Some people are under the impression that it’s impossible to get a business loan if they don’t have any credit. It certainly makes it harder to get a top-notch, low-interest loan, but it isn’t impossible.
In truth, if you have no credit, it’s going to be difficult to get the total amount of money you want. Plus, with no credit, you’ll probably end up paying higher interest rates because you have no credit history to draw from. So these are definitely things to consider.
If you put together a good business plan, you should have no trouble finding a lender willing to loan your business the capital it needs to survive and thrive. We’ll now take a look at three things business owner should do when looking for a loan without any credit.
Create a Solid Relationship with Your Local Bank
Smaller banks usually have fewer restrictions than large national banks. This provides a unique opportunity to business owners without any credit. Since small banks have fewer restrictions, you can work on developing a relationship and using the personal approach to get a loan from a smaller financial institution.
Start off by opening a business checking and savings account at your local bank. Show the good people working at the bank that you’re responsible by using your checking and savings accounts wisely. It will prove that you are a smart and serious business owner worthy of a business loan.
Establish a Relationship with the Business Loan Officer at Your Local Bank
Now that you’ve opened your checking account and proved you are responsible, it’s time to begin developing a relationship with the business loan officer. When you connect with this person, let them know about your history with the bank. Sharing this information will make it easier for the loan officer to approve you for a business loan with no credit.
Your best bet is to get a loan backed by the Small Business Administration, which is possible since most smaller banks provide them. If you happen to default on the loan, the government will help the local bank which makes it a less risky proposition on their part.
To qualify, prove to the business loan officer that you’ll be able to repay your loan based on current cash flow. That’s where your business checking and savings accounts come to the rescue.
Secure Your Loan with Collateral
If you do not qualify for a loan based on your willingness to repay without a credit score, you could always use collateral to secure the funds. Your biggest obstacle is proving to the bank you aren’t a major credit risk.
By putting up collateral, the bank will have nothing to lose if you default on the loan. This will make it much easier for them to lend you money when you have no credit.
According to Small Business Loans Simplified, a website that goes into detail about small business loans that don’t require a credit check, “Business expansions, daily operation needs, or unexpected economic downturns are only a few of the reasons many small businesses are looking for loans.”
Please use this information to get a business loan without any credit.
- Pros and Cons of Financing a Business
- 12 Tips for Getting Your Bank Loan Approved
- Why You Can’t Get a Bank Loan for Your Small Business
- Types of Business Loans for Small Businesses
- How to Get an SBA Loan
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