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 no credit check business loans. Each lender has its own requirements, which may include things like minimum annual revenue amount, time in business, and the requirement to put up collateral.
Can You Get a Small Business Loan With Bad Credit?
When evaluating applications, lenders often consider both a business’s credit score and the personal credit score of the owner. If either of these is low, it can hurt your chances of getting approved for a loan or can result in higher rates if you are approved.
The different types of business loans usually require a minimum personal credit score of 670. Online lenders that offer bad credit business loans have a lower threshold, often as low as 580, which is “poor” for some credit agencies and “fair” for others. Building business credit may help you qualify for better terms and larger loan amounts.
As you get financing, considering these steps may help you work toward building a business credit score:
• Make debt payments on time
• Keep credit utilization low by avoiding maxed-out credit lines
• Grow revenue to offset existing debt
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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 loan payments have a decent chance of being paid back. That means assessing the ability of an applicant for a loan 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 that small business owners can seek out if there is no credit check. Some lenders do offer them. But they are considered risky and often have high interest rates and origination fees.
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Other Sources of Funding for Small Businesses
There are small business loan alternatives that may work in place of a no credit business loan. Consider the alternatives below:
No Credit Check Personal Loans
No credit check personal loans may work.
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.
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H3: 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.
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Traditional Small Business Loans
It may be possible to get a traditional loan without a credit check, but expect the lender to demand collateral or offer high interest rates. There will be limited options regarding loan types, as well.
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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 can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today 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 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 I get a business loan with a 500 credit score?
It is possible to get a business loan with a credit score of 500, which is seen as either “fair” or “poor.” There may be a demand for collateral or high interest rates imposed.
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.
Photo credit: iStock/Anchiy
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