Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Jordan Tarver has spent several years writing and editing for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor’s degree in business finance and his personal experience to simplify complex financial topics. Jordan’s promise is actionable advice that’s easy to understand.
Jordan Tarver has spent several years writing and editing for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor’s degree in business finance and his personal experience to simplify complex financial topics. Jordan’s promise is actionable advice that’s easy to understand.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Securing financing for your business can be a struggle, especially if you have limited credit. Small business owners with poor personal credit may be left wondering whether it’s possible to get a business loan with no credit check.
While most business loans require credit checks, there are some lenders that don’t review your personal or business credit reports. Compare the best business loans with no credit check below.
Best Business Loans With No Credit Check of February 2024
BEST FOR INVOICE FACTORING
FundThrough
Learn More
From participating partners via businessloans.com’s website.
Why We Picked It
FundThrough offers invoice factoring without a credit check. Loans can extend up to $10 million, and the lender offers funding speeds that reportedly are 97% faster than other invoice factoring companies. Factoring rates range from 2.5% to 5% and there are no additional financing fees. That said, borrowers may encounter additional fees for early invoice payments and same-day funding.
Pros & Cons
- Funding speeds 97% faster than competitors
- Offers next-day funding
- No financing fees
- Fees apply for early invoice payments
- Invoices must be less than 90 days old to qualify
- Same-day funding requires an additional fee
Details
Eligibility: Rather than requiring a credit check to determine eligibility, FundThrough reviews the applicant’s business bank account and accounting software to evaluate cash flow. This information also informs the funding limit a borrower qualifies for. Invoices must be less than 90 days old to be eligible.
Turnaround time: FundThrough offers next-day funding. However, borrowers can pay an additional fee for same-day funding.
BEST FOR SQUARE SELLERS
Square Loans
Learn More
From participating partners via businessloans.com’s website.
Why We Picked It
Square Loans is Square’s financing arm that offers loans from $300 to $250,000. Loans are only available to eligible Square sellers, but the application process is reportedly simple and lending decisions do not require a credit check.
There are no interest rates, but borrowers are charged a fixed fee that is based on the loan amount. That said, Square Loans does not publish its fees online. Loans are repaid out of the business’ daily sales and the balance must be repaid within 18 months of disbursement.
Pros & Cons
- Personal guarantee not required
- No late fees or other additional fees
- Application process is reportedly streamlined
- Maximum borrowing amounts are low
- Does not publish fixed fees
- Daily payments reduce ongoing cash flow
Details
Eligibility: Similar to other payment processors that offer business loans, businesses must have processed at least $10,000 with Square over the last year to be eligible for Square Loans. Eligibility is also based on other business factors, including the company’s account history, payment processing volume and payment frequency.
Turnaround time: Square Loans offers funding as soon as the next business day.
BEST FOR PAYPAL USERS
PayPal Working Capital Loan
APR range
None; charges one-time fixed fee
Learn More
From participating partners via businessloans.com’s website.
None; charges one-time fixed fee
Why We Picked It
PayPal’s working capital loans are exclusively available to eligible PayPal users. This simplifies the application and approval process because PayPal already has access to the business’ accounts and other financial information. Loan amounts go up to $150,000 for first-time borrowers and are available for up to $200,000 for subsequent loans.
Rather than an interest rate, borrowers are charged a fixed fee based on the loan amount, repayment percentage and the business’ PayPal account history. Borrowers must pay at least 5% or 10% of the loan balance every 90 days to remain in good standing—but no payments are due on days without sales.
The application is straightforward and entirely online with no credit check.
Pros & Cons
- Single fixed fee determined by several factors
- Automatic repayments based on daily sales
- No payment due on days without sales
- Borrowers must use PayPal to accept customer payments
- Does not disclose fees online
- Repayment begins 72 hours after funding
Details
Eligibility: To be eligible for a PayPal Working Capital loan, applicants must have a PayPal business or premier account for at least 90 days. The business must process at least $20,000 in annual PayPal sales with a premier account or $15,000 with a business account. Any existing PayPal Working Capital loans must be paid off.
Turnaround time: PayPal reports that its working capital loans are funded within minutes of approval.
BEST FOR CROWDFUNDING
Kiva
Learn More
From participating partners via businessloans.com’s website.
Why We Picked It
Kiva is a microlender that offers a unique crowdfunding platform for a wide variety of prospective borrowers. Compared to traditional financing, Kiva utilizes your personal network and its own network of 1.6 million investor lenders to crowdfund loans up to $15,000 with terms up to 36 months.
Business owners who apply directly through Kiva’s website may receive 0% interest. Kiva refers to these as Direct Loans, which are only available to businesses in the U.S. and social enterprises internationally. However, if a prospective borrower applies through a Kiva Field Partner—local organizations working in communities to vet borrowers, provide services and administer loans—they will likely pay interest to the partner in some form, which varies by partner.
Loan funds are distributed and repaid through PayPal or Kiva’s Field Partners.
Pros & Cons
- No minimum credit score requirement
- Does not require cash flow documents
- Requires no collateral
- Maximum loan amounts of $15,000
- All loans are crowdfunded
- Long funding times
Details
Eligibility: Because Kiva uses a crowdfunding method, it’s able to offer less stringent qualification requirements. Although Kiva loans don’t require a minimum credit score, years of cash flow documents or collateral, borrowers are vetted or endorsed by either a local Field Partner, Trustee or members of the community.
Turnaround time: After you submit your application, a Kiva representative will get back to you within 10 to 15 business days. Kiva suggests that “submitting a great photo and business story will help your application make it through the review process more quickly.”
Once you’re approved for fundraising, you have 15 days to raise funds from your own network, and then 30 days to publicly fundraise with Kiva’s network of lenders.
Summary: Best No Credit Check Business Loans of 2024
Tips for Comparing Business Loans With No Credit Check
Use these tips to compare business loans with no credit check requirements:
- Pay attention to a lender’s eligibility criteria. Knowing each lender’s requirements is essential when you’re making a list of potential business loans for your company. You’ll want to avoid loans that feature a minimum credit score requirement if you’re hoping to secure financing without a credit check.
- Make note of all costs. It’s important to tally up the cost of interest, origination fees and any other fees that you might have to pay when you take out a business loan. Because no-credit-check loan options tend to be more expensive, calculating the cost of financing upfront is essential. You should understand both your monthly payment and the overall loan cost when deciding whether a business loan is right for you.
- Get preapproved. Some lenders allow you to prequalify for a business loan—often with only a soft credit inquiry that won’t hurt your credit score. If a lender you’re interested in has a preapproval process, you can enter some basic business information to get a loan and interest rate estimate if you’re eligible for financing.
Methodology
We reviewed lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders that require no credit checks based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 25%
- Customer experience: 20%
- Eligibility and accessibility: 10%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.
What Are No Credit Check Business Loans?
A business loan with no credit check comes from a lender who doesn’t check your credit report—either your personal credit, your business credit, or both. Finding a lender that doesn’t consider your credit can be tough, but it is possible.
To find one of these loans, you may need to spend more time researching lenders and your loan options. Lenders that offer alternative funding options, such as merchant cash advances or invoice factoring, may be your best option for a business loan with no credit check.
Nonetheless, these alternatives can be more expensive and difficult to understand, making them risky for many business owners. If you decide to accept one of these loans, be sure to fully understand the costs associated with it.
Types of Business Loans That Don’t Require Credit Checks
If you want to avoid a credit check, you may need to look beyond standard business loans and consider alternative business financing solutions. This could include financing like:
Pros and Cons of No Credit Check Business Loans
As with any type of financing, there are benefits and drawbacks you should go over if you’re thinking about applying for a business loan with no credit check.
Can You Get a Business Loan With No Credit Check?
Whether you have bad credit or no credit, you might be intrigued by the idea of applying for a business loan that doesn’t require a credit check. However, trying to find a lender that offers this type of business loan can be difficult.
There are business loans for borrowers with bad credit, and perhaps some financing options with no credit check. However, it’s important to proceed with caution and check the cost of such options and the lender’s reputation.
Business lenders that don’t rely as heavily on credit for approval often charge high interest rates and excessive fees in exchange for the flexible approval criteria.
Find the Best Small Business Loans of 2024
Where To Get a Business Loan With No Credit
Starting a business is an exciting endeavor but can also be financially challenging, especially if you don’t have a credit history. Traditional banks may not be an option, but alternative funding sources exist. Lenders where you can get a business loan with no credit check include:
- Online lenders. There are online platforms that provide accessible and relatively quick business loans without requiring a credit check. They typically have a straightforward application process and flexible terms.
- Microlenders. These are nonprofit organizations offering small loans to startup businesses and entrepreneurs. They generally have more lenient credit requirements and offer business planning and training support.
- Crowdfunding platforms. Crowdfunding platforms are online fundraising sites where you can raise money for your business from a large number of people, often in exchange for rewards or equity.
- Merchant cash advance companies. These firms provide a lump sum of cash in exchange for a portion of future sales. They typically don’t require a credit check, making them an option for businesses with poor or no credit.
How To Get a Business Loan With No Credit Check
It can be difficult to get a business loan without a credit check, but there are ways to receive one. Consider these methods to get funding without a credit check:
- Alternative financing options
- Your current bank may offer financing with no credit check
- A payment processor that offers business loans based on sales history
- Crowdfunding or other non-debt fundraising
- Personal savings or a loan from family and friends
Alternatives to No-credit-check Business Loans
If you can’t qualify for a traditional business loan due to your credit and you don’t want to pursue no-credit-check options, consider alternative solutions.
Friends and Family
Crowdfunding
Small Business Grants
Frequently Asked Questions (FAQs)
Do SBA loans require a credit check?
U.S Small Business Administration (SBA) loans can be an attractive and affordable source of business capital. However, the qualification standards for SBA loans can be strict, including the minimum credit criteria.
Some SBA lenders may require a minimum FICO score of 680 and a minimum FICO Small Business Scoring Service (SBSS) score of 160 to qualify for certain SBA loans. FICO SBSS scores are based on a hybrid of information found on your personal and business credit reports.
Do business loans require credit checks?
Most lenders perform a credit check when you apply for a business loan. In some cases, the credit check process might include a review of both personal and business credit reports and scores. Some lenders, like those on our list, require no credit checks.
Reviewing credit information helps lenders predict the risk that an applicant will default on a credit obligation in the near future, such as the next 24 months. If your credit risk is high, the lender might deny your application or charge you a higher interest rate to offset the added possibility of repayment problems.
Can I get a business loan with a 500 credit score?
Obtaining a business loan with a 500 credit score is possible, but it might limit your options. Online lenders, microlenders and merchant cash advance companies often have more relaxed credit requirements than traditional financial institutions. However, these loans may come with higher interest rates or strict terms.
Can I get a business loan without using my credit score?
If you want business financing that doesn’t require a personal credit check, you’ll need to search for business loans that do not require a personal guarantee. This can be a challenge since many lenders view small businesses as an extension of their owners.
You may also need to build good business credit to qualify for certain loan options without using your personal credit score.
Are no credit check loans a bad idea?
No credit check loans can be a bad idea, but it depends on the lender and the terms and conditions of the loan. Before accepting a loan, be sure to fully understand how the loan will be repaid and any costs associated with it. No credit check loans are often very costly and may be limited to smaller amounts of funding.
Do no credit check loans affect your credit score?
Your credit score won’t be affected when you apply for a business loan if the lender doesn’t perform a hard credit inquiry. However, if you default on that loan, a lender or a debt collector can still report your late payment to the credit bureaus if you’ve signed a personal guarantee for the loan. This can cause significant damage to your credit score.
Next Up In Business Loans
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Credit: Source link
