Business Loans with No Credit History

No credit business loans refer to credit products that do not depend on a business’ prior credit for qualification.


Since most lenders use a debtor’s history to determine their credit risk, understanding where and how you can get a no-credit-history loan becomes useful information for budding businesses.

Also, if you have a bad credit history, understanding your options for no-credit-loans can help you access credit for your budding business.


In this article, we will look at where you can get a loan for your business including when you have no reliable credit history. We will also look at lending institutions and what you need to qualify for such a loan in case you are sourcing it from an institution.


Institutional loan products such as Fundbox, PayPal Working Capital, American Express Business Loans and others all have different eligibility requirements. There are also differences in interest rates, limits, and payment periods among lenders that are worth looking at.

  • Cost of Loans
  • Limits
  • 4.66% for 12-week term
  • Up to $100,000
PayPal WC
  • Deducted from sales
  • Based on your PayPal sales
American Express
  • 6.98% - 19.97% (APR)
  • $3.5 - 75K
  • APR range
  • Fees
  • Terms
  • Amounth
  • Unemployment protection
Bank 1
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No
Bank 2
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No
Bank 3
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No

Table of Contents

Why Don’t I have a credit history?

Lenders largely rely on a borrower’s credit history to determine their creditworthiness. However, there are scenarios where an individual or business might not have sufficient credit history to help the lender make an informed decision. 


For instance, if you are launching your first business, there is a chance your business might not have taken any credit for your business. Similarly, if you have ever used credit but not in the past, you will not have sufficient information to generate a credit score. 


Also, if you haven’t taken credit enough times, there will  not be enough information to generate a credit score for you.

Hot Tip:

If you never launched your 1st business you might not have a credit history.

Can I get a Business Loan without a Credit History?

Even if you do not have any credit history, it is still possible to get a business loan from either a non-institutional or institutional lender. Let us explore some of these options. 


If you are looking for a lender that will not check your credit history, you can try your luck with non-institutional lenders such as family, friends and nonprofits. These lenders are less likely to care about your credit history because they are not out there to make money from your loan. However, they will usually have lower limits, be less reliable, and so on.


Institutional lenders such as Fundbox, PayPal and American Express are much more reliable and typically have higher limits. Their downside is that they are more expensive and might require collateral. 


Since friends and family won’t ask you to meet certain minimum requirements, let us look at what it takes to get a loan from some of the best no credit check products.

Requirements to Qualify

When looking for a no credit history loan, Fundbox is one of your best bets. The organization offers invoice financing, which you can use to raise funds for paying suppliers and employees as you wait for your customers to honor their invoices. 


To qualify for a Fundbox loan, you need to be a US citizen/resident. You will also need to prepare three months of business transaction history. This will help the lender evaluate your limit based on your invoice payments and accounts receivables. 


PayPal Working Capital is another great no-credit-loans option if you are a merchant and have been receiving payments through PayPal. The facility offers flexible payments, affordable fixed fees (which you will know beforehand), funding in minutes and, of course, no credit history check.


To qualify for a PayPal Working Capital loan, you need to have a PayPal Premier or Business Account that is at least three months old. Also, you must be processing at least $20,000 annually if you have the Premier account or $15,000 if it is the Business account. 


Of course, you also need to clear any PayPal Working Capital Loan you may be having first.


American Express Business Loans are another option when looking for a no credit check loan. To qualify, you will first need to be pre-approved. Also, you must be at least 18 years old, reside in the US or its territories, be a Basic Card Member and be in good standing with the organization.

Types of business loans with no credit history 

Depending on your needs and what is available in your locale, you can consider different loan products. 


Short-Term Business Loans 

With short-term loans, you get lump sum capital and agree to pay back in fixed installments. This type of loan is suitable for launching or expanding a business instead of financing short-term expenses. 


Short-Term Business Line of Credit

Unlike a business loan, a business line of credit offers revolving credit. Lenders who offer this product will usually allow you to borrow continuously, provided you have not exceeded your total limit. Naturally, you will only pay interest on the outstanding balance. Due to its revolving nature, lines of credit are suited to fund operational expenses.


Working Capital Loans

As the name suggests, working capital loans are designed to finance daily operational expenses. They help maintain a positive cash flow for your business. Due to relatively lower limits, working capital loans are typically not suitable for investing in assets. 


Merchant Cash Advance

Merchant cash advances provide lump-sum amounts to help you cover urgent expenses. You will then agree with the lender on a percentage that will be deducted from future receivables. Merchant cash advances have relatively high interests, which makes them suitable for only urgent expenses. 


Collateralized Loans

Collateralized loans require you to attach an asset to the loan. This gives the lender some assurance of recovering their money if you fail to pay. Typically, this type of loan is secured with invoice or equipment financing. Although the lender has the right to seize whatever asset you provide, there are regulations that protect you from exploitation by predatory lenders.

Pros and Cons 

Loans with no credit history have their pros and cons. Let’s look at some of them. 


One of the advantages of this type of loan is that you can get funded whether you have a bad credit history or none at all. For reasons discussed earlier, you might be having no credit history, but that should not mean you cannot get a loan for your business. 


Secondly, no credit check loans tend to be processed faster. Lenders do not need to scrutinize your past loans’ records, which reduces loan processing time. If you need to finance an urgent expense such as salaries for your staff, you should consider a no credit check loan.


On the downside, no credit check loans usually have steep interests. The assumption is that these loans are riskier. So, lenders try to offset the risks with higher interests. For instance, a merchant advance loan’s total annual borrowing cost may be between 40% and 350%, depending on the lender. 


Another challenge with this type of loan is that it has relatively lower limits. Business lines of credit, working capital loans, and short-term business loans, for example, are designed to fund operational expenses, which can be considered small expenses.

Hot Tip:

One of the advantages of this type of loan is that you can get funded whether you have a bad credit history or none at all.

Why Lenders Check Credit Score

Lenders believe your credit history is a good predictor of your ability to pay a loan. So, they usually check your credit history to help them with determining how risky it is to lend you. 


Based on your credit history, a lender may decide to either deny you a loan or give you one based on the perceived risk.


Your credit history is also useful in helping lenders to determine limits for your loan. Generally, if they think you are a reliable borrower, you may get a higher limit.


Similarly, lenders can use your credit history to determine suitable interest rates for you. If you are perceived to be a less risky borrower, you may be charged lower interests.


You are entitled to a free credit report from each of the three credit bureaus in the US once in a year. This can be downloaded from the Annual Credit Report website, which is the only FTC-authorized site for free credit reports.

How to Establish Credit if You Don’t Have a Credit History

No credit check loans are great, but we have seen limitations such as low limits and high interests. So, you might want to build a good credit history to qualify for more conventional bank loans. The four tips below can help you build credit fast.


  1. Get a secured credit card – If you have a bad history or no history, you may not qualify for a credit card without collateral. Thus, a secured credit card becomes your second-best bet.
  2. Open a credit card account – If you have some history, you can start with a beginner credit card to help you make small credit purchases.
  3. Request for a limit increase for your credit card – This will allow you to spend more and prove that you can handle even bigger repayments
  4. Become an authorized user – By being listed as an authorized user on a credit card, you get some benefits from the responsible behavior of the card owner.
  5. You might also want to consider the following aspects when building your credit profile, as this is what lenders check for in your history:
  1. Payment history – Ensure you pay your installments on time
  2. Age of credit – Basically, if you borrow and repay continuously for a long time, lenders will be more confident with giving you money
  3. Credit mix – If you can, you should combine both installment and revolving loans. It shows your ability to repay different types of loans comfortably. 
  4. New credit inquiries – A high number of new credit inquiries can make lenders think you are biting more than you can chew. However, the impact on your credit score is only temporary.

Frequently Asked Questions (FAQ)

Yes, no credit check loans are available from lenders such as PayPal, American Express, nonprofits, government agencies, etc.

Yes, some credit products are not based on credit cards. For instance, PayPal’s Working Capital does not require you to subscribe for a credit card.

Most no credit check lenders will not list you for defaulting.

No, most no credit check business loans charge high interests to compensate for the high risk that comes with such loans.

Lenders who do not require credit checks have better methods of collecting their money. e.g. automatic deductions from credit/debit card receivables.

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