While traditional business loans typically require credit checks, there are plenty of options available for small businesses that don’t require the same. The challenge is finding a lender that is willing to overlook personal financial history in favor of other data that helps predict whether the company can afford to pay back the loan. Fortunately, there are lenders who focus on these additional metrics, such as cash flow and revenue. This article will examine some of the most popular business loan alternatives that don’t check personal credit scores.
Many entrepreneurs seek financing that is separate from their personal credit. This is especially true for newer companies that don’t have a strong track record or for those that prefer to keep their personal and business finances separate. Unfortunately, there are very few funding sources that don’t take into account a person’s personal credit history when making approval decisions. Even those that consider the business’s history often require a personal guarantee.
However, there are lenders that don’t check personal credit at all and base their decision on other criteria instead. For example, mobile payment company Square offers a no-credit-check business loan program for companies that use its point of sale platform. These loans are based on a business’s daily card sales, with amounts starting at $300 and maxing out at $250,000. Applicants receive a near-instant approval decision and are required to meet a minimum monthly payment.
Those seeking no-credit-check business loans can also look into invoice factoring, which is a type of financing that focuses less on an individual’s credit score and more on the value of a company’s accounts receivable. This type of financing is especially useful for business-to-business companies that are waiting on payments from clients and need to make payroll in the meantime.
Other sources of funding that don’t check personal credit include a variety of online lending platforms. These platforms provide borrowers with access to multiple lenders in one place and help avoid the negative impact on a credit report that results from applying for multiple loans at once.
Some lenders may run a credit check, but only after an applicant has agreed to the terms and provided all required documentation. In addition, some lenders may run a soft inquiry, which does not negatively affect a person’s credit score.
While there are several lenders that offer no-credit-check business loans, it is important to remember that these types of loans typically have high interest rates. In addition, securing such a loan can cause harm to a small business’s credit if the borrower is unable to repay the debt on time. Therefore, it is best to only apply for this type of loan if it is truly necessary. A borrower should also carefully review the terms and conditions of these loans to ensure that they understand what is expected of them. If they do not meet their obligations, the lender can take legal action against them. For this reason, it is always a good idea to work with an experienced business attorney. no credit check loans for business