The reading level for this article is All Levels
In today’s rough-and-tumble credit market, finding a business loan with no credit can be a daunting task. However, don’t be turned off by the first few rejections that you will probably get, for savvy entrepreneurs in need of small business loans, no credit is necessary…if you know where to look.
The first obvious “don’t†is the big banks. Wachovia and Bank of America are not going to get you anywhere. Large banks get more than enough business, and don’t need to take on the unncessary risk of new or poor credit businesses. Big banks see their customers (especially the smaller ones) as little more than an account number, and generally don’t let them get past the highly inflexible rules and regulations that they issue. Instead, it is much wiser to try your luck with a small bank or a credit union. Both of these options will give you the opportunity to pitch your idea to someone that is higher up in the decision-making process, giving your sales pitch a much greater likelihood success. They carry other benefits intrinsic to their business structure as well: smaller banks tend to be more competitive due to their smaller client base and credit unions, as a result of being non-profit organizations, have lower interest rates than a for-profit bank. Both are, thus, excellent choices for small business loans.
No credit can be daunting for the businessperson in need of a business credit card, but remember, all businesses have to start somewhere, and business credit cards are typically the first step. Of the 500 or so business credit cards in existence, only about 60 will extend credit to start-up businesses, and typically with a very high APR. While it can be frustrating, the hunt is often worth the wait.
Here is a cool trick to remember when looking for small business loans: no credit is needed for merchant cash advances! If you are doing a good number of monthly credit card sales, you may be eligible for a cash advance without even having to consider your credit. Merchant cash advances are based entirely on predicted future credit card sales and nothing else, and they often exist with reasonable interest rates, high balances, and flexible repayment options.
Another option you may want to consider is an SBA loan. The SBA is a branch of the department of commerce that guarantees loans to start-up businesses, minorities and veterans. Depending on your level of need, it may be wise to consider the options available from the SBA.
