Looking for no credit check business loans?

No credit check business loans aren't really a thing but it's still possible to get a loan even if you have poor credit.

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By

Tom Stelzer

Reviewed by

Rachel Wait

Updated

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Can I get a business loan with no credit check?

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, the good news is 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 appearing on your credit file for other lenders to see.

Why can’t I get a no-credit-check business loan?

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. They look at your credit history 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.

How do I check if I'm eligible?

  • Look for your lender’s eligibility checker. Most lenders will have some kind of link or box that says “check your eligibility first”. Use it.
  • The eligibility checker will ask for both your business’s details and your personal details, but it will only run a “soft” credit check. This will take a quick look at your credit report without leaving any permanent mark on it. This means it won’t hurt your credit score in any way.
  • You’ll then get an indication of how likely you are to be approved for a loan. If it’s good news, you can go ahead and apply in full (when a hard credit check will be carried out). Having this knowledge reduces the chances of you making too many loan applications in a short space of time – which can make you look desperate for credit and lead to a rejection.

Secured business loans, personal guarantees and higher rates

If you have a low credit score, you might have to agree to certain terms before you can be accepted for a loan. These can include:

  • Securing your loan. If your credit score isn’t great, securing your loan may give the lender the extra guarantee it needs to accept your application. This means you’ll need to use an asset, such as property, as collateral. However, that asset is then at risk if you can’t keep up with your repayments. If you can, try using a business asset and not your personal property as collateral in order to avoid risking your house if things go wrong. Moreover, secured business loans always take longer because the lender has to assess the value of the collateral you’re offering first.
  • Signing a personal guarantee. Unfortunately, this is a fairly common practice in the UK, even for businesses whose credit score is acceptable. A personal guarantee is a legally binding agreement that means you’ll be personally liable for repaying the loan if your business is unable to. Find out more on how personal guarantees work in our dedicated guide.
  • Paying a higher interest rate. These days, a reasonable number of lenders specialise in offering loans to businesses that have bad credit. However, it will most likely cost you more.

What types of business finance can I get with bad credit?

Here is a list of business lending options that are still available to those with poor or limited credit:

Type of financeSecurityRepayment termsGood forBad for
Business line of creditRevolvingSecured or unsecuredFlexible – but the longer you borrow, the more you’ll pay
  • Improving your cash flow
  • Only borrowing as much as you need
  • Long-term borrowing
OverdraftsRevolvingUnsecuredFlexible – but the longer you borrow, the more you’ll pay
  • One-off, unexpected and small expenses
  • Businesses with a good credit history
  • Borrowing high amounts for a long time
Bad credit business cardsRevolvingUnsecuredFlexible – no interest is charged if you pay monthly
  • Improving your monthly cash flow
  • Cheap borrowing if you pay on time
  • Long-term borrowing
Invoice financingOne-offSecured against your invoicesShort-to-medium terms – tied to invoice payments
  • Improving your cash flow
  • Businesses with not-so-great credit scores
  • Long-term borrowing
Merchant cash advancesOne-offUnsecuredShort-to-medium terms – tied to credit card takings
  • Businesses with unpredictable incomes
  • Businesses with not-so-great credit scores
  • Businesses that don’t take many card payments
Asset financingOne-offSecured against business assetsMedium-to-long terms – usually repaid in monthly instalments
  • Purchasing equipment
  • Using assets as collateral to grow the business
  • Flexible borrowing
Short-term business loansOne-offUnsecuredShort terms – usually repaid in monthly instalments
  • Reacting to an unexpected event
  • Grabbing an unexpected opportunity
  • Long-term borrowing
  • Improving cash flow
Business loansOne-offSecured or unsecuredLong terms – usually repaid in monthly instalments
  • Long-term projects
  • Growing your business
  • Flexible borrowing
  • Improving cash flow

How do lenders assess my eligibility?

It depends on the lender, but the following are all likely to affect your business’s chances of getting credit:

  • Your business credit score. Lenders will look at your credit score to determine how reliable you are as a borrower. Your credit score can vary depending on the credit reference agency, but the higher it is, the better.
  • How long your business has been trading. Most lenders won’t lend your business money unless it has been trading for at least a couple of years.
  • Your business finances. Be prepared to give information on your business’s annual turnover, profit, trading and payment history. You may also be asked to provide your business’s full accounts.
  • Your business plan. A strong business plan will show your lender how you’re planning to use the money you’re asking for to ultimately increase profit.
  • Your personal credit score. Some lenders will look at this, especially if your business only has a short credit history. Some credit reference agencies will produce a “blended” credit score that looks at both personal and business reports.

How to improve your chances of getting approved

  1. Check the eligibility criteria first. Do this even before looking for the eligibility checker. There’s no point wasting time if, for example, the lender you’re looking at only works with limited companies and you’re a sole trader.
  2. Boost your credit score. You can improve your credit score by paying down debt, filing your business’s accounts on time, making payments on time (to a financial institution or to a supplier), and spacing out credit applications by several months.
  3. Check your website and social media. These days, your business’s online presence is more important than ever. Some lenders will look at it, especially if you’re running a startup that doesn’t have much of a credit history.
  4. Do your homework. Research your options first. Lenders often specialise in certain types of products or business profiles, so you need to find a good match.
  5. Be realistic. Don’t apply for a sum you already know you can’t afford to pay back.
  6. Don’t be sloppy with your application. Gather all the necessary documents and keep everything in order – do your best to make your business look as sharp, professional and reliable as possible.

If you’re struggling to get a business loan, you could consider applying for a business credit card instead. This offers a more flexible way to borrow and could help you build your business credit score so that you can secure a loan in the future.”

– Rachel Wait, financial journalist

Bottom line

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. It can also be worth speaking to a specialist online lender as they might be more willing to offer you a business loan with poor credit – though be prepared to pay higher interest rates.

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Frequently asked questions

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To make sure you get accurate and helpful information, this guide has been reviewed by Rachel Wait, a member of Finder's Editorial Review Board.
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Written by

Writer

Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio

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