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Is it possible to get a business loan with an EIN only? Yes, but it can be difficult unless the business has been around for a long time.

Lenders like to use a variety of factors to determine whether a borrower is a good candidate for a small business loan. When those factors are restricted to only a business’s financial history, it makes it harder to determine whether the applicant is a good investment. However, it is possible.

Below, we discuss how to apply for a startup business loan using an EIN and why you may want to consider doing so, as well as what you can do if your application is denied.

What Is an EIN?

EIN stands for “employer identification number.” It’s a nine-digit number assigned to businesses by the IRS. Contrary to popular belief, you don’t need to have employees to obtain an EIN.

There are a few reasons why you may want an EIN:

1.   It makes filing taxes easier.

2.   It enables business owners to open a business bank account.

3.   It helps business owners get a business credit card.

It is possible to apply for a business loan with an EIN, but to improve your odds you’ll want to ensure your business has a financial history. You can begin compiling this long before your company is ready to make its first sale.

Does Your Business Have an EIN?

Unless you have specifically applied for an EIN, it’s unlikely your business has one. To get an EIN, you will need to submit an application through the IRS. If you have lost your EIN and can’t find the appropriate paperwork, you may be able to contact the IRS directly and obtain it. Most importantly, your EIN is a nine-digit number that is different from your SSN.

Can You Get a Small Business Loan With Only an EIN?

Obtaining a small business loan with only an EIN is possible, but it often requires more than just the EIN to secure financing. The EIN, issued by the IRS, is primarily used for tax purposes and identifies a business entity. While it is an essential piece of information for loan applications, lenders typically require additional documentation and criteria to approve a loan.

In addition to an EIN, lenders will look at:

•  The business’s credit history: A strong personal credit score can provide assurance to lenders about the borrower’s ability to repay the loan. In the absence of an established business credit history, personal credit becomes even more critical.

•  Business financial statements: This includes profit and loss statements, balance sheets, and cash flow statements. These documents help lenders assess the financial health of the business and its ability to repay the loan.

•  A business plan: A comprehensive business plan may also be required to demonstrate the company’s strategy for growth and its potential for generating revenue.

•  Collateral to secure the loan: Collateral can be business assets like equipment, inventory, or real estate. This provides security for the lender, reducing their risk in case the business fails to repay the loan.

While it is theoretically possible to get an EIN-only business loan, the reality is that additional factors, such as credit history, financial documentation, and possibly collateral, play a much larger role in the approval process.

Recommended: 15 Types of Business Loans to Consider

How to Apply for a Startup Business Loan Using an EIN Number

Applying for small business loans with only an EIN can be done, but it does take time to establish a business credit history. To improve your odds, follow the steps below:

1.   Apply for an EIN.

2.   Open a business bank account.

3.   Apply for a business credit card with your EIN.

4.   Make all payments to vendors and credit accounts through your business bank account. Ask vendors to report your on-time payments to Dun & Bradstreet, Experian®, and Equifax®.

5.   Check on your business’s credit score.

6.   Once your business has an established credit score, apply for startup business loans using your EIN number.

What Lenders Look for Beyond Your EIN

Lenders are always concerned with a borrower’s ability to pay back a loan. An EIN alone provides no information about creditworthiness, so lenders generally look at other aspects to see if a loan to your business might pose a credit risk.

Business Revenue and Cash Flow

Financial documentation that features monthly and annual revenue is key, especially in the absence of a business credit score. Revenue and cash flow figures show how much money your business can afford to borrow. Cash flow statements reveal a company’s level of liquidity, which in turn indicates how easily a business could make payments on a potential loan.

Time in Business

Owners of established businesses are likely to have more financial experience than people running startups or other new firms. If a company has a track record of surviving economic cycles and unexpected setbacks, lenders are prone to believe it’s resilient and likely to repay its debt.

Industry Risk Level

Some industries are less sensitive to economic disruption because they provide goods or services people can’t do without. Examples include health care, car repair, education, and child care. If your business is in a luxury sector (such as travel, hotels, retail, or fashion), its revenues could suffer if the economy enters a downturn. Lenders are likely to consider the level of risk in your industry when deciding whether to approve your loan.

Why Should You Use EIN Over SSN?

Startup business loans using only an EIN number have a few benefits:

•  Personal credit history may not be a factor.

•  Borrowers who don’t have an SSN can still apply for a business loan.

•  The application process may be easier.

However, before you decide to rely solely on your EIN, using your SSN also has some benefits you may want to consider:

•  Your personal credit score may improve loan terms.

•  More financing options may be made available.

•  Eligibility requirements may not be as difficult to reach.

Types of Loans Available With an EIN

Because some borrowers that use only an EIN may seem to be more of a gamble for lenders, it’s not uncommon for lenders to opt for loans that pose less of a risk.

The top business loans for 2025 for borrowers applying only with an EIN are:

•  Equipment loans: Equipment loans are secured with the equipment itself, which lowers the risk to the lender. However, lenders may still impose a cap on how much they are willing to loan to borrowers applying only with an EIN. The good thing about equipment financing is that the loan term often mirrors the equipment’s useful life.

•  Invoice financing: The invoice financing method uses unpaid customer invoices as collateral to secure a business loan. Once customers pay up, full repayment of the loan is expected.

•  Invoice factoring: This approach involves selling unpaid invoices to a third party at a discount. That company collects payment on your behalf. Once they receive payment, they forward any remaining amount to you minus any fees.

•  Merchant cash advances: With a merchant cash advance, borrowers receive a lump sum of cash from a lender. Instead of making monthly payments, a small percentage of each credit card sale is automatically sent to the lender. Neither monthly payments nor collateral is required since payment is guaranteed through sales.

Will My Loan Be Limited?

While it’s certainly possible to use an EIN to get a loan, keep in mind that lenders use things like personal information, personal guarantees, and collateral to help protect themselves from lending to subprime borrowers.

Therefore, as a small business borrower, your financing options may be limited by only using an EIN during the application process because the lender has less information to go on. If your business has a short financial history, it’s safer to assume you pose a certain amount of risk.

Borrowers seeking EIN-only business loans may find that there are fewer loan options, higher interest rates, and shorter loan terms.

Recommended: What to Know About Short-Term Business Loans

What to Do If You Aren’t Eligible

If your application is declined, you may consider remedying any issues with your personal credit report while also continuing to build your business’s credit score.

Remember, your credit report and your credit score are two different things. Your score is a result of the information within your credit report. Therefore, first check your credit reports and see if there are any errors. You can do so for free once a year through annualcreditreport.com. If you see any information that should not be there, begin the dispute process.

If there aren’t any errors, you may need to pay down your debt and begin to make all of your payments on time moving forward. If you have any older credit accounts, keep them open even once they are paid down. Also, if any friends and family have strong credit profiles and have accounts that have been open for a few years, you may ask to become an authorized user on their account. Their positive history will boost your personal credit profile.

Aside from bootstrapping and asking for help from friends and family, other options include small business grants and crowdfunding. Both are highly competitive, so you will want to consider moving forward with the above recommendations as well, just in case.

The Takeaway

An EIN is a nine-digit number that is essentially a Social Security number for your business. It’s required for certain businesses, especially any that have employees.

Some business loans can be obtained with only an EIN, but many small business owners will find that their options are limited if they don’t also provide their personal information. Generally, businesses need strong, lengthy credit histories to obtain business loans with only an EIN.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Can you build business credit with just EIN?

Yes, it is possible to build business credit with just an EIN. However, the first step would be to open a bank account using the EIN. From there, the business owner would make all payments to their accounts from that business bank account.

Can you get a small business loan with a bad credit score and just an EIN?

While it is possible to get a business loan with bad credit and just an EIN, loan options are likely to be limited.

What is the average time it takes to get approved for a small business loan with just an EIN?

The average amount of time depends on the loan and the loan amount. Some loans are disbursed within a very short amount of time, while others require a lengthier underwriting process and can take up to several months.

Can you apply for a SBA loan with just an EIN online?

You can apply for a business loan with only an EIN, but you will need to provide other information as well, such as a Social Security number or tax ID number and a written-out business plan.

Are there any added fees to a small business loan with just an EIN?

Each lender may or may not have unique fees associated with the application process. However, applying with just an EIN is not normally the cause or justification behind standard lender fees.

Photo credit: iStock/JLco – Julia Amaral

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-019

You have a business dream, but your credit rating isn’t stellar and putting up collateral is a problem. Can you still launch a small business or expand one that is on the cusp of growth?

The truth is, it won’t be easy. The Federal Reserve’s raising of interest rates to cool inflation also seems to be cooling business owners’ prospects of getting a bank loan over the last couple of years.

Even with bad credit, it may be possible to secure a startup business loan with no collateral to help you launch your business without putting your personal assets on the line. However, it must be stressed that this type of financing typically comes with high rates that help compensate the lender for the risk being taken.

Learn more about your different financing options as a small business startup, as well as the pros and cons associated with these choices.

Can You Get a Startup Business Loan With Bad Credit?

Getting startup business funding with bad credit is challenging, but it is possible. Traditional banks and credit unions typically impose high interest rates and less favorable terms for such loans. Some lenders may require a personal guarantee, which commits your personal assets to cover the loan if you can’t repay it.

Fortunately, some funders will look beyond a low credit score. You may want to investigate merchant cash advances, invoice factoring, crowdfunding platforms, and similar alternatives.

Read on to learn more about your options.

Understanding “Bad” Credit

As you run your new venture and figure out how much money it takes to start a business, you might also be wrestling with questions about credit scores.

Lenders use different credit scoring models to evaluate your creditworthiness. Some have minimum credit scores that they prefer to see in applicants seeking loans, as these outlays of money may present considerable risk to the lenders.

As a startup, you may not have an established business credit score. In that case, lenders generally evaluate your personal credit history. For personal credit scores, Experian® defines a “good” score as 661-780, a “fair” score as 601 to 660, and a “poor” score as 500 to 600.

Recommended: No Credit Check Business Loans

Options for No Collateral Business Loans

With some basic financials in hand, it’s time to explore some of your options for unsecured small business loans, as well as some other approaches that may be worth considering. It is possible to find funding at this early stage, even with bad credit. But these loans may come with higher rates to compensate for the risk, so carefully review the terms of any financing agreement to understand the true cost.

Recommended: How Much Funding Can I Get From a Business Loan?

Online Business Loans

Online business lenders may offer alternative bad credit business loans with less stringent requirements compared to traditional banks. You can also explore small business loans for specific groups, such as women with bad credit. While approval and funding times can be fast, you still need to provide proof showing that you’ll be able to repay the loan.

Remember to consider the drawbacks associated with these subprime online business loans. They usually come with a very high APR and a shorter repayment term. Often startup business loans for bad credit must be guaranteed personally, which means your individual credit score can be impacted for any late payments or delinquency — and your personal assets may also be at risk to pay back the loan if your business isn’t able to.

Credit Cards for Small Business

A small business credit card may be an alternative to help cover early startup costs. You could be more likely to qualify with a strong personal credit score, even if your business credit score is on the lower side of the spectrum or simply not established yet. In fact, you can get a business credit card before you open your business.

Most of these cards come with a required personal guarantee. Many also come with an annual fee and while there may be perks or rewards, it’s wise to compare these costs before applying.

As always, your card’s APR is also an important factor, especially if you expect to carry a balance from the beginning as you get your startup off the ground.

Merchant Cash Advance

If your business accepts credit card transactions, you may be able to qualify for a merchant cash advance. This gives you a lump sum to use as working capital, then you pay a percentage of your daily credit card transactions (known as the holdback amount) until your balance is repaid. Rather than being charged an interest rate, merchant cash advance companies use a factor rate.

This charge is a multiple of your borrowed amount, such as 1.5. A $25,000 cash advance, for example, multiplied by a 1.5 factor rate would bring the total balance to $37,500. In other words, the financing would cost $12,500. Merchant cash advances may have even higher factor rates and other fees which can make them a very expensive form of funding for businesses.

Additionally, because merchant cash advances aren’t considered a loan, generally their regulation is less stringent and regulatory oversight is less rigorous than more traditional loans.

Invoice Factoring

For a startup that already has some accounts receivable, you may qualify for invoice factoring to help your cash flow while you wait for customers to pay you. The factoring company charges a percentage of the invoice amount as their fee (typically around 85%), then fronts you a percentage of the funds before payment is received. They generally manage the payment process with your customers. Once the invoice is repaid, you’ll receive the remaining balance.

Equipment Financing

Equipment financing is a type of business loan that is used to purchase equipment for business purposes. The equipment you are purchasing acts as the collateral for the loan. Needs will vary based on the nature of the business, but some types of equipment that may be purchased with this type of loan include agricultural equipment, office equipment, printers, vehicles, restaurant ovens, and more.

Typically, when the loan is repaid, you are the owner of the equipment. In some cases, the lender may require additional assurances, such as a personal guarantee.

Crowdfunding Platforms

Crowdfunding is a unique form of financing, but it can help launch your startup without you having to worry about credit scores as much. You can create a campaign to garner interest in your business and get financial backing in one of four forms: equity, donation, rewards, or loans.

While crowdfunding allows you to raise money and test the market at the same time, it can be a much more intensive marketing process. Plus, there’s no guarantee you’ll reach your funding goals.

SBA Loans

Many lenders offer Small Business Administration (SBA) loans to startups because they come with a guarantee as long as certain underwriting guidelines are met. In some cases, even startups with credit challenges may be able to qualify for an SBA loan. One option for new businesses is the SBA Microloan program, which lets you borrow up to $50,000.

Peer-to-Peer Lending

Peer-to-peer lending services are another alternative to more traditional lending options like bank loans. With this type of lending, online platforms match potential borrowers with potential investors. Eligibility requirements will generally vary from platform to platform.

Some services have minimum credit score requirements, which can potentially make it more challenging for businesses or individuals with lower credit scores to qualify. The process to funding is generally quick, but borrowers with less-than-stellar credit may find that interest rates are higher than a traditional loan.

How to Improve Your Chances of Approval

Before you launch any applications for unsecured startup business loans, it can help to do prep work to strengthen your pitch. Even with bad credit, you can present an in-depth business plan that outlines your strategies for success and how you plan to use the funding.

A business forecast can also be helpful in giving the lender an idea of your expected cash flow in the coming months or years. As a startup, you may need to provide personal information as well, such as your tax returns.

Build Business Credit

You can help set yourself up for success by properly establishing your business credit. Here are a few steps to get started:

•  Officially incorporating your company

•  Getting a federal employer identification number (EIN) from the IRS

•  Opening a business bank account

It can be difficult to find no–credit check financing options, so it’s generally worth building your business credit score as early as possible. When working on building your credit score, it may be helpful to establish relationships with vendors that report to the business credit bureaus. Also, pay your bills on time. Taking these steps contributes to a stronger credit profile that could help open the door to more favorable financing opportunities.

Demonstrate Consistent Revenue

If your startup has been in business for a while, you probably have records of your monthly cash flow and revenues. Financial statements that show a steady income or a consistent upward trend will demonstrate to lenders how solid your business is.

Consider a Co-Signer or Guarantor

No startup business loan for bad credit is guaranteed to be approved, but adding a financially stable individual with an excellent credit history as a guarantor or cosigner on a loan can improve your odds. Cosigners and guarantors commit to covering your debt in case you can’t repay it, so their backing lowers the risk to the lender. The key difference: A cosigner is equally responsible for the loan right away, whereas a guarantor isn’t on the hook for repayment unless the borrower fully defaults.

Have Realistic Loan Expectations

Startups are unpredictable in themselves, so loans to startups can pose significant risks to a lender. The risks are multiplied if the borrower has no collateral to secure the loan and a low credit score that raises repayment concerns. As a result, it’s prudent to expect smaller loan amounts, higher interest rates, and more fees from lenders to compensate for this increased insecurity.

💡 Recommended: Unemployment for Business Owners

Alternative Options for Startups With Bad Credit

When seeking traditional business loans, startups with bad credit often face significant challenges, but several alternative options can provide the necessary capital to get their businesses off the ground.

1.    Small business grants: One viable option is seeking small business grants, which are essentially free money provided by government agencies, non-profits, and private organizations. Unlike loans, grants do not require repayment and are typically awarded based on merit, need, or the potential impact of the business. Startups can explore local, state, and federal grant programs tailored to their industry or demographic.

2.    Business line of credit: Another option is establishing a business line of credit. While this may seem similar to a loan, a business line of credit offers more flexibility and often has less stringent credit requirements. It allows startups to draw funds as needed, paying interest only on the amount used, which can be particularly useful for managing cash flow.

3.    Borrowing from family and friends: This approach requires transparent communication and clear terms to ensure personal relationships are maintained.

4.    Personal savings: Funding a business from one’s own savings eliminates the need for external approval and interest payments, though it does come with personal financial risk.

5.    Bartering services or equity: This is where startups exchange their products or services with other businesses instead of cash, or offer a percentage of the business in return for investment.

By leveraging these alternative funding sources, startups with bad credit can find creative and practical ways to secure the resources they need to grow and succeed.

The Takeaway

When you start a business, you’ll need to weigh the pros and cons of risk. Unsecured business loans for owners with challenged credit can come with high interest and demanding terms. Exploring multiple options can help you make the best choices for your startup.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Is it possible to get a startup business loan with bad credit and no collateral?

It is possible to get a business loan for a startup with bad credit, but the interest rate might be very high. Some lenders may require a personal guarantee. That means your personal assets could be used to cover the loan if the business doesn’t succeed and that personal credit would also be impacted by the health of your startup loan.

Could I start a business with bad credit and no money?

It’s possible to start a business despite obstacles like a bad credit score and little to no startup funds. In addition to startup loans, other options to explore include things like a business credit card, merchant cash advance, invoice factoring, crowdfunding platforms, and SBA loans. Remember that when looking for startup business funding with bad credit, you may be subject to less favorable terms, such as higher interest rates and lower loan amounts.

Can I get a business loan with a 500 credit score?

Yes, you may be able to get a small business loan with a 500 credit score, but it will be challenging and typically involves higher interest rates and less favorable terms. Traditional banks and credit unions usually require higher credit scores, so you may need to explore alternative lenders such as online lenders, microlenders, or nonprofit organizations that specialize in working with borrowers with poor credit.

Can you get a business loan with your EIN number?

You cannot get a business loan with just your employer identification number (EIN). Lenders will also consider other factors such as your personal credit score, business credit history, revenue, and overall financial health.

What are the best ways for a startup business to get funding with bad credit?

Startups with bad credit will each have their own needs and capabilities; no particular funding option will match every company’s situation. That said, it’s helpful to avoid high interest rates if possible. Crowdfunding, bartering, and small business grants are a few ways to secure funding more cheaply.

Photo credit: iStock/JLco – Julia Amaral

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-016

With a revenue-based business loan, a financing company gives your business a lump sum of cash and, in return, you give them a certain percentage of your business’s future monthly revenues. Unlike traditional business loans, your monthly payments don’t stay the same, but instead rise and fall as your revenue rises and falls.

Business loans based on revenue can be a good option for companies that have strong sales but aren’t able to qualify for other small business loan options. You’ll want to keep in mind, however, that this type of financing generally comes with higher costs than traditional business loans.

Read on to learn the pros and cons of business revenue financing, how revenue-based financing works, how to find revenue-based business loans, and more.

What Is a Revenue-Based Business Loan?

A revenue-based small business loan is a type of cash flow loan that allows you to borrow against future revenue.

A revenue-based loan gives you a lump sum amount that is based on your monthly or annual revenue. Then, instead of fixed monthly payments (as with a typical small business loan), the financing company takes a defined percentage of your total sales within each repayment period, which may be one week or one month.

When reviewing your loan application, a revenue-based lender focuses primarily on your revenue stream and your business plan. Lenders look for the potential to increase your revenue, since the faster your business grows, the sooner the money is paid back and the lower the risk to the lender.

Key Features of Revenue-Based Business Loans

Revenue-based loans are unlike traditional loans because they allow for greater flexibility. A revenue-based loan is similar to a merchant cash advance in that your payments fluctuate with sales volume. With a merchant cash advance, though, repayments come only from debit and credit card sales. A revenue-based loan involves total receipts. This might mean you can afford higher payments and thus can borrow a larger sum.

Payment Flexibility

As mentioned above, revenue-based financing does not call for fixed monthly payments. Instead, because repayment amounts are directly tied to your business’s revenue, your payments will be higher during strong sales months and lower during slower periods.

Revenue Thresholds and Repayment Terms

To be eligible for revenue-based financing, you generally have to show that your sales exceed a certain amount per month or year. This is called the revenue threshold, and it will vary by lender. The lender wants to ensure that you’ll have enough coming in every month to make a satisfactory payment.

The cost of the loan comes from a multiple or factor rate (such as 1.5x) that’s applied to the lump sum. With a 1.5x factor, you’d pay $15,000 total for a loan of $10,000. That’s likely to be costlier than a traditional loan with a longer term.

How Does Revenue-Based Financing Work?

With revenue-based business loans, the lender determines how much you can borrow based on your sales, as well as the payment frequency that would work best with your business. You may pay weekly or monthly depending on what the lender thinks you can handle.

Unlike other types of small business loans, revenue-based funding does not involve interest payments. Instead, the repayments are calculated using a particular multiple that results in returns that are higher than the initial investment. Typically, these loans come with a repayment amount of 1.5 to 2.5 times the principal loan.

Revenue-based loans are not bound by the same regulations as bank loans. As a result, approvals and funding can be obtained in a relatively short period — generally much shorter than the months it may take a bank to reach a decision.

Once you agree to the loan terms, the lender will provide you with a lump sum of capital, and soon after will begin deducting a percentage of your revenue. The percentage that is deducted in each payment period is known as the capture rate. It typically falls somewhere between 2% and 8% of your monthly revenue. Using this model, you should ideally never pay more than your business can handle.

Because your payment amount fluctuates with your total sales, payments can, theoretically, go on for a long time, potentially several years.

What Can Revenue-Based Business Loans Be Used for?

Lenders typically expect these loans to be used to develop new products, expand your sales force, or venture into new markets.

However, you can generally use the funds you receive through a revenue-based loan in any way you see fit. Often borrowers use the funds from a revenue loan in a way that will increase their sales and profit margins or to prepare for a busy season that is on the horizon. Higher revenues mean you will pay off the loan faster and, ultimately, pay less in interest.

How Can You Pay Off a Revenue-Based Business Loan?

Revenue-based loans are paid off over time, and the amount you pay each month depends on your total sales. Therefore, if you have a stellar few months in sales, it’s feasible you could pay off the loan during a busy season. However, if you have a slow month, your payment won’t be that much and it will take longer to pay off the loan.

Recommended: Are No-Money-Down Business Loans Real and How Do They Work?

Pros and Cons of Business Loans Based on Revenue

Like all loan products, revenue-based loans have their share of pros and cons. When comparing it to other small business loans, consider the following benefits and drawbacks.

Advantages

A key advantage of revenue-based business loans is that your lender looks at your revenue — not how old your business is, not your collateral, and not your personal or business credit score.

Even if you can’t qualify for a traditional business loan, you may be able to get a revenue-based loan.

For many business owners, it’s the repayment terms that make revenue-based loans particularly appealing. Term loans with fixed payments can work well if your business has consistent, reliable sales. But if your business goes through swings throughout the year, then a fixed monthly payment may not be ideal. With revenue-based loans, your payments should reflect what you can actually afford to pay.

Unlike merchant cash advances, which only work if your customer base pays with either credit or debit cards, revenue-based loans can work for any business, regardless of how its customers choose to pay. All that matters with revenue-based loans is your total monthly revenue.

Revenue-based financing also tends to carry longer terms than merchant cash advances. This is because the latter often requires a daily payment, while the former can be paid monthly or weekly.

Disadvantages

Revenue-based loans are often pursued by businesses that can’t qualify for traditional loans due to poor credit. From a lender’s perspective, poor credit increases the likelihood that you won’t be able to pay off the loan on time. To mitigate this risk, revenue-based financing often comes with high rates and fees. This type of loan can even be more expensive than a merchant cash advance because of the higher borrowing amounts and longer terms.

Since your payment is tied to monthly revenue, your loan term fluctuates. While the faster you grow, the faster you pay off the loan, the opposite is also true — if your growth is slower than expected, the number of months needed to pay off the loan will grow. This results in paying more interest over the term of the loan because the interest accumulates over a longer period of time. Sometimes lower growth is outside of your control, but you need to be aware of how this affects the cost of your debt.

Finally, you’re giving up a portion of your revenue each month. That means you’ll have less cash available for other things — like taking advantage of new opportunities that come up, or addressing the unexpected.

Ideal Candidates for Revenue-Based Business Loans

Revenue-based loans align well with businesses that have fluctuating sales or those that don’t qualify for traditional financing. Also, time frames for these loans may be comparatively short, so companies that are prepared to repay their loans faster may also be a good fit.

Types of Businesses That Benefit

Seasonal businesses are compatible with revenue-based financing, as borrowers can make smaller payments during leaner times and larger ones when sales are strong. Examples might include Halloween costume shops and ski equipment dealers.

Businesses with recurring revenue streams, such as software-as-a-service companies and subscription-based enterprises, can also benefit from this form of funding.

Is a Revenue-Based Loan Right for You?

If you don’t have the credit scores to get a traditional business loan, but have solid revenue — and a plan to make it grow even higher — a revenue-based business loan may be a good option for you. These lenders generally care more about where your business is going than where you came from.

And, If you use the loan proceeds to develop new products, increase your sales force, or develop new sales initiatives, the result will likely be increased revenue, which will allow you to pay off the loan sooner and could make the high cost of the loan worth it.

This might also be an appealing type of financing if you operate a seasonal business, since your payment will fluctuate along with your revenue and/or you need capital quickly, since it can be faster to get than a traditional loan.

However, you might not be the best candidate for this type of loan if you aren’t certain that your business will be experiencing a solid amount of growth. Also, if your business is struggling, the higher costs that come with this type of loan could become problematic. In that case, you might want to look into other business loans for bad credit.

Recommended: What Is the Minimum Credit Score for a Business Loan?

5 Steps to Finding and Applying for Revenue-Based Business Loans

Here are the steps that are typically involved in getting revenue-based financing.

1. Figure Out How Much You Want to Borrow

Before you start looking for a lender, you’ll want to take some time to determine how much you want to borrow and exactly how you will use the funds. As part of the application process, you typically need to submit your desired loan amount, along with a plan for how the loan proceeds will be spent and how these investments will help your business.

2. Prepare the Necessary Documents

Applying for a revenue-based loan is similar to applying for any small business loan. You’ll likely need to gather appropriate paperwork that proves you are who you say you are and that your reported revenue is accurate. You may need to have:

•  Personal and business income tax returns

•  Balance sheet and income statement

•  Personal and business bank statements

•  A photo of your driver’s license

•  Business licenses and permits

•  Articles of incorporation

•  Details on any other loans (if applicable)

•  Documented plan to increase your existing business revenue

However, there are some types of “no-doc” business loans that don’t require much documentation. These lenders are willing to approve borrowers based on credit history and collateral, but are likely to charge higher interest.

3. Compare Lenders

Banks and other conventional lenders generally don’t offer revenue-based financing. However, you may be able to find this type of loan through investment companies, financing institutions, revenue-based financing firms, and venture capital firms. Loan brokers may also be able to point you towards lenders offering revenue-based loans.

If you end up with multiple options, it can be a good idea to compare not just costs but also any other benefits the financing company offers. Some revenue-based lenders will act as mentors to your business since they have a vested interest in seeing your company succeed, which could be a valuable add-on.

4. Apply

You can typically apply online and, once you submit your application, your chosen lender will review and verify your monthly and annual revenue statements as well as other submitted documents.

5. Waiting Period

If you are approved for the loan, a representative will reach out and likely present a mix of offers with varied repayment terms. You’ll have a chance to go over each offer and ask any questions you may have. In some cases, you can get approved and have the cash in hand within several days to a few weeks.

Alternatives to Revenue-Based Business Loans

If you’ve been denied more traditional loan products, and are on the fence about going with a revenue-based loan, you may want to consider the following alternatives.

Business Credit Card

If you don’t need that much additional capital, you could consider a business credit card. You might be able to find a business credit card that offers a 0% introductory annual percentage rate (APR), which could help you get through any cash flow issues you may be experiencing. The 0% intro APR period could last as long as 21 months, which could help you pay off any business expenses without racking up any interest.

Microloan

What are microloans? Also known as microcredit, this type of financing provides small amounts of funding to help start or grow a business. These loans commonly target specific groups, such as women, minorities, veterans, or others who may face barriers to accessing bank loans and other traditional means of funding.

Peer-to-Peer Loan

Peer-to-peer (P2P) lending (also known as crowdlending) is when a borrower receives funding directly from other individuals, cutting out the financial institution as the middleman. Borrowers and investors connect on P2P lending websites. Each site sets the rates and the terms and enables the transaction. This may be a viable option if you’ve been repeatedly denied capital using the more traditional route.

Crowdfunding

With business crowdfunding, your company collects small monetary contributions from a large group of people through an online platform. In some cases, you don’t have to pay the money back (just give each investor a “reward” or gift). However, developing a successful crowdfunding campaign can take a lot of time and effort.

Angel Investor

If you’re willing to part with a little bit of equity, an angel investor may be able to help. Angel investors are usually high-net-worth individuals who are able to provide needed capital to start-ups and young businesses in exchange for an ownership stake in the company.

The Takeaway

Revenue-based business loans are a way to get capital by pledging a percentage of future ongoing revenues. Payments reflect whatever amount you can afford, but overall, costs may be higher than traditional business loans. Also, other small business financing options may have more stringent financial requirements.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Can you get a revenue-based loan with bad credit?

Yes. The main deciding factor is your business’s total sales. If you have strong sales, then you may be a good candidate for revenue-based loans.

How do revenue-based business loans even work?

Revenue-based financing is a form of financing that allows small businesses to get capital up front and pay it back from future revenues. Payments are based on a weekly or monthly percentage of revenues and continue until the financing is repaid along with the fee. The total cost is usually around 1.5 to 2.5 times the principal loan.

Is revenue-based financing good?

It can be a good option if you have been turned down for other types of business loans because of a lack of collateral or a low credit score.

Do you have to have revenue to get a business loan?

Not necessarily. While many business lenders require prospective borrowers to meet minimum annual revenue requirements to qualify for a loan, some loans are designed for new businesses that don’t have any sales yet.

Is revenue-based financing a loan?

Yes, it is a type of loan and it must be paid back.

Photo credit: iStock/Hispanolistic

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-023

If you need funds to launch a new venture or expand a current business, a small business loan can be a great option. But how much business loan money can you get? Depending on the lender and the type of financing, you can typically borrow anywhere from $500 to more than $5 million.

Exactly how much a lender will offer your small business, however, will depend on your company’s financials, time in business, and credit profile. Read on to learn how much you could get with a small business loan, as well as the different types of business loans and how to qualify for the best rates and terms.

How Much Do Most Business Loans Offer?

How much of a business loan you can get depends on the type of loan you’re after, such as a short-term loan, Small Business Administration (SBA) loan, or bank loan. How you plan to use the money can also affect how much of a loan you can get. You’re likely to get less for a startup business loan than for, say, a heavy equipment loan. Here’s a breakdown of some of the most common types of small business loans.

The differences between loans don’t stop with the amount, however. You’ll also pay different interest rates for each kind of loan. To get a sense of how much different types and sizes of loans may cost, you may want to use a small business loan comparison site.

To use a loan comparison tool, you generally need to plug in an approximate loan amount, as well as some basic stats about your business, including time in business, revenue over the last 12 months, and credit score. You’ll probably want to be familiar with some common business loan terms in order to provide the most accurate information.

If you already know how to apply for a business loan, that’ll give you a head start.

Amounts Offered by Types of Lenders

You can generally borrow the highest amounts with traditional lenders, but you’ll have to jump through a few hoops to qualify. Luckily, there are many small business loan options on the market, even for larger loan amounts. Here’s a look at some of the most common lending options for small businesses and how much business loan money you may be able to get with each.

Bank Loans

Banks typically offer the largest loan amounts, and if you have the cash flow and the credit history to qualify, you can often borrow as much as $1 million. You might even be able to borrow more, though you’ll likely need stellar credentials to do so. Some large commercial banks don’t even have a maximum borrowing limit, while smaller banks typically do.

Maximum loan amount: $1 million

SBA Loans

The U.S. Small Business Administration (SBA) is an independent government agency that helps small businesses by guaranteeing loans issued by banks and other private lenders. Due to reduced risk to the lender, SBA-backed loans offer large amounts (as much as $5 million), as well as low interest rates compared to typical business loan interest rates.

Average loan amount: $457,122

Maximum loan amount: $5 million

Online Loans

If you have thin or poor credit, an online loan may be your best option. These loans can be anywhere from $1,000 to $500,000, and the qualification process is generally easier than loans from traditional lenders. The interest rate, however, will likely be higher than an SBA or traditional bank loan.

Maximum loan amount: $500,000

Short-Term Loans

Typically, a short-term business loan has a term of one year or less and is structured as a lump sum loan (which can be as much as $500,000) with repayments made on a daily or weekly schedule. This type of loan is most commonly offered by online lenders, and interest rates tend to be higher than other types of loans.

Maximum loan amount: $500,000

Medium-Term Loans

The definitions vary, but most commonly, medium-term loans are ones with a repayment period between two and five years and loan amounts up to $500,000. Borrowers usually have to make payments every month or twice a month. You generally need a business producing revenue to qualify for a medium-term loan and a credit score of at least 700. Be aware that you may also be on the hook for small business loan fees, such as application fees, underwriting fees, and servicing fees.

Maximum loan amount: $500,000

Lines of Credit

With a business line of credit, a lender gives you access to a specific amount of cash (ranging from $1,000 to $500,000), which you can draw from whenever you want and use to cover whatever expenses you need. You’ll only pay interest on the funds you use. Lines of credit can be a great option for small businesses facing frequent cash flow issues. They can also be a good thing to have in your back pocket in case of emergencies.

Maximum credit amount: $500,000

Equipment Financing

Equipment financing limits vary with each bank (or online lender) and each piece of machinery, but you can generally borrow between 80% and 100% of the value of the equipment or vehicle you are purchasing — often up to $500,000. Typically, the equipment itself acts as the loan’s collateral and the repayment period often mirrors the equipment’s expected lifespan.

Maximum loan amount: $500,000

Microloans

Microloans generally run between $500 to $10,000, and can be a great option for new companies or borrowers with poor credit. If you apply through the SBA, the maximum available microloan is $50,000. Unlike short-term loans, microloans are typically available through nonprofits and come with relatively low rates. However, microlenders often have specific parameters for a business to qualify for the loan.

Average loan amount for SBA microloans: $13,000

Maximum loan amount: $50,000

Invoice Factoring

Invoice factoring is a short-term financing method that allows businesses to sell unpaid customer invoices to third-party invoice factoring companies. You can often get 85% of your unpaid invoices up front. The factoring company then collects payment from your customers and gives you the remaining balance minus fees. While these fees can be hefty, knowing what invoice factoring is and how to use it may help your business get past difficult financial times.

Maximum loan amount: 85% of unpaid invoices

Business Credit Cards

Small business owners who are interested in financing ongoing expenses and working capital can sometimes be drawn to business credit cards. Opening a credit line with a business card offers flexibility and carries advantages, such as rewards for spending, 0% introductory annual percentage rates (APRs), and the capacity to build business credit. The downside is that a revolving line of credit may come with high interest costs (once the introductory rate ends) and other fees.

Maximum credit amount: varies

Recommended: Can a Personal Loan Be Used to Start a Business?

7 Factors That Affect How Much of a Business Loan You Can Get

There are generally a lot more requirements for small business loans than there are for personal loans. Here are some key factors that can influence how much you can borrow.

1. Credit Scores: Personal and Business

Lenders typically only offer the highest loan amounts to business owners with good to excellent credit, since these borrowers represent a lower risk. A lender will typically want to look at both your personal and business credit scores. (There are no-credit-check business loans, but they typically come with higher interest rates.)

2. Collateral

Collateral is an asset — such as equipment, real estate, or inventory — used to secure a loan. In the event that you cannot make loan payments, the collateral can be seized and resold to cover the remainder of the loan. (For a no-doc business loan, credit history and collateral can sometimes be enough for approval.) It’s possible to get a loan without collateral, but you may be offered a lower amount, asked to pay more in interest, or both.

3. Debt-to-Income Ratio

Your debt-to-income ratio affects your monthly budget, which in turn can affect your ability to pay your debts each month. If the ratio is too high, a lender may either decline to work with you or offer you a lower loan amount.

4. Revenue

Generally speaking, the more money your business brings in each month and year, the more you will be able to borrow. Depending on the lender, you might need to bring in as much as 10 times the amount you want to borrow if you are applying without collateral.

5. Time in Business

The longer you’re in business, the more faith a lender will likely have in your company. Many small businesses fail each year, so if you’ve been in business for at least two years, you’ll likely have an easier time getting approved for a larger loan amount.

6. Down Payment

Making a down payment on a business loan proves you’re serious about the loan — and about paying it back. The larger a down payment you are able to make, generally the more a bank or lender will be willing to lend to your business.

7. Industry

Lenders will also often look at the type of industry your business falls under. If you’re in a field that is considered risky, associated with an unsteady cash flow, or not seen as socially acceptable, a lender may reject you or offer you a lower amount.

Calculating How Much of a Business Loan You Need

When applying for a small business loan, you’ll want to consider not just how much business loan money you can get, but exactly how much of a loan you need. The reason: The more you borrow, generally, the more you’ll pay in interest and fees — and the higher your monthly cost will be.

Before you start applying for a small business loan, it can be a good idea to think carefully about what you would do if you could get access to extra capital, and then calculate exactly how much you would need to accomplish your goal. You may then want to add a little bit of padding to that amount to account for unexpected expenses.

You may even want to draw up a detailed plan (and budget) for how your company will use the funds and what impact you expect the money to have on your business growth. When you present your financial statements as part of the application, lenders are likely to look at figures like your business revenue, EBITDA (earnings before interest, taxes, depreciation, and amortization), existing liabilities, and cash flow.

Tips To Maximize Your Business Loan Amount

Here are some simple ways you may be able to qualify for more funds.

Make a Down Payment

Generally, the larger your down payment on the loan, the less risk you pose to a lender, and the more they will allow you to borrow.

Put Up Collateral

By backing your loan with collateral, you present less risk to the lender, which means they will likely be willing to offer you a larger loan amount.

Look Into an SBA Loan

If your business can meet the strict qualifications, SBA loans tend to come in larger amounts than other types of small business financing.

Reduce Your Debt

By paying off debts, you can likely improve your debt-to-income ratio and, in turn, increase the amount you can borrow.

Work on Building a Better Credit Profile

In general, the stronger your credit, the more money you will be able to borrow.

Wait a Year or So

If your business hasn’t been around for at least two years, you may want to hold off applying for a loan and put your efforts into building a good foundation for your business and increasing your revenue. In the future, this will allow you to borrow a larger amount.

Recommended: How Much Does It Cost to Start a Business?

The Takeaway

How much you can get for a business loan varies widely. Business bank loan amounts can range anywhere from $500 to over $5 million. Traditional banks and SBA-backed lenders tend to offer the largest loan amounts. The exact amount you will get approved for will depend on the lender, the type of loan you’re seeking, and your qualifications (such as your credit score, time in business, and annual revenue), among other factors.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How does the loan amount affect interest rates?

Higher loan amounts pose more risk for lenders, which can lead to higher interest rates. However, economies of scale can lower rates for substantial loans, as processing costs are spread over a larger amount, making the loan more profitable even with lower rates.

How does the loan amount affect other fees?

Many loans come with an origination fee, which is typically a percentage of the loan amount. The bigger the loan, the more you’ll pay in origination fees.

How are qualifications related to loan amounts?

Qualified borrowers are considered financially strong and good with their finances. Therefore, borrowers with strong credit profiles and solid revenue are generally able to get higher loan amounts.

How much business loan money can you get?

Business bank loan amounts can range from as little as $500 to as much as $5 million.

Do banks give loans to start a business?

It’s uncommon for a bank to give a loan to a business that has not been producing revenue for at least a year and preferably two.

Photo credit: iStock/Edwin Tan

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSMB-Q325-021

Building a business often requires financing, but it can be hard to get approved with a credit score that’s low or that hasn’t been established yet.

Some lenders offer business loans with no credit check. Each lender has its own requirements, which may include things like minimum annual revenue amount, time in business, and appropriate collateral.

Keep reading to learn more on no–credit check business loans, how to get one, and alternative sources of funding.

Can You Get a Business Loan With No Credit Check?

Banks and other traditional lenders that are willing to give loans to business owners want to be sure that the loans have a decent chance of being paid back. That means assessing a loan applicant’s ability to make those payments. How could a bank or other type of lending organization make such an assessment without even being able to look at the credit history of the business? The challenge is clear.

That said, there are financing opportunities for small business owners that involve no credit check. Some lenders do offer such loans, but they are considered risky and often have high interest rates and origination fees.

Recommended: Can You Get a Small Business Loan With Just EIN?

What Are the Challenges of No–Credit Check Loans?

A loan that doesn’t require a credit check can leave you carrying extra financial burdens.

No–credit check loans are likely to have less favorable conditions than traditional small business loans. For example, repayment terms are often significantly shorter (as in, months rather than years). Payments may be due more frequently, extra fees may apply, and interest rates will be higher.

Steep interest rates often cause large monthly payments, which can be hard to sustain, especially if your business is seasonal. And unsustainable payments increase the risk of defaulting on the loan.

Important Considerations

As noted above, no–credit check loans often have high interest rates and fees. Here are some angles to consider.

•   How much of your business’s monthly revenue will be consumed by loan payments? Exorbitant interest rates call for large and/or frequent payments, which can crush your cash flow and steer you into a relentless cycle of debt. An inability to get out of debt could leave you vulnerable to predatory lenders down the road.

•   What are the additional fees being charged? Some lenders may tack on extra charges (including high origination fees) that add to your overall debt.

•   Will payments be reported to the three major credit bureaus? If not, your responsible repayment of a no–credit check loan might have no effect on your credit history. You could lose the opportunity to strengthen your business credit score and lower the price of future loans. For that matter, a delinquency or default in payments that is reported to credit bureaus will probably harm your credit score.

Alternative Sources of Funding for Small Businesses

There are small business loan alternatives that may work in place of a no–credit check business loan. Consider the alternatives below.

No–Credit Check Personal Loans

No–credit check personal loans may be an option worth exploring. However, it’s important to note that personal loans generally cannot be used for business purposes. Make sure you check for any restrictions against using a personal loan for business purposes before applying for one.

Recommended: What Is the Minimum Credit Score for a Business Loan?

Payroll Loans

Payroll loans are designed to specifically fund employee paychecks in the event of a short-term cash flow issue. Approval and funding times are usually fast to cover last-minute gaps in capital. These loans are seen as a last resort by many because they come with very high interest rates.

Equipment Financing

Equipment financing can help you get funding in place for machinery or office equipment. The actual assets are used as collateral, although you may also need to offer a personal guarantee.

Merchant Cash Advances

A merchant cash advance is based on future sales through your point-of-sale system, also known as your POS system. You can borrow a lump sum, then pay back the loan using a percentage of your daily sales.

Business Grants

Small business grants are available from various national, state, and local agencies, as well as private-sector organizations. Because you don’t have to pay back grant money, donors generally pay less attention to your credit history. Instead, grant applications usually center on business plans, financial documents, and details about how the funds will be used. A good place to start looking for grants that might suit your business is the database grants.gov.

Pros and Cons of No–Credit Check Business Loans

No–credit check loans offer significant advantages and disadvantages. Pros of no–credit check business loans include:

•   They provide quick and accessible funding for individuals with poor or no credit history, bypassing the lengthy approval processes associated with traditional loans.

•   They can offer a pathway to rebuilding credit if timely payments are reported to credit bureaus.

However, the downsides are substantial. Cons of no–credit check loans include:

•   Very high interest rates and fees make these loans more expensive in the long run.

•   Risk of predatory lending practices is higher, potentially trapping borrowers in a cycle of debt.

•   The lack of credit checks means lenders are not assessing the borrower’s ability to repay, which can lead to financial strain and default.

While no–credit check loans can be a lifeline for those with limited options, they should be approached with caution and as a last resort.

When These Loans Might Make Sense

Some business owners may struggle to meet the credit requirements for traditional loans from banks or credit unions. But for businesses that can showcase consistent and stable monthly revenue, proving it generates enough income to cover loan payments, no–credit business loans may be a workable funding option.

If even bad credit business loans are hard to get, but you have assets like equipment or real estate, you could use them as collateral for a no–credit check loan. Or, if the business needs cash right away, these loans may be workable, as they tend to be processed quickly.

As always, it’s wise to read the fine print carefully.

How to Strengthen Your Application Without a Credit Check

There are ways to beef up your loan application that have nothing to do with your credit score. For example, you may be able to boost lender confidence by presenting a well-organized file of financial records, including bank statements from the past year, profit and loss statements, balance sheets, tax returns, and any outstanding invoices or accounts receivable. This demonstrates your business’s transparency and financial discipline.

Focus on Revenue and Cash Flow

Evidence that the company has steady recurrent revenues, plentiful cash flow, and increasing annual revenue should help persuade a lender to approve a loan without a credit check. You could use documentation such as cash flow statements and bank records to show proof of deposits and stable account activity.

Offer Collateral or Guarantees

Lenders who offer business loans with no credit check often compensate for the increased risk by requiring collateral or a personal guarantee. Valuable assets that could serve as collateral for a no–credit check loan include heavy equipment, inventory, real estate, or accounts receivable.

Many business loans — especially for startups or businesses with limited history — require personal guarantees. A personal guarantee makes an individual responsible for the business loan if the company can’t repay it. This gives the lender some recourse in case of default. This word doesn’t signify guaranteed approval, especially for loans with no credit check.

Explore Small Business Loans

Not having a good credit score will make it challenging to get a small business loan, but it won’t be impossible. No–credit check loans may be a viable way for you to get the funds you need, though they typically come with higher interest rates and fees than loans that require good credit.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Can you get a business loan if you have no credit?

Yes, there are no-credit business loans available. In order to qualify, your business usually needs to meet other requirements, such as certain revenue numbers, and you should be prepared to pay high interest.

Do small business loans require a credit check?

Not all small business loans include a credit check, but you may see higher rates and fees with loans that don’t rely as heavily on the applicant’s credit score.

Can you get a business loan with bad credit?

It is possible to get a business loan with a credit score of 500, which is classified as either “fair” or “poor.” The lender may demand collateral or impose high interest rates. If your credit score is below 500, it’s prudent to consider other funding options, such as crowdsourcing or invoice factoring.

Can you get a business loan with your EIN number?

It is unlikely you will get a traditional business loan with only an EIN number, but some less traditional lenders may offer financing. Lenders may also consider your personal credit score, business credit history, revenue, and overall financial health.

What are the risks of taking out a no–credit check business loan?

For a no–credit business loan, lenders generally charge high interest rates and may demand collateral as well. A loan with a high interest rate may be more difficult for a borrower to repay on time, possibly leading to delinquency or default. Inability to pay could lead to the debt being sent to collections, a drop in the borrower’s credit score, or even bankruptcy.

Photo credit: iStock/Anchiy

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-015