Whether you’re a new business owner or started your business awhile ago, business loans are an essential part of financing your company. But business loans can be difficult to acquire, especially if you’re a new entrepreneur.
Acquiring a business loan is more difficult if you have a bad credit score. Most startups have no business credit. And lenders also check your personal credit score, which is problematic if your score is less than perfect.
Fortunately, you have another loan option: alternatives to no credit check business loans. If you need funding or quick capital, here’s your guide to business loans without a credit check.
What Alternatives to No Credit Check Business Loans are available?
No credit check business loan alternatives are short-term financing options that don’t conduct a full business or personal credit check.
These loans are ideal for business owners with bad credit or want a quick financing option.
The application process is quick and you’ll receive your funds in a short amount of time. Your application is typically approved only in a few hours.
Because of the fast turnaround, you receive funds in as little as a day after you submit your application.
The repayment terms are also flexible, offering both variable and fixed repayment options.
But this depends on the type of loan and the lender. Some lenders require you pay every week or every month. Some require a percentage of your sales charges.
Keep in mind, you don’t get these loans from a typical lender or a bank. You receive alternatives to no credit check business loans from an online lender.
You also have flexibility when it comes to the specific loan type. Loans such as merchant cash advances and AR financing have no credit check (lighter than normal) options.
Qualifications depend on the type of business you own and the type of loan you want.
These qualifications include the size of the company, company assets, receivables and credit card sales. For startups, private lenders typically have few qualifications.
Who Benefits From These Loans?
Every business owner can benefit from an alternative to a no credit check business loan, but certain business owners will benefit more than others. Here are the major people who can benefit from these business loans:
- Business owners who don’t want a hard credit inquiry on their credit report
- Business owners with bad credit (personal or business credit)
- Business owners who need a quick loan
Business owners usually look to loans similar to no credit check business loans for specific reasons. These include:
- Covering working capital expenses
- Slow business months
- Growing businesses needing refinancing
- Inventory or equipment investments
- Startups that need capital
If a business is starting up, a hard credit check can damage your credit score.
The main factor that determines the best option besides no credit check business loans is not the business owner, but the type of business loan.
For example, startups shouldn’t sign up for a loan that relies on sales for repayment, such as merchant cash advances.
They will benefit more from flexible loan options such as a small business line of credit and even crowdfunding options.
Types of Business Loans like those with No Credit Check
If no credit check business loans are intriguing you, you have a variety of options. These loans still require a credit check but have their own terms and qualifications.
You can review these loan types and decide which one is right for your organization.
Small Business Line of Credit
This is a business credit line with funds between 100k and 250k. These are similar to a business credit card; you start with $0 and use the funds up to your limit.
You only have to repay what you use. Keep in mind, most business line of credits don’t have a no credit check option.
Invoice Financing (or Accounts Receivable Financing)
This is when a financing company advances a payment equal to your invoices. You repay the loan over a specific period of time as a specific rate. Since this loan option is based on assets, your personal or business credit score isn’t required.
This is similar to invoice financing, but you actually sell your invoices to a factoring company at a reduced rate. You’ll receive this payment in two installments. This helps avoid repayment while still receiving funds.
Purchase Order (PO) Financing
A PO is a lump sum used to spend on goods and supplies that are then sold to customers.
You receive this money before your sale so you can fulfill larger orders. This loan option is ideal for distributors, wholesalers, resellers, importers/exporters, and outsourced manufacturers.
Revenue Based Financing
This loan’s repayments terms are based on a percentage of a company’s revenue.
Businesses pledge to use this percentage to pay off their full loan, regardless of the specified time limit. Because repayment is based on your revenue, this loan is ideal for higher profit companies and not startups.
Merchant Cash Advance
This is a lump loan sum given to a business and repayment terms are based on a percentage of their daily credit card sales.
These payments are made until the loan is fully paid off. Since sales are required for repayment, this loan option isn’t ideal for startups.
No Credit Check Crowdfunding
Crowdfunding technically isn’t a loan. This is a way to raise money for your company, product, or service. You can use crowdfunding websites to raise money and set a goal amount. If you reach that goal, you keep the money.
Time to Get a Business Loan
All business owners will benefit from alternatives to no credit check business loans.
You have flexible loan options and your personal credit isn’t affected. The application process is quick and you can receive your funds the day after your application is approved.
There are different loan options that work best for different business owners. Do your research and know which option besides no credit check business loan works for you.
Are you looking for a loan without a credit check? Take a look at our bad credit loan options.