You may need to borrow money for your business for all effective operations. You will turn to direct lenders to ensure the smooth flow of business. However, getting a business loan requires a lot of formalities, and one of them is that you will need a good credit score. A business credit score is mandatory if it has a separate identity from yours. Otherwise, they will check your personal credit score. Sometimes, lenders may check both scores.
It is known to everyone that no lender can lend you money without running a credit check, and when it comes to a business loan, it is all but impossible to get approval without a credit check. No lender can lend you money without an affordability check, which involves a credit score check and repaying capacity.
Does that mean such loans do not exist? No. These loans do exist. A no credit check business loans do exist, and they are of several types.
You might be surprised to know that you do not need to have your credit score checked for invoice financing. This will allow you to borrow money against the value of unpaid invoices minus fees.
Lenders will not peruse your credit score but they will assess the credibility of clients you have outstanding invoices for. If your customers have higher credibility, you will likely get approval faster.
Depending on the invoice financing, it depends on whether the invoice company will collect money directly from your customers or from you when they are paid off.
As the name suggests, you will be able to borrow money based on the track record of your sales. You will get higher money when the sales track is high. You will be liable to pay a chunk of your future revenues as part of payment toward the loan over the course of time. These loans do not require a credit score check because the lending decision will be made after taking into account your sales. The repayment amount could be up to 2.5 times the principal sum.
This sort of financing is applicable for growth-stage companies, those that want to launch a new product, and those who need money for an extensive marketing campaign. It is less expensive than standard business loans. You do not need to guarantee as well as secure any assets against the loan. Monthly payments will be flexible, and you will raise money quickly. However, they are subject to risks as well.
You might have difficulty paying off the debt if you fail to generate revenues. Sales-based financing is not so standard. Very few lenders provide this facility.
Friends and family
Friends or family can be your favourable lender if you need a small sum. They will be willing to loan you without a credit check. In fact, they will not ask for collateral. As long as you promise to pay back the debt, they do not mind backing you financially, provided they can give you a helping hand. Do not betray their trust because they will not be able to help you down the line.
PayPal working capital loans
These loans are not the same as regular working capital loans, as no credit check is required. It means even if your credit rating is poor, you do not need to have a fear of being turned down. Your PayPal account history will decide the loan size.
No APR will be charged because you will pay a fixed percentage, 5 to 10%, of your sales every 90 days. As far as it is about the fees, it depends on the factors like your sales volume, loan amount and repayment terms.
How to get a business loan with no credit check
Here is how you can get a business loan with no credit check:
As you do not have to have your credit score checked, it does not mean that you do not need to do anything. You will still have to do all preparations. Make sure that you have a profit and loss statement and a bank statement.
Lenders would like to see the track record of revenues of the previous at least two years. You may need other documents as well. Visit the website of a lender and check out there what they need. You can contact them to know what documents you need for the processing of the loan. The customer care team will let you see all information on the phone or email.
Apply for the right funding option
Bear in mind that each business loan varies. They cannot be suitable for all types of businesses. Before you apply for any, you must understand whether they are a good choice for your business. Meeting the requirements below will not help you get approval.
For instance, you will need at least $15,000 in annual sales to secure a PayPal working capital loan. Of course, this kind of funding is not apt for you if you do not earn that much sales. But invoice financing can come in handy.
Reveal true situation
In order to secure a loan, you may be tempted to hide some information, or you may exaggerate. Do not mess with your profit and loss account statement, or try to answer all questions with honesty in the form. Be as trustful as possible because, in the end, this will benefit you only. Any false information could throw you in debt later.
The final word
Business loans with no credit check are available, and they can fund small and large funding needs. Although these loans may seem affordable, you must know that these loans are not suitable for all types of businesses. Further, they are subject to risks as well. Weigh up all drawbacks as well before you apply for them. Do proper research so you do not regret it later. Your business may be badly affected if you take the wrong decision.