No credit check business loans are an alternative financing option for small business owners who may need help qualifying for traditional bank loans due to poor credit history. Unlike conventional loans that require a credit check, no credit check business loans provide access to funds without a deep dive into a business owner's credit history.
This makes them an attractive option for business owners and entrepreneurs who have faced financial difficulties or are just starting and have yet to establish credit history.
Can I Get a Business Loan With No Credit Check?
Essentially, business loans with no credit review or no credit check business loans do exist, but don't expect a traditional business loan with traditional terms, interest rates and fees, as they may be less favorable than business financing where the credit score is reviewed.
The truth is most small traditional business loans require a credit review of the owner to be able to get access to the best small business loans for the business. Many business consultants are not aware that additional options are available in the business loan marketplace for small businesses.
Does a Working Capital Business Loans With No Credit Check Exist?
Working capital funding with no credit checks do exist, unlike personal loans with personal guarantee, but the product offerings are limited to short-term funding, business cash advance, and invoice factoring. It is an urban myth that you can get a credit card without personal or business credit and without the owner’s personal credit score being checked.
When searching for business loans with no credit check, many websites provide bad advice and misinformation to small businesses about what small business loans genuinely have no credit review. So it’s best practice to be careful and ask questions upfront of the lender or originator.
Reasons for Business Owners Not Wanting a Credit Check
There can be only two reasons why a business owner would be searching for a business funding with no credit check, including:
- Bad credit history.
- They were denied financing for all other small business loan products available in the marketplace.
- They are curious and want to explore all available business financing options.
Why Does a Small Business Lender Also Check Personal Credit?
Before we dive into both short-term loans, business cash advances, and other products, let’s discuss why business lenders check the personal credit score of the owner in the first place. Many business owners are surprised to know that when they apply for a small business loan, lenders want all of the information of the owner(s) so that they can pull the personal credit of the owner(s). The response by business owners is usually, “I was asking for a small business loan, not a personal loan. Why do you need to pull my credit as the owner? Why can’t you look at my business credit scores?”
The truth is the owner’s behavior in personal life when it comes to credit and paying bills is quite similar to the way they pay bills in their business life and with business credit. Since the business owner is the ultimate decider in what gets paid, it makes sense that looking at that business owner’s credit history says a lot about the owner of the business and the way they handle credit and bills. Bad credit will be a challenge.
1. Hard vs. Soft Credit Inquiry
Before considering options with no credit check, you may want to know that there are significant differences in the type of inquiries. There is now both a “soft credit pull” also known as "soft credit check" and a “hard credit pull.”
2. Hard Credit Pulls
Also known as a “hard inquiry,” hard credit pulls are when a lender requests a report from up to three different credit reporting agencies: Experian, Equifax, and TransUnion. By pulling three agencies, it is still considered only one credit pull. A hard inquiry can lower your score a couple of points, or it may have little to no impact. It is unlikely to play a significant role in any decision unless there are many hard pulls in a short time period. You do not have bad credit merely because of credit inquiries.
The impact of inquiries is commonly misunderstood. It is only an issue when an individual is applying for too many things at the same time. Hard pulls provide access to a more in-depth profile and allow lenders to take on greater risk because they receive a more detailed business history about the borrower.
3. Soft Credit Pulls
Also known as a “soft inquiry,” soft credit pulls are used by lenders when they decide to use one out of the three credit bureaus and provide less information (it excludes credit score) than that of a hard pull.
Soft credit pulls utilize just enough information to make a credit decision about the borrower yet offer financial protection as its not a "hard pull". FICO does not consider a soft pull inquiry the same as a hard pull, which would have no impact on credit scores on the credit report. Credit standards can be higher for lenders that use soft pulls and may lead to lower approvals for credit-impaired borrowers.
Best Business Loan Options
Some of the best business loan options to look out for are:
1. Bad Credit Business Loans
Bad credit small business loans provides a lump sum of money repaid over 3 to 12 months. The bad credit loans cost is either a factor rate or principal and interest rate and does cost more than other traditional small business loan options with a credit check. This is not a no credit check business loan, but does allow for bad credit. This is a secured loan against business assets.
Loan Amounts: $10,000 up to $100,000
Interest Rates: Factor rates between 1.18 to 1.48 of loan amount.
Terms: 3 to 12 months
Processing Times: one day
Credit Score: All types of FICO scores are considered, from bad credit to excellent. A loan with no hard pull credit check option is also available.
Loan Payments: Weekly or daily payments
*A business bank account with business bank statements is required for funding. Low annual revenue required
2. Business Cash Advance (Merchant Cash Advances)
Business Cash Advances (BCA) are revenue-based agreements that advance sales at a discount to a small business. The small business is responsible for paying back a payback amount known as a specified amount, which is higher than that of the advance for the company. The cost difference is called the “factor rate or fixed fee cost,” which is a fixed cost. These are not principal and interest costs.
For repayment of a business cash advance, a set percentage of future revenue called the specified percentage, is collected by a convenience ACH payment daily or weekly, deducted from the business's bank account. During repayment, reconciliation can occur. Suppose the ACH payments exceeded the set future percentage of monthly sales. In that case, the small business can request a refund for overpayment so that collected payments match the specified percentage of the revenue volumes. For a merchant cash advance, a fixed percentage of credit card processing is split from the batch for repayment, so the reconciliation feature does not apply.
Future sales can fluctuate, so the repayment term is flexible because the payback percentage constantly changes due to fluctuating revenue. This product is popular with businesses that cannot get a traditional loan, need working capital, or need a fast way to get funds. This financing option is not a loan but is considered an advance. Business Cash Advances are a popular tool with entrepreneurs in the service industry, such as restaurants.
Factor Rates: Ranges from 1.09% up to 1.45%
Repayment Terms: This is not a loan, so there are no time limits. Payments continue until paid in full based on the specified percentage collection method and are dependent on future revenues.
Fees: Origination fees that range 0% to 5%
Payment: Weekly or daily Monday-Friday fixed ACH
Credit Score: All types considered from bad credit to excellent credit score. No credit check options also available.
*Low annual revenue and monthly revenue required
3. Invoice Financing
“Invoice Factoring,” also called “Invoice Financing,” is a purchase of invoices from an insurer at a discount at the time of issuance. This accelerates the payment of the invoice by the issuer improving cash flow.
This type of small business advance of funds lets you, as the owner, finance purchase orders or outstanding invoices. The invoice factoring companies will purchase a contractual amount of newly issued invoices from the issuer and because they now own the invoice, assume collection from the customer directly instead of the initial issuer.
Because of this process, the credit evaluation is based on the business owner’s customer’s track record of paying the invoices, not the owner, so a check from the owner is not needed.
Fees: 1.5% to 2.75%
Time Frame: Once approved, invoices can be advanced daily.
Processing Times: It can take a couple of days to approve and start getting advances from invoices.
Credit Score: No credit score required as business owners credit is not evaluated.
Frequently Asked Questions
Can I get a small business loan with a 500 credit score?
Yes, some programs offer funding for businesses with credit score of 500 or less in some circumstances.
Can I get a Business loan with no credit score? Do they check credit for a business loan?
A Business loan or business line of credit from traditional lenders requires credit review. A minimum credit score is required. There is alternative financing available with no credit review, but your cash flow will be evaluated.
Do online Lenders like Bluevine, Paypal working capital, and Fundbox offer financing options with no credit check?
Alternative lenders such as Bluevine, Paypal business loan, Paypal working capital loan, American Express Business Loan and Fundbox do not offer any credit check loans.
Can I get a bad credit business loan with no collateral?
Yes, there are business funding options for business owners with bad credit and bad credit scores from alternative lenders.
Do SBA loans require a credit check?
Yes, the Small Business Administration loans require credit review. A poor credit score will not be acceptable. A great credit score is needed.
Does Equipment financing require Credit Review?
Equipment financing will require credit review, but bad credit may be acceptable from an alternative lender.
Can I get a business credit cards with no credit review?
You must have good credit to get a business credit card.
Advice on No Credit Check Small Business Financing
We strongly recommend choosing small business loan products with the best terms over something that may seem easier with less information to disclose. Don’t let anyone convince you that something that is “easy” is necessarily better. As in any shopping or search, evaluate your eligibility and investigate all options for financing your business before making final decisions.
Start With This Online Form
Applying for a loan with AdvancePoint Capital is as easy as one, two, three. Start with this online form, including your email address, fill out the short application page, wait a few hours for your loan approval, and then get your money!
AdvancePoint Capital offers an easy small business loan experience. Our customers love the fast, streamlined process and high approval rates that come from working with us.
*Advancepoint is not affiliated with Paypal working capital or Fundbox