No credit check for business loans

If you have bad or limited credit, having hard searches added to your credit report is really the last thing you need. It’s a situation that can lead business owners to believing a no credit business loan is the best option for them. 

However, with two thirds of adults harbouring the misconception that frequent credit score checks negatively impact their score, and 90% of business owners lacking an awareness of what goes into their business credit score, this would seem to be an opportune moment to empower business owners with an understanding of their creditworthiness.

Here’s what a no credit check business loan is and what some of the alternative options may be if you choose to go another path.

What is a no credit check business loan?

A no credit check business loan does what it says on the tin – a lender extends funds to a business without running a hard credit check. Lenders will often look at other aspects of the business, for example, cash flow projections, and these types of loans usually come with higher interest rates.

No credit check business loans are generally targeted towards borrowers who have suffered difficult experiences when it comes to seeking funding in the past, for example, in the form of repeated rejections with no assistance or direction towards a solution that could actually work for their needs.

What is a bad credit business loan and do they differ from no credit check business loans?

Bad credit business loans are designed for businesses with very limited or bad business credit scores. Unlike a no credit check loan, a credit check is run on the borrower with a bad credit business loan, but it’s run with the understanding that the loan is designed with bad credit scores in mind. Again, these types of loans often come with higher interest rates.

If a lender does run a credit check, is it run on the applicant's personal or business credit score?

That depends a lot on the type of loan you’re requesting. As a general rule of thumb, if you’re asked to extend a personal guarantee, the lender will likely run a credit check on you as an individual.

However, bear in mind, it’s entirely possible your business credit score and personal credit scores differ wildly from each other, in which case, you may have a very different experience when applying as a business compared to possible past experiences when applying as an individual.

If you don’t know your business credit score, you may be able to find out with Tide’s Credit Score Insights.

Types of no credit check business loans

There are some types of loans that can sometimes come with no credit checks, these include:

Merchant cash advance

A merchant cash advance isn’t really a loan – but an advance against future earnings. Essentially, you trade a percentage of future sales for cash today, and these can sometimes come with no credit checks.

Invoice finance

Invoice finance (specifically, invoice factoring) can involve selling your invoices to a factoring company, which again, isn’t a loan so much as a sale.

Short-term business loan

Some short-term business loans are offered without credit checks, for instance, your current bank or lender may be able to extend a loan without running a check, as you are already an established customer with them.

Crowdfunding, and family and friends

Crowdfunding, small investment rounds, and funding from family and friends can sometimes go through without the need for a credit check, although, generally, the bigger the investor the more likely they are to run a credit check on you or your business.

Is a no credit check business loan right for me?

While it can feel like credit checks are there to punish you, they’re actually there to protect you. Overextending yourself or your business can have severe, long lasting effects on your financial health. A credit check is there to help prevent businesses entering into an unhealthy cycle of debt.

The problem is, you often don’t get a lot of information after a rejection, so it can start to feel like one rejection after another. Ultimately, the decision is yours, but we recommend taking extra care not to enter into a debt cycle or to enter into an agreement with a predatory lending company.

Find business loans with Funding Options by Tide

Whether you’ve decided to take out a no credit check business loan, a bad credit business loan, a merchant cash advance, or a standard business loan, reach out to our expert support team using the link below to find out if we can help you find the most suitable options for you. We work with many of the most established lenders in the UK and help facilitate loans ranging in value from £1,000 and £20M.

Find a business loan.

Short-term lending can lead to financial difficulty and is not suitable for everyone. Contact us for support if you ever face difficulties making your repayments. Warning: Late repayment can cause you serious money problems. For help go to moneyhelper.org.uk

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.