Sources of financing for companies without credit checks

First, what is a credit report?

A company’s credit report shows potential funders the applicant’s payment history. The problem is that many businesses with poor credit also need financing. These financing options often carry higher interest rates than other forms of lending. There are several ways to acquire finance for a new business with no credit history, and here are some of them.

1. Merchant Cash Advance

In a merchant cash advance (MCA), the provider is not concerned about your company’s creditworthiness. That’s because an MCA is your company’s act of selling a portion of its future earnings with debit and credit cards.

MCAs move very fast. Many companies apply for it and see the money in their bank account just a few hours after hitting “send.” MCAs are also very flexible. The money works as a working capital loan to finance equipment purchases or as a short-term cash injection.

That percentage means that your business will return proportionally to what you gain. If 15% of daily transactions occur and your company gets $1,500 on a particular day, it will return $225. If your business wins $20,000 on another day, you will get back $3,000. While paying less on days when you earn less can be beneficial, large payments do not gain you an advantage in your return, as there is no benefit to returning an MCA faster.

2. Financing through POS system

Depending on the point-of-sale system you apply for, financing options vary. These companies often use the data from your point-of-sale software to determine an appropriate credit lending option for your business. Each one works by examining your entity’s POS account history.

When you apply for credits, you offer a loan amount and a percentage of each day’s transactions going to repayment. The total interest will not increase over the life of the loan, and as long as you pay a minimum percentage of the loan every 90 days (depending on repayment terms), your loan will remain current. Because these loans use your POS account to determine these factors, they do not require a credit check or personal guarantee.

3. Crowdfunding

Many entrepreneurs see crowdfunding as an alternative to credit. If you have an established consumer base, crowdfunding can be an easy and efficient way to add working capital in times of need. There are several platforms available online for crowdfunding.

These platforms are suitable if you need funding to create a new product. You can allow access, customization, and other perks to supporters who offer more.

4. Building Up Credit

Finally, another alternative is to wait until you are in a better credit situation before you start applying for a loan. Small business owners are eager to grow and expand. Showing patience with your business credit rating can lead to much more favorable loans in the future.

With good credit and, of course, a willingness to allow financial institutions to do hard credit pulls, you can find your business qualifying for much more favorable types of loans, including:

• Business lines of credit: Business lines of credit are advancing loans on which a business can draw cash up to an agreed credit limit. These loans are helpful, as applicants only require to make payments and pay interest on the cash drawn below the limit.
  
• Business credit cards: These cards work much like particular credit cards used for significant business-related purchases. They offer cashback and other rewards to help your business keep costs as low as possible.

In conclusion, there are a lot of alternatives to this kind of financial process. You have to choose what works for your business. Always check all your possibilities to make the best deal.