Congratulations—you have a great business idea, a good plan, and the passion to succeed. You are now an entrepreneur. But there’s one hurdle in your path: you have no credit history or a poor personal credit rating. This might lead you to ask, “Can you get a business loan with no credit?” The answer is yes, but it entails exploring other non-conventional funding sources and their pros and cons.
Conventional financial institutions are known to use credit scores to assess loan requests. However, there are several ways through which anyone with a bad or no credit score can become an entrepreneur. Now, let’s look at these options in detail and discuss the sources that can be used to find the necessary funds.
Building a Strong Foundation
However, if you choose other funding sources at the start, it is crucial to build a strong business credit history for the future. To this end, it is advisable to open separate business accounts and credit cards to avoid mixing the two. Paying business bills on time helps improve the credit score as it is consistent.
Another credit product that can be used to start with is a secured business credit card. If properly managed, the user can be upgraded to unsecured lines of credit. However, maintaining relations with the lenders even if the loan application is rejected can greatly help in the future.
Alternative Funding Paths
While traditional bank loans might be out of reach initially, consider these alternatives:
Microloans
Microloans are a type of loan specifically intended for startups and small businesses. Loan amounts are usually below $50,000, and credit standards are less stringent. The U.S. Small Business Administration (SBA) loans works with non-profit lenders that focus on microloans.
Online Lenders
There are many online platforms that provide business loans with faster application process and less emphasis on credit score. However, these loans attract higher interest rates than the normal bank loans that are offered to the borrowers.
Business Grants
Various grants are available for startups and small businesses from government agencies, non-profit organizations, and even some corporations. Grants are usually free money that does not have to be paid back; however, to receive a grant, one has to apply and meet certain qualifications.
Merchant Cash Advances
Can you get a business loan without credit? Merchant cash advances are quite special. Here, a lender gives you a sum of cash in advance for a percentage of your future sales as agreed. This option does not require a credit check, but the repayment schedule can be complicated, and the fees are relatively high.
Invoice Factoring
Invoice factoring can be used by businesses that sell their goods on credit. A factoring company purchases your accounts receivables at a lower price and then sends them to your clients for payment. This gives the business an initial cash inflow but at the cost of factoring fees.
Take control of your financial future with America Lending Group!
America Lending Group offers a variety of consumer and business loans. Alongside resources to help you build business credit. Whether you’re looking to buy a home, grow your business, or consolidate debt. America Lending Group can help you achieve your goals. So, what are you waiting for? Visit our website today!