A small business loan can help you grow your company or purchase additional equipment, but many lending options require a credit check. If you have bad credit or don’t want to tarnish your business credit report with multiple inquiries, there are other funding options available.
Traditional business loans from a bank or online lender require a credit score to determine your eligibility. However, there are also funding options that focus on where your company is going rather than its past financial history. Some of these funding sources include microloans and peer-to-peer lending.
A microloan is a small amount of money that’s typically offered by a nonprofit to new or disadvantaged businesses. These loans often don’t require a credit check or charge low interest rates. Peer-to-peer lending allows you to borrow money from individuals who have invested in your business. While this type of financing isn’t usually as fast as a traditional loan, it can be an effective alternative if you have bad credit or don’t want your credit to be pulled by multiple lenders.
Some of these financing options require collateral, such as your business’s inventory or accounts receivable. Other requirements may be more stringent, such as a minimum monthly sales volume or a certain number of months in business. You can find out more about these types of loans and their specific terms by researching each lender’s website.
While personal loans don’t require a credit check, most small business loans are based on your business’s history and its owner’s personal credit. This means that if you have poor credit, you’re less likely to qualify for a business loan and may be required to provide collateral or sign a personal guarantee. There are some alternatives that can help you build up your business credit without a credit check, such as a secured business line of credit or merchant cash advance.
Many merchant services and payment processing companies have started to expand into the lending industry, offering loans for small business owners with bad credit. These options usually don’t require a credit check, but they can be difficult for startups to secure. Many of these providers also require that you use a supported accounting software, such as QuickBooks, FreshBooks or Xero, to apply.
Many of these lenders offer fixed fees, such as a transaction fee or monthly servicing fee, which are charged to maintain and process your loan. Others may have origination or closing costs, such as loan-packaging fees, appraisals or recording fees. You can find out more about these terms and costs by comparing each lender’s website. In addition, you should also consider how much of the debt you’re willing to take on. This will impact your repayment schedule and the total amount of interest you’ll pay. For example, some lenders have a maximum amount that you can borrow based on your business revenue or total annual expenses. Using our loan calculator can help you estimate how much you can borrow before applying for financing. small business loans with no credit check
