When starting a new business, getting the funds you need to get off the ground can be challenging. Many small business lenders look at both your personal and business credit histories and may require collateral. This makes it tough for some business owners, especially those with lean or no business credit history and those who have poor personal credit scores, to qualify for a business loan.
Fortunately, there are financing options that place less emphasis on checking your business credit. NerdWallet has rounded up the best business loans that don’t require a credit check plus other options for those with bad or fair business credit.
The Best Business Loans That Don’t Check Your Credit
Some loan providers don’t run credit checks at all, while others make only soft inquiries that don’t affect your consumer credit reports or scores. Others use a combination of both hard and soft inquiries. If your lender uses a hard inquiry, it will show up on your personal credit report and could negatively impact your credit score. If you’re looking for a business loan that doesn’t check your credit, it’s important to understand the terms and conditions of the product you choose.
There are many different types of business loans available, and each comes with its own set of benefits and drawbacks. For example, some loan types don’t come with a grace period or prepayment penalty, while others do. In addition, interest rates vary depending on the type of business loan you pursue.
The best business loans for bad credit have low minimum requirements and offer competitive rates. They also often provide flexible repayment terms and are backed by solid financial institutions. You can even find some unsecured business loans for those with bad credit or no credit at all.
If you have a strong credit score and plenty of assets, you may be able to qualify for a traditional business loan. You can also try to improve your chances by focusing on making consistent payments and improving your credit report.
You can also consider alternative financing options, such as equipment loans, accounts receivable financing and invoice factoring. These alternatives are sometimes easier to qualify for than a traditional business loan because the lenders can assess the value of your assets and your client’s payment history. Some of these options also don’t check your credit and are typically based on the amount of money you have in your accounts receivable. Another option is to borrow against your 401(k) retirement account, but it’s essential that you research this option carefully before taking this step. no credit check small business loans