UK
IRE
AU
CA
US
ZA
NGSouth Africa Lead
Page written by Alastair Woods. Last reviewed on October 30, 2024. Next review due 2025.
Securing a small business loan can be challenging for many organisations, but for business owners with bad credit, it can be extremely tough. No credit check business loans may provide a solution to this problem, although this type of financing typically comes with higher costs, shorter terms and lower sums available.
No credit check loans are usually provided by online and alternative providers instead of traditional lenders such as banks and credit unions. With this type of financing the lender does not check your personal or business credit score when reviewing your loan application.
No check business loans can help small business owners with poor credit get the financing they need, but securing a loan without undergoing a credit check can be difficult. Most lenders will check your credit when you apply, so finding lenders who are happy to forgo this basic requirement could take a lot of time and research. Also, you should be prepared for the fact that financing without a credit check can be more expensive than other types of business loan.
A business credit score is an indicator of the financial strength of your organisation and its ability to pay its bills. This is an important metric. Lenders will consider your business credit score when deciding to lend you funds. Your score will also impact how much you pay for borrowing the cash. The better your score, the better your chances of getting a loan at a competitive interest rate.
Business credit scores are different from personal credit scores. Usually graded from 1 to 100, a good business score is 80+. If your score is less than this, you may struggle to secure the best types of loan and you should follow these steps to repair your credit:
It is common for mistakes to occur on credit reports – both business and personal – but incorrect information could have an adverse impact on your loan application. Check both reports and ensure the details they contain are correct. If there are errors, get them amended before applying for a loan.
If you don’t have a strong business credit score, you can build one by following these steps:
Yes, although you will need to shop around to find lenders who offer this kind of financing and collateral may be required. Some lenders may be willing to provide you with a loan based on a ‘soft credit check’. This is a review of your personal or business credit (or both) that does not leave a hard search statistic on your credit report. Alternatively, you could consider loans such as a merchant cash advance or invoice financing that use your sales receipts and billings as security for a loan – these types of borrowing are often available without a hard credit check, although they are typically more costly than standard business loans.
No credit check business loans may be a good financing solution for business owners who:
Unfortunately, the majority of lenders will check business and personal credit scores when you apply for a loan. If this is a problem for you and/or your business, you could consider the financing options shown below:
There are several types of no credit check business loans, and they are usually provided by online and non-traditional lenders. However, interest rates, fees and terms and conditions for no credit check loans can vary significantly, so it is important that you do your homework and check all the options before settling on a deal. Popular no credit check business loans include:
Secured business loans are easier for borrowers with bad or no credit to obtain and they may be available without a credit check. You provide hard assets, such as real estate, plant and machinery, or inventory as security for the loan. The lender holds a lien on the assets until the loan is paid back, then full ownership returns to you.
It may be possible to secure a business credit card to fund your organisation without a credit check – although the interest rates and fees you pay may be very high. The application process for these cards is usually fast, streamlined and does away with the need for piles of paperwork – in many cases you won’t even need a formal business structure to apply. Business credit cards are also great for re-building your credit if you pay off the balance every month. No added security is usually required.
Equipment loans are ‘self-collateralising’ – they use the asset you’re financing as security, similar to a car loan or a residential mortgage. Once the loan is approved, the lender sends the funds to the equipment vendor, who then delivers the machinery. You use the equipment as you pay for it and the lender maintains a lien on the title to the machinery until the loan is repaid. No other collateral is required.
Also known as account receivables financing, this type of loan allows you to borrow against the value of your unpaid invoices and is best for B2B organisations. The lender will usually provide up to 95% of the invoice value within a few days or even hours of the bill being raised. Your invoices act as security for the loan, no other collateral is required.
Available for businesses that accept customer payments by credit and debit card. You borrow against the value of your card sales. As your card sales increase, your borrowing limit goes up. Pay the loan back with a fixed percentage of your card sales on a daily, weekly or monthly basis. Your sales act as security for the loan, no other collateral is required.
As well as the loan options above, you may be able to get funding for your business from other sources without a credit check:
As with all forms of financing, there are advantages and disadvantages with no credit check business loans:
Pros
Cons
Possibly, although few lenders will provide a startup loan without a basic credit check and if you can find such a loan, the costs will usually be high. Additionally, keep in mind that startup loans are always some of the most difficult to secure and at the very least, legitimate lenders who provide this sort of financing will conduct a soft business and personal credit check. Additionally, no reputable lender will guarantee your approval for a loan without reviewing your financial status first
Just because you can’t qualify for a standard business loan or you do not want to pursue no credit check forms of financing, it doesn’t mean you have to give up your big ideas. There may be other ways to raise the funds you need without a credit check:
Business grants can be a good option for small business owners. Credit checks are usually not required, and, unlike business loans, you don’t need to repay the money. However, the downside is that it can be very tough to secure a grant. They are often restricted to specific locations, industries or causes, making it difficult to qualify.
Available via various online platforms, crowdfunding can bring in large sums if your presentation hits the right spot. Although it may be tough to raise big money in small donations from hundreds of donors, you will pay no interest charges and you do not need to repay the money if you spend it where you said you would. An eye-catching idea and a powerful pitch is essential to succeed with this funding option.
Many small business owners borrow money from family and friends, especially when they are trying to get a new venture off the ground. However, using funds from loved ones can often be a source of contention if the ground rules are not clear from the start. If you have access to this type of financing opportunity, make sure your funders know if they are providing a loan, a gift or an investment from the start. If there are plans to pay the money back, put this down in writing with a clear repayment schedule – including a plan of action if things do not turn out as expected and you cannot pay the funds back on time, or at all.
No matter if you’re seeking your first loan or you’re a seasoned borrower, working with business finance experts can make all the difference when applying for funding. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality business loans that do not require a credit check from a choice of lenders. Give your organization the financial boost it deserves. Register with Swoop today.
Written by
Alastair is South African and has a depth of experience in small business financing and strategy. He has led the launch and development of several successful ventures related to fintech, biotech and agriculture. Alastair studied economics and finance at the University of Cape Town, and then went on to complete his Masters at the University of Edinburgh.
Swoop promise
At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.
Find out more about Swoop’s editorial principles by reading our editorial policy.
Get your free No credit check business loans quote today
Apply in minutes 
FREE no obligation, personalised quote 
Get a quote 
