Small Business Startup Loans With No Credit Check

Do startup loans with no credit check exist? Yes, small business loans with no credit check are available. But they don’t come in the form of traditional loans and they come with tradeoffs—namely higher rates and fees and shorter terms.

It’s also important to note that while several lenders explicitly advertise that they don’t perform a hard credit check or that they’re open to working with applicants with low or “bad” credit scores (we’ll talk about some of them below), no business owner is ever guaranteed to qualify for a loan—so don’t be fooled by any lender advertising this way. There will always be an application process that will involve, at the very least, the lender reviewing your business financials.

If you have bad credit, searching for a business loan may feel futile. It’s even harder if you’re a startup just trying to get off the ground. 

Startup business loans and no credit check financing are available, but they tend to come with higher interest rates, additional lender fees and shorter terms than typical business loans. Some business lenders are willing to do only a soft credit pull (meaning it won’t affect your credit score), but very few lenders are willing to lend to startups with fewer than six months in business.

How to Know If You Have Bad Credit

If you’re afraid you have “bad credit,” make sure you understand the FICO score ranges before deciding that no lender would want to work with you. You may be underestimating your credit score or your loan options.

Lenders will typically consider your personal credit in the following tiers:

• 700 or above: If you have a credit score of 700 or higher, then you meet the minimum credit requirement for nearly any type of business funding out there—even the most difficult to attain, like bank loans and SBA loans.
• 650 to 700: If your credit score falls in this range, then you’re still in pretty good shape. In fact, after you get a bit of business history under your belt, if your business is in good financial standing, you may still be able to qualify for an SBA loan.
• 600 to 650: When your credit score starts to fall into this range, that’s when your options become a bit limited. That said, with a score like this and after a few months in business, you could still qualify for a medium-term loan from an alternative lender.
• 550 to 600: With a credit score in this range, you’ll definitely be limited in your loan options. If you establish some business history and you have financial stats to show for it, however, then you could still qualify for certain types of short-term or secured funding.
• Below 550: You will be hard pressed to find funding options with a credit score this low, but there are steps you can take to improve your personal credit score and to build your business credit score.

If you have a new business and don’t yet have a strong credit score, here are options to consider for your business financing needs.

Invoice Financing

In general, invoice financing can be a good option for business owners with bad credit, particularly business-to-business companies that process a substantial amount of invoices.

Invoice financing companies advance you a certain portion of your outstanding invoices, assuming they will eventually be settled. The financing company retains a portion of your unsettled invoices and charges a fee for each week the invoices remain unpaid. Once the invoices are settled, the financing company returns the retained amount, minus the lender fees.

Because borrowers use invoices as collateral, lenders don’t rely as much on their personal or business credit scores.

Porter Capital

Porter Capital is an alternative lender that offers both invoice financing and invoice factoring. Porter’s transportation-specific division, Porter Freight Funding, states that it doesn’t perform a credit check before purchasing your invoices as part of the factoring process since it relies instead on the credit history of the clients who will be paying your outstanding invoices.

Equipment Financing

An equipment loan grants you a sum of money to purchase necessary business equipment, machinery, or even software. You pay the loan off, with interest, over a set term. 

Similar to invoice financing, the collateral for an equipment loan is the equipment itself. This allows lenders to be more flexible on their qualification requirements, such as credit score and time in business, since they have the security of a physical asset should you default on your loan. 

eLease

eLease is open to lending to startups and business owners with personal credit scores as low as 550. The lender doesn’t have a specific minimum requirement for time in business or annual revenue, which makes it a particularly appealing option for a startup business loan. The tradeoff will be interest rates that can reach as high as 22%.

Microloans

Regardless of your credit score, if you’re a startup, you may qualify for a microloan. Many microlenders are nonprofits that want to help traditionally marginalized groups and strengthen struggling communities. As such, microlenders may not require you to demonstrate creditworthiness.

Accion Opportunity Fund

Accion has a minimum annual revenue requirement of $50,000—lower than many other lenders, which typically require $100,000 to $250,000. Generally, Accion will consider applicants with a personal credit score starting at 570.

Merchant Cash Advances

A merchant cash advance, which affords you a lump sum in exchange for a portion of your future sales (plus a fee), may be the most enticing option on the surface because it can be one of the easiest financing options to qualify for. Be aware, though, that a merchant cash advance is almost always the most expensive route to go, and many bad actors operate in this space to take advantage of businesses in desperate financial situations.

That said, there are certainly reputable merchant cash advance companies that can help businesses secure startup financing with a poor credit score.

PayPal Working Capital

PayPal Working Capital doesn’t require a credit check or credit history to qualify. Instead, you qualify based on your PayPal sales history.

You need to have a PayPal Premier or Business account for at least 90 days before you can apply. Eligibility largely depends on the number of PayPal sales and transactions you bring in, not on your credit score. You need annual PayPal sales of at least $15,000 (PayPal Business) or $20,000 (PayPal Premier) to qualify.

With PayPal Working Capital, you can apply to borrow up to $150,000 with no credit check. To repay the loan, PayPal takes a fixed percentage from your PayPal account.

Business Credit Cards

Many people overlook business credit cards as a viable business funding option. But business credit cards for bad credit are available, although most are secured by a cash deposit. On the upside, these can help you build business credit as you grow your business, so in the future you can qualify for an unsecured business credit card. The downside: You’ll need to put down a cash deposit to secure the card, which may range anywhere from a couple hundred to a few thousand dollars. Additionally, paying off the card won’t improve your personal credit score.

New business ventures are essentially the riskiest bet there is for lenders. After all, you have no business history to prove your business can run smoothly, and no business credit score to prove you’re financially responsible. How can a lender know that you’ll eventually pay off your debt?

There are some alternative forms of financing that can offer small business startup loans with no collateral or credit check, or that might be options for business owners with bad credit. 

Crowdfunding

Crowdfunding has become a popular option for entrepreneurs looking to launch a new product or service. It lets you tap into the collective efforts of friends, family members, customers, and individual investors to raise the capital you need to start your business.

Platforms like Indiegogo, Kickstarter, and GoFundMe make it easy for you to host an online campaign and reach potential backers through email and social media. Plus, there’s the added benefit of validating and refining your business concept through feedback from the masses.

Small Business Grants

Small business grants are an extremely attractive source of funding because, unlike small business loans, you don’t need to worry about paying them back.

You just need to be awarded one—which probably won’t be easy.

Federal, state, and local governments offer a wide range of grants to help small businesses start and develop. The catch is that they are typically reserved for specific industries and causes that have been identified by the government, such as scientific or medical research or conservation efforts.

Friends and Family

If your family and friends believe in you and your business and are willing to invest in the future of your company, they might be a great resource.

But proceed cautiously. If you accept money from your friends or family, you inherently put them at risk. Make sure that they are fully aware of the risks and have a strong understanding of what you plan to do with their loan or donation.