While most traditional business loans require a credit check, there are some lending options that put less emphasis on the borrower’s personal or business credit. While these loans may have higher interest rates, they can be a good option for borrowers who want to avoid a hard inquiry on their personal or business credit reports or those with bad or no credit who need funds quickly. This article takes a look at some of the best no credit check loans for business and how to secure them.
Why Do Some Lenders Require a Credit Check?
Lenders typically check a borrower’s credit history because it gives them an indication of how likely the business owner is to repay their loan. The credit report also shows lenders if the borrower has been late with other bills and debts, which can have a negative impact on their score.
Even if a business owner has been late with payments or is working to improve their financial situation, the lender will still consider the business’s overall performance when making a lending decision. This is why many small businesses are able to get approved for funding even if their credit score is low.
What Are The Limitations of a No Credit Check Loan?
The most common type of no credit check loan is a line of credit. This type of financing is available from a wide variety of lenders and is often based on the amount of revenue or sales that the business generates on a regular basis. However, if you are looking for a more significant sum of money, this may not be the right financing option for you.
Other types of no credit check loans for business include invoice factoring and unsecured lines of credit. Invoice factoring is a financing solution that helps businesses that are waiting on payment from clients to make payroll or pay for other operational costs. This financing provider is usually only offered to those who have a relationship with a payment processing or ecommerce platform, such as PayPal, Shopify, or American Express.
Secured lines of credit are a different type of financing that allows for a larger lump sum of money. While this option does not require a credit check, it can be more difficult to qualify for than other loan options. This is because the lender will evaluate other aspects of the business, such as annual revenue and cash flow.
If you are seeking a no credit check loan for business and your current score is too low, try improving your score before applying. By paying your bills on time, you can slowly raise your score to the point where you will be eligible for most business financing options. If you are ready to apply for a business loan, be sure to compare different companies and choose the one that will provide the best funding opportunity for your unique circumstances.