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Unfortunately it’s next-to-impossible to get a business loan without some form of credit check. However, if you’re worried that you won’t be approved for a business loan because of bad credit, there are still plenty of options for businesses with poor credit.
It’s also possible to check whether you’ll qualify for a business loan without going through a “hard” credit check. This means that you can check your eligibility for a loan without it affecting your credit score or appealing on your credit file.
Lenders want to make sure that they’re only lending money to people and businesses that will ultimately be able to pay it back.
However, they have no real way of knowing if that’s the case without checking your credit score, and your credit history is used to assess how risky it will be for them to lend you money.
That’s why no responsible lender will offer you a loan without running some kind of credit check. However, that doesn’t mean you can’t get a loan at all. It just means you’ll need to approach the problem differently from business owners who can boast a spotless credit record.
What impact will a low credit score have on the terms of your business loan? It depends, but here’s a basic list of what you can expect:
Here is a list of business lending options that are still available to those with poor or limited credit:
|Type of finance||Security||Repayment terms||Good for||Bad for|
|Business credit cards||Revolving||Unsecured||Flexible – no interest is charged if you pay monthly|
|Overdrafts||Revolving||Unsecured||Flexible – but the longer you borrow, the more you’ll pay|
|Business line of credit||Revolving||Secured or unsecured||Flexible – but the longer you borrow, the more you’ll pay|
|Invoice financing||One-off||Secured against your invoices||Short-to-medium terms – tied to invoice payments|
|Merchant cash advances||One-off||Unsecured||Short-to-medium terms – tied to credit card takings|
|Asset financing||One-off||Secured against business assets||Medium-to-long terms – usually repaid in monthly instalments|
|Short-term business loans||One-off||Unsecured||Short terms – usually repaid in monthly instalments|
|Business loans||One-off||Secured or unsecured||Long terms – usually repaid in monthly instalments|
It depends on the lender, but the following are all likely to affect your business’s chances of getting credit:
At the end of the day, lenders want to make sure you’ll be able to pay back your loan, and anything you can do to demonstrate this will improve your chances of being approved.”
While there’s no real way to get a business loan or finance without a credit check, it’s still possible to check your eligibility for a business loan without it appearing on your credit file. Furthermore, if you’re worried you won’t be approved for a loan because of bad credit, there’s also a number of options available to you.
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