Can You Get a Startup Loan With No Credit Check?

Apr 17, 2022

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If your credit isn’t at its top, you might be eligible for an initial business loan without a credit check. However, such loans may come with high costs or high-interest rates, particularly in cases where approval is said to be assured. Beware of these loans; reputable lenders don’t assure you that you’ll be approved for the loan you need for your small business without verifying your credit.

Here are some startup business loans that won’t impact your credit score and are among the other financing options entrepreneurs might think about.

set a startup no credit check

Startup loans that do not require a credit check

Alternative online lenders might not be able to consider credit when it comes to business loans for startups. Online loans generally are more flexible and can provide more funds faster than traditional banks. However, they can be more expensive in terms of interest rates and charges for this convenience.

Here are some alternatives from the large lenders.

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PayPal Working Capital

It’s a loan that’s not based on credit. PayPal Working Capital loan doesn’t need a credit check but instead considers your PayPal account’s background. You’ll have to have at least a PayPal Premium or Business Account for a minimum of 90 days before you can be eligible.

The loan allows for flexible repayments, and funds can be received within minutes. You’ll be charged a fixed amount when you apply, depending on the amount of your loan and the percentage of repayment you choose, and your business’s PayPal track record. A portion of your profits to pay the loan on time.

American Express Business Loan

The American Express Business Loan lets the borrowers apply for financing up to $75,000, ranging from $3500 to $75,000. The repayment terms vary between 6 and 36 months. What’s the issue? Only current AmEx Business Credit Card owners that meet specific requirements can be considered for the loan. American Express will do a soft credit check before you apply. This won’t affect your credit score.

BlueVine

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BlueVine provides credit lines for businesses. If your business is structured as a limited liability business, BlueVine won’t perform a hard credit check when you request a loan. They perform an inquiry into your credit report when you’re a general partnership or sole proprietorship. However, this will happen only after you’ve accepted an offer.

Is there any guarantee for startup business loans without a requirement for credit checks?

Although there are lenders who offer “guarantee” for startup business loans, it’s best to be cautious should you find one of these deals. Business lenders with credibility aren’t likely to approve a loan for a startup without first examining your credit.

The lenders use this information to decide the risk of loaning you money. When you’ve got a great individual credit rating (a FICO score at or more than 690), this can make it more likely to be able to get business finance with attractive terms and with low-interest rates. If your company doesn’t have an established history, it may be difficult to obtain the business loan you need to start with low credit.

Certain lenders might perform the “soft” credit check when you apply for financing. This isn’t the same thing as not conducting a credit report. Soft pulls can let lenders know if you’re likely to be approved, but they don’t impact the credit rating. If your application isn’t approved, at the very least, there’s no need to apply elsewhere with a lower credit score.

Are you able to get a loan for your startup without a score?

It’s sometimes difficult to secure a loan for a startup because new businesses won’t have a proven financial record that lenders can look at. Although these options are restricted, some lenders consider other factors besides credit. If your credit score isn’t in top condition, there are no-credit-check loans you could apply for.

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Business loan lenders typically assess potential applicants based on the “five C’s of Credit”: capacity capital, character, collateral, and terms. “Character” refers to your credit score, and if a lender doesn’t want to consider the other factors, such as how much cash you have significantly.

Startup commercial loans that have no credit check Pros and cons

There are clear advantages to starting loans that do not require credit checks. However, there are some disadvantages worth examining.

Pros

  • Can get the ability to borrow money even with poor credit.
  • It might be simpler to take out a loan in the near future if you repay the loan in time. 
  • The timely payment of your bills can increase your credit profile.

Cons

  • A higher interest rate often accompanies credit cards that do not require a credit check.
  • May pay additional fees.

You could spend a significant amount on interest, which could overshadow the advantages of the loan.

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What are the other alternatives to startup funding?

Suppose you’re having trouble obtaining a startup loan because of your credit. It’s possible to look into other options for financing which don’t necessarily need a great credit score, for example:

  • The borrowing of money from family or friends.
  • Launching a business crowdfunding campaign.
  • Applying for small business grants.
  • Make equity investments in your company’s startup.
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