the costs and terms of any alternative business financing options that they pursue. For example, an ACH loan or invoice factoring may be more affordable for those with bad credit than a merchant cash advance.