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A business is a for-profit entity that sells goods or services. It may be small with a limited operations or large enterprises that operate across multiple industries.
Some lenders focus on collateral, capital, character, and other criteria instead of checking a business credit score. Here are some of the best no-credit-check business loan options.
Collateral-Based Loans
While most lenders will still perform credit checks when offering business loans, there are a few loan types that don’t. This is because these financing options offer less risk for the lender by requiring some form of collateral. Collateral can be anything from real estate to equipment to accounts receivable and inventory. When a business is willing to put up these items as security for a loan, the lender can usually get more favorable terms and lower interest rates.
The best part about collateral-based business loans is that they can be used to fund a variety of business objectives. These loans can help start-ups and small companies that lack a long credit history, or those who need to make immediate purchases like expanding into new markets or upgrading the office LAN. Collateral-based loans can also provide a boost in working capital for established businesses that need to smooth out cash flow or fund payroll until new invoices come in.
To find a lender that offers these types of loans, try Lendio or National Business Capital, two popular online business loan marketplaces. They allow you to prequalify without affecting your credit, so you can explore the various options without worrying about a credit inquiry. Just be sure to check out the repayment plan, interest rates and fees for each option before deciding on one.
Lines of Credit
If you’re looking for business loans that don’t require credit checks, you’ll want to focus on alternative lending marketplaces. These lenders will often require higher revenue and will have a more difficult time assessing your financial situation, but they can offer lower interest rates than traditional lenders. One example is National Business Capital, which offers lines of credit with up to $75,000 and requires a minimum of $100,000 in revenue.
You can also find financing options that aren’t based on your personal or business credit, such as invoice factoring and ACH loans. These loans will still review your credit score, but they will rely less on your personal or business credit scores and more on other aspects of your company, such as your annual revenue, cash flow, and the number of years your business has been in operation.
You can even find some lenders that will provide a line of credit to new businesses with as little as 560 credit. These lenders may use a soft credit inquiry for pre-approval and a hard inquiry at the time of funding, which doesn’t impact your personal or business credit score. This type of financing is expensive and risky for lenders, however, so it’s typically reserved for the most established companies. It’s best to use these lines of credit sparingly and only when you need it.
Asset Backed Loans
You might be able to get a business loan without a credit check from a nonprofit organization like Kiva, which offers loans with 0% interest. Or you could apply for an asset-based line of credit through an online lender, such as National Business Capital or Lendio. These lenders evaluate assets like inventory, accounts receivable and equipment instead of a borrower’s credit history and can offer flexible financing solutions, including term loans and lines of credit. They also typically offer lower interest rates than conventional business loans because the collateral mitigates some of the risk for the lender.
Many business loans no credit check lenders require a down payment or equity stake in the company in exchange for funds, but not all do. Lendio, for example, matches businesses with lenders who will offer a line of credit, merchant cash advance or invoice factoring. This can be a good option for entrepreneurs with bad credit.
But be careful if a lender claims to offer guaranteed startup business loans no credit check, as these can have high fees and rates that can make them difficult for small businesses to afford. Look for a lender that evaluates the five C’s of a borrower, which includes capacity, capital, character, collateral and conditions.
Bad Credit Loans
Those with bad credit often have fewer options for small business financing, as most lenders run a credit check to determine eligibility. That being said, there are still a few lenders that offer bad credit loans to small businesses.
These lenders typically look at more than just a borrower’s personal credit, and may also review business data, such as revenue and current accounts receivable. This can help them assess whether or not a borrower will be able to make the necessary payments, even if their personal credit isn’t strong.
Additionally, some lenders may also require a business owner to provide documentation that proves they can meet the payment terms of their loan. This can include business tax returns, bank statements and financial projections.
Some lenders that offer bad credit business loans no credit check may have different requirements than others, and it’s important to carefully research each lender before applying. Be sure to compare rates and terms and understand how each lender will evaluate your application.
Finally, it’s important to note that a few lending companies will advertise guaranteed startup business loans no credit check, but this should raise red flags. These types of loans are often predatory and come with high interest rates, fees, short repayment terms and other penalties that make them very difficult to pay off.