In the past, getting a business loan often meant visiting your local bank and filling out lengthy applications, providing lots of business documentation, financial information and sometimes personal financial information. This all was done in order for the lender to run a credit check. If you had poor credit, it was virtually certain that the small business loan wouldn’t be approved. But today, there are many financing options that don’t depend on your credit score, making it easier for entrepreneurs to qualify for financing even with bad credit.
Some of these alternatives include invoice factoring, ACH loans and business lines of credit. They’re not a panacea for entrepreneurs with bad credit, but they can help them access funding that would otherwise be inaccessible. And, since they’re short-term financing options that are repaid quickly, it is possible to build your credit profile while using these types of funding sources.
Aside from these financing alternatives, entrepreneurs with low business credit scores might find it easier to get funded by a business with bad credit than a traditional lender. This is because many lenders have developed financing products that depend less on credit and more on other factors, such as revenue and time in business. However, it’s important to remember that you should still make building your business credit a priority so that you can qualify for more traditional lending options in the future.
Another way to fund your business without a credit check is to borrow funds from friends and family. However, if you do decide to borrow from family and friends, it’s important to set up clear financial guidelines in advance to avoid placing strain on your relationships or the business.
Lastly, some entrepreneurs might be able to find crowdfunding sources that allow them to raise money for their businesses. However, the caveat with this type of funding is that it’s typically a high-interest product and the success of your campaign will depend on how well you market it.
The final way to get a no-credit-check business loan is through specialized online lenders that offer small-business financing for entrepreneurs with bad credit. These lenders can be found by conducting a search for “bad credit business loan.”
It’s worth noting that most businesses that don’t require a credit check rely on other metrics than your personal or business credit history to approve you for financing. These factors may include your revenue, the amount of time you’ve been in business and the type of financing you want to secure. You should also research whether or not the lender you’re considering reports your on-time payments to the commercial credit bureaus, which can make it easier for you to build business credit. NerdWallet’s Best Business Loans for Bad Credit can help you compare and select the best funding option for your unique business needs. Then, be sure to follow the tips outlined in this article to improve your chances of qualifying for the best financing available. small business loans no credit check