by Many small business owners are looking for financing options that don’t require a credit check. This may be for a variety of reasons. Some don’t want a hard inquiry on their personal credit reports that could lower their scores; others know that their poor personal or business credit will automatically disqualify them from traditional lending options. Others are simply seeking a way to separate their business and personal finances completely. Regardless of the reason, there are financing options available to small businesses that do not require a credit check.
Nontraditional lenders, online lenders and community development financial institutions (CDFIs) offer loan products that don’t review personal or business credit. These include business lines of credit, invoice factoring and merchant cash advances. Often, the qualifications for these loans are based on factors like business experience and cash flow, rather than a specific credit score. This is good news for entrepreneurs with a low personal or business credit score who don’t have the best chance of qualifying for a traditional small business loan.
Some traditional lenders that are willing to work with borrowers who have poor credit include banks that are already familiar with your business, private equity funds and venture capital firms. Other business financing sources that aren’t traditionally available are microloans and crowdsourcing platforms. Both of these funding sources typically work with nonprofits that are interested in helping new, small or disadvantaged businesses. These lenders tend to look at other criteria beyond credit, such as the size of your company and your relationships with vendors.
Other types of financing that don’t use credit as a primary qualification include guaranteed and SBA-backed business loans. These programs often have a lower minimum credit score than standard loans and are backed by either the government or other lenders. They are also generally easier to qualify for than conventional loans.
In some cases, a lender might waive the credit check requirement or perform a soft inquiry on your consumer credit report. A soft inquiry will not have the same impact on your credit as a hard one, and it may only be seen by you when you check your own report. However, this is not a guarantee that you’ll be approved for the loan or financing.
The only guaranteed way to get a small business loan no credit check is to work on improving your credit score. Paying down debt and making consistent payments on time can help improve your credit rating and increase the number of financing options you’ll have in the future. It’s important to remember, though, that even financing options that don’t use a credit check still require you to meet other eligibility requirements. This includes having a positive business cash flow and being willing to sign a personal guarantee on the loan if your company can’t repay it. You should also consider whether a lender will report on-time payments to the business credit bureaus, which can boost your company’s credit profile over time. small business loans no credit check
