Ways to obtain business loans without credit checks

Business loans could be short-term and long-term, aimed to meet all kinds of business expenses. Qualifying for a business loan is not as cinch as emergency loans because they involve greater risk due to the dynamic nature of the business.

Whether you are a start-up or an established company, you might need to borrow money at some point. Many entrepreneurs struggle to receive approbation because of many factors, such as a poor credit rating, fluctuating business profitability, poor business income, and little business history – to name a few.

It is worth noting that your business credit score will also be taken into account, especially if your business has a separate legal entity. Do not be under the impression that your personal credit rating does not play any role. Lenders will evaluate both personal and business credit ratings. However, if you are a sole proprietor, your personal credit score will be regarded as your business credit score.

What if your credit rating is bad? Your credit score plays a paramount role in deciding whether or not you should be approved. Unfortunately, a bad credit rating will call your credibility into question. Your business must have a sound relationship with suppliers and creditors. If you clear dues on time, your business credit score will be good. The higher, the better. A business credit rating range falls between 0 and 100.

However, a bad credit score does not preclude you from applying for a business loan. Though not all lenders, some do not hesitate to approve your application. Unfortunately, this will restrict the loan amount and attract outrageously high interest rates.

Could you apply for a business loan with no credit checks?

Even if you are looking to borrow money despite a bad credit rating, your credit history should not be lower than the bare minimum that lenders have set. Applying for a business loan could be challenging when your credit rating is not so stellar. But if your credit score is so bad that you cannot afford to lose your credit points further, you might be tempted to borrow a loan with no credit check.

First off, you need to keep in mind that these kinds of loans do not exist at all. No lender is authorized and permitted to consider your application without a credit check. Even if you are trying to borrow a small amount of money, lenders will check your credit rating as well. Without running hard checks, they cannot know your past payment history.

If you come across a lender who provides you with a loan with no credit check, you should immediately understand it is a red flag. No registered lender can approbate your application without making hard inquiries.

However, there are some lenders who run soft inquiries in order to protect your credit rating. They will charge high interest rates. Most of the time, these rates are too high. It might be difficult to repay them. A small business loan without a credit check should be considered only when you need it for urgent expenses.

Make sure that the lender you are applying for these loans is a lender who runs soft inquiries. They may not be sufficient to understand your previous payment behaviour, but they will cost you less money. However, despite soft inquiries, interest rates will be higher than those of standard business loans.

The loan amount will be restricted when you apply for a loan with no credit checks. Most of the time, the total amount of money cannot be more than £1,000. Further, the repayment length does not exceed more than a month. Because the debt amount is small, they are discharged in fell one swoop.

Some lenders may require you to pay down the debt in fixed equal instalments. Most lenders would put you on a weekly instalment repayment plan. Monthly instalment plans are available for large loans. The loan amount must be large enough to be paid back in at least six-month instalments.

Monthly instalment loans do not come with no credit check facility

Bear in mind that monthly instalment loans with no credit check do not exist at all. Monthly instalment loans come with a large amount of money. They are deemed to be paid down in fixed instalments over a period of time depending on the amount. Of course, it is not possible for a loan to sign off on your application without a credit check.

Here is what you need in order to qualify for a large sum of money:

• You must have a good credit rating. Approval is quite challenging without a decent credit file. Some lenders may entertain your application, but they will charge high interest rates.
• Apart from a good credit rating, you should be able to have consistent profitability. Lenders would take into account the profitability of the previous two years. This will give them an idea of how much money you make every year and how much you are left with after paying all your business expenses, so you do not have to struggle with debt payments.
• The value of your assets should be greater than your liabilities. In some cases, your business loan could be secured against your business assets. This factor plays a key role in determining whether or not to accept your application.
• If you are a start-up, make sure that you give your lender proof of sound projected profitability. Your business plan must be effective and compelling.

To wrap up

It is not easy to obtain business loans without credit checks. If any lender approves your application without a credit check, they might charge high interest rates and restrict the loan amount. Ideally, you should have at least a fair credit score so your credit score does not plummet to the range of very poor due to hard inquiries. Focus on other factors as well, such as a business plan and a sound financial condition.