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How to Get a Small Business Loan with No Credit

By , April 7th, 2017 | No Comments


How to Get a Small Business Loan with No Credit
It is among the most common – and frustrating – vicious cycles on the small business landscape: you need an infusion of working capital in order to make strategic investments, add staff, grow your business and generate profit, but banks will not even consider your loan application (or even give you a free calendar or fridge magnet) because you do not have an abundance of credit.

An “abundance of credit” is not an exaggeration. Since the Great Recession circa 2007, banks have dramatically ratcheted up their credit requirements for small businesses. Whereas in the past a few months (or generally less than a year) of a credit history was considered sufficient, these days virtually anything less than two years is a non-starter.

Is this fair? No. Is there something you can do about it? Yes! Below, we highlight 5 steps on how to get a small business loan with no credit:

Stop wasting time applying for a small business loan from your bank. Yes, they are happy to get your cash deposits and “reward” you with an interest that is below the rate of inflation. You may even get the aforementioned free calendar and fridge magnet. But if you do not have a long and stellar credit history, then save yourself some valuable time and plenty of frustration by taking banks off your list.

Start exploring the alternative lending marketplace. You will find firms that offer unsecured working capital loans or merchant cash advances to small businesses that do not have years of flawless credit. Typically, only a few months of operational history is required.

Narrow down your search of prospective lenders by honing in on four key things: 1) Ensure they have at least five years of experience serving small businesses. 2) Ensure they are an actual lender, and not a broker or consultant. If they are a middleman, then they will shop your loan around – and likely damage your credit rating in the process. 3) Ensure they fund 100% of their loans themselves, using their own capital. 4) Ensure that you have the option to repay your loan early if you wish, without incurring any additional fees.

When you identify a prospective partner, contact them for a consultation. If they aggressively push you towards certain loan products, or if they try and talk you into taking out a larger loan than you require, walk away (or better yet, run away). Any firm worth your business should insist on providing you with an objective, informative consultation that focuses on your needs.

When you are finally ready to move forward, apply for your small business loan. This should be a fast and easy process that you can do online, and you should hear back within 48 hours on (and if not, you should be clearly told why there may be delays or why your application is not approved at the current time). Provided that everything moves ahead as you hope, the funds you need should be in your account within a week.

The bottom line? Getting a loan with no credit may seem like an impossible task or like being stuck in a vicious cycle, but rest assured you have plenty of options. The alternative lending marketplace is definitely “open for small business!”

Photo: GotCredit

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