Can I Get a Small Business Loan With No Credit Check?
The truth is most small business loan products require a credit check of the owner to be able to get access to loans for the business. Many small business consultants are not aware that additional options are available in the small business loan marketplace. Essentially, a business loan with no credit check.
Some short-term small business loans are available that do not require a credit check, but they are few and far between. Additionally, invoice factoring does not look at the owner’s credit for businesses looking for an advance from the invoices they produce for clients.
Does a Working Capital Business Loan With No Credit Check Exist? What Are My Small Business Loan Options?
Working capital small business loans with no credit checks do exist, but the product lines are limited to short-term business loans, 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 credit being checked.
When searching for a business loan with no credit check, many websites provide bad advice and misinformation about what business loans genuinely have no credit check. So it’s best practice to be careful and ask questions upfront of the lender or originator. Determine if a loan with no credit check is right for you and your business.
What Are the Reasons for a Corporation, LLC, or Sole Proprietors Not Wanting a Credit Check?
There can be only two reasons why a small business owner would be searching for a small business loan with no credit check, including:
- 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 funding options.
Why Does a Small Business Lender Check Personal Credit and Not Just Business?
Before we dive into both short-term loans, business cash advances, and other products, let’s discuss why small 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?”
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.
Hard vs. Soft Credit Inquiries
Before considering options for small business loans 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” and a “hard credit pull.”
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.
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 credit check lenders to take on greater risk because they receive a more detailed business history about the borrower.
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. 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 Loans With No Credit Check
Short Term Business Loan With No Credit Check
A short-term business loan with no credit check provides a lump sum of money repaid over three to 12 months. The 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. AdvancePoint Capital has access to a loan with no credit check and can assist you in acquiring this type of financing.
Loan Amounts: $10,000 up to $100,000
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 to excellent. A loan with no credit check option is available.
Business Cash Advance (Merchant Cash Advance)
Business Cash Advances (BCA) are also known as the purchase of future sales agreements that advance future sales at a discount to a small business. The small business is responsible for paying back a fixed payback known as a specified amount, which is higher than that of the advance for the company. This difference between the advance amount and the payback amount is called the “factor rate or cost,” which is a fixed cost. These are not principal and interest costs.
The advance is repaid by taking a fixed percentage of future overall deposits, called the specified percentage. The payments are collected by an ACH set daily or weekly payment deducted from a bank account based on the specified percentage of future sales. At the end of every month, reconciliation can occur. Suppose the fixed costs taken out of the account monthly are more than the set future percentage of monthly sales. In that case, the small business can request a refund for overpayment so that the set specified percentage of sales collected matches the revenue volumes. Repayment continues until the payback amount is paid back in full.
There is no time limit with advances, as the fixed 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 with no credit check 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 to excellent. No credit check options available.
“Invoice Factoring,” also known as “Accounts Receivable Financing,” is a type of financing that allows small business owners to get cash quickly from invoices that they would otherwise be waiting to receive payment from for 30, 60, or 90 days.
This type of small business advance of funds lets you, as the owner, finance purchase orders or outstanding invoices. A finance company will advance a set amount of the unpaid invoice to the owner and then collect directly from the client or customer for the unpaid portion.
Because of this process, the credit evaluation is based on the business owner’s customer’s track record of paying the invoices, not the business owner, so a check of the business 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 check options available.
Frequently Asked Questions
Can I get a small business loan with a 500 credit score?
Yes, some programs offer funding for businesses with credit scores of 500 or less in some circumstances.
Can I get access to a Business Line of Credit with no credit check?
We are not aware of a business line of credit with no credit check.
Do online Lenders like Bluevine, Paypal working capital, Kiva, and Fundbox offer business funding with no credit check?
Bluevine, Paypal working capital, Kiva, and Fundbox do not offer any credit check loans for business funding.
Do online business marketplace Lendio and Fundera offer no credit check options?
Lendio offers no credit check options, neither does Fundera.
How can I get a business loan with bad credit and no collateral?
The only time a business should choose a loan with no credit check is when they cannot get approved through a traditional small business loan. You will end up paying more money with less agreeable terms.
Can I get a business start-up loan with bad credit?
It will be challenging to get business startup capital with bad credit for a new business venture. We suggest crowdfunding as an alternative option.
Can I get Business Lines of Credit or credit cards with no credit check?
The short answer is no. Even a loan with no credit check is difficult but not impossible to find.
Advice, Tips, and Warnings About No Credit Check 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.
AdvancePoint Capital is ready, able, and available to help you access all products available in the business funding marketplace and assist in the application process, including business financials.
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.
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