March 4, 2024

Many small business owners need financing to grow their companies. However, traditional business loans from banks and credit unions typically require a credit check, which may be out of reach for some. Some might not want to have their personal credit pulled because they know their score will likely disqualify them, while others simply don’t want to have lenders tarnish their report with multiple hard inquiries.

For these reasons and others, there are a few lending options that don’t check credit when making loans. These financing choices are considered alternative, or nontraditional, and often include nonprofit lenders, online lenders, community development financial institutions and other organizations. These alternatives are more likely to look at other factors than just credit scores when evaluating business loan applicants.

Unlike standard business loans, many of these alternative business financing options don’t have a minimum credit score requirement. Some of these lenders also provide a variety of loan products, including term loans, lines of credit and cash advances. Additionally, some of these lenders offer different terms for those with varying credit scores. For example, some lenders, like Accion Opportunity Fund and OnDeck, don’t consider a credit score in their underwriting process, while others, such as Bluevine and QuickBridge, have a 650 minimum credit score.

One of the most popular alternative business funding options is a line of credit, which is similar to a credit card. This type of financing provides access to revolving funds that you can use as needed up to a maximum limit, and the lender charges interest only on the amount you borrow. Compared to traditional business loans, lines of credit can have higher interest rates and may come with more fees.

Another option is a small business loan from a friend or family member, which can be more flexible than some of these other options and may not require a credit check. However, it’s important to remember that this can strain relationships and should only be used when necessary. Also, some of these financing sources will not report on-time payments to the commercial credit bureaus, so they can’t help your business build its own credit history.

In addition to these options, there are some government-backed programs that don’t have credit requirements and can help you get money quickly. Some of these include the Small Business Association’s (SBA) 7(a) program, which is available to startups, and the Microloan Program, which is open to established businesses. Additionally, some crowdfunding platforms allow you to raise funds through small contributions from members of your community, which can be a great way to get started with a new venture. Just be sure to research the different funding options to find what works best for you. Randa Kriss is a senior staff writer at Fundera, an online resource for small business owners that reviews financial products, software and services. She specializes in writing about small business finance, accounting, merchant services, credit cards, bank accounts and other topics. small business loans no credit check

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