Small Business Loans - No Credit History

The majority of startups fail because they simply do not have the capital to keep the doors open. If you are a small business owner with bad credit or no credit, then you may find it difficult to secure a loan from a bank or traditional lending institution.


Lenders want reassurances that you will repay the money they lend to you and without any borrowing or lending records in your name, it is difficult to convince them that you will. The good news is that there are lenders who do not require a credit history. In this article, we list these lenders and tell you everything you need to know about small business loans with no credit history.


Stick around.

  • Interest rates
  • Amount
  • Repayment
American Express
  • 6.98% to 19.97%
  • up to $75,000
  • 12, 24, or 36 months
Working Capital
  • 1.01-1.58
  • up to 30% of your last 12 months of PayPal sales
  • 18 months
Shopify Capital
  • 1.1 or 1.13
  • $200 to $2,000,000
  • 12 months
  • 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?

Credit history is a personal record of an individual’s financial history. This record reflects whether or not you have been able to repay loans on time and how many times you have bounced checks in the past. 


As a result, those who have never had any credit cards or loans may find that they do not have a credit history as this history only reflects the history of credit taken. If you have never applied for a loan or credit card before, you will not have a credit history.


Not having a credit history does not necessarily mean having a bad credit score. Your credit score is determined by your debt-to-income ratio, but this does not take into account how well you have managed the personal loans you have taken. 


This means that simply because you do not have a credit history, your credit score may be high or low regardless of the little or no borrowing activity in your name.

Hot Tip:

Not having a credit history does not necessarily mean having a bad credit score.

Can I Get a Small Business Loan without a Credit History?



Although an individual with no credit history will usually have a very difficult time in obtaining funding when compared to those who have built up their credit, it is not impossible. 


Once an individual has begun to build their credit history and score, they will begin to become more successful in obtaining commercial financing. There are some small business loans for people with no credit or bad credit history. 


However, it is necessary to remember that while a bad credit history may disqualify someone from having access to commercial financing, it does not automatically mean that they will be rejected. 


Some lenders do offer business loans for start-ups and existing businesses in need of working capital for equipment or inventory.


Although the lack of credit history makes it more difficult to get funding when compared to those who have built up their score over time, there are some lenders who do offer business loans to people with no credit. 


A new business owner will need a source of revenue in order to acquire a loan, regardless of their credit history.


Once an individual has been in business for a while and has been generating revenue from their business, they will have a credit history that might help them to take out other types of loans in the future.

Business Loan on Keyboard Key Concept.

Requirements to Qualify

When applying for a small business loan, applicants will need to remember that having no credit history does not automatically mean an individual will be unable to obtain the necessary funding. 


In fact, it is possible for someone with no credit history to obtain funding as long as they meet some of the requirements of commercial lenders.


As mentioned previously, individuals can begin to repair their credit score by making all of their payments on time, paying down the amount that they owe, and opening up additional accounts.


Individuals must be at least 18 years old in order to qualify for a personal loan. Furthermore, it is necessary for borrowers to have earned income in order to take out a business loan.


As mentioned previously, individuals will need to meet the requirements of commercial lenders in order to be approved for small business loans without a credit history. Individuals should remember that the size of their income, how long they have been in business, and if they can provide collateral are all factors that will help them obtain funding through commercial lenders.


Although it may seem like having no credit history will make it impossible to qualify for commercial financing, there are some lenders who can provide small business loans without a credit history that might be able to offer the necessary funding.

Types of Small Business Loans with no Credit History

There are a number of different types of business loans that will do just fine for those who need a business loan and have no credit history.

● SBA 504 Loan 

An SBA 504 is a type of long-term Small Business Administration loan that does not require good personal credit. The collateral for this loan is property, be it real estate or business property. Because the lender has to take property as security, these loans are only available to businesses with steady cash flow.

● SBA 7A Loan 

SBA 7A Loans are short-term loans that can be used to expand or start a business and do not require good personal credit. The collateral for these loans is usually inventory. These loans also come with long repayment schedules, but they come at lower interest rates than an SBA 504 loan.

● Merchant Cash Advance 

A Merchant Cash Advance is a short-term loan that can be used to expand or start a business and does not require good personal credit. The collateral for this loan is the business’s future sales.

● Peer-to-Peer Lending Platforms 

A Peer-to-Peer lending platform is a website that connects businesses with money lenders who agree to fund certain percentages of the loans they make. Depending on the lender, these sites do not require good personal credit.

Business Line of Credit

A business line of credit is a type of unsecured small business loan. Once approved, you will be given an amount for which you can draw as needed at your own discretion (similar to a checking account). The main difference between this and a true business cash advance is that instead of paying back the entire amount upfront, you’ll pay it back as you go. You can think of it as a safety net for unexpected expenses.

● Business Credit Card 

A business credit card is an unsecured line of credit that does not require good personal credit. Because there are no assets being put up as collateral, interest rates on these cards are very high.

● Microloans 

A microloan is a small business loan that does not require good personal credit. These loans can be very helpful in starting a small business and often provide just enough funding to help get an idea off the ground or acquire one piece of equipment.

● Unsecured Business Loans 

An unsecured business loan is a short-term business loan that does not require good personal credit. A common type of unsecured business loan is the line of credit, which is similar to a credit card in many ways.

● Business cash advance

This is the most common type of business loan used by those with no credit history, bad credit, or start-up businesses. Once approved, the lender provides you with a lump sum of funds, which you pay back over time via your credit card or bank account. Since the lender is almost assured to collect their money, they are more willing to lend to those who have no credit history. It’s important to note that business cash advance lenders generally charge high-interest rates for this type of loan. However, these businesses are sometimes the only companies willing to lend without a credit history.

Small-Business-Loan pic 3

Pros and Cons of Small Business Loans with no Credit History


  1. Money can be available within days – Funding is available for small business startups, individuals who have no credit history, or those that are trying to rebuild their credit. You will need a clear business plan to qualify.
  2. Small business loans with no credit history can be easier to obtain than traditional loans.
  3. You don’t have to wait for your loan – many companies provide same-day funding, and some may even approve you on the spot if you’re in a hurry.


  1. Interest rates: Interest rates tend to be higher than traditional small business loans.
  2. Bad credit will result in higher interest rates or even disqualification for some lenders. You can typically expect to pay between 8% and 30%, depending on your credit score.
Hot Tip:

Small business loans with no credit history can be easier to obtain than traditional loans and Interest rates tend to be higher than traditional small business loans.

Why Lenders Check Credit Score

A credit check is a necessary part of the small business loan approval process. The majority of lenders will refuse to give you a loan if they feel that there’s even a small chance that you won’t be able to pay it back on time, or at all.


In fact, if your credit score is too low, most alternative lenders will not even look at your business plan or loan application.


Your credit score is used to determine how trustworthy you are, and if you will make payments on time. This is hugely important for lenders because they could lose money if you don’t repay the loan. 


Lenders also use your credit history to determine what interest rate to charge you (which means that those with poor credit may end up paying a much higher rate).


Again, you could be hiding assets from the lender. In other cases, high-risk borrowers might have friends or family members make payments on their behalf. If the borrower defaults on the loan and this turns out to be the case, they will likely sue these people for repayment.


If your business is new, banks might not know whether it is viable or not. In this case, a high credit score can help prove that you’re responsible and ready to handle your loan responsibly.


Remember, people who don’t have a credit history, bad credit, or even those with poor credit can still get loans and do well as entrepreneurs. Although it might be difficult at first, there are companies willing to help you. You just need to find the one that’s right for your business.

Small-Business-Loan pic 2

Establishing Credit without Having a Credit History

If you’ve never had a credit card or loan, then establishing your personal credit can be difficult. Here are a few tips on how to build your credit history:


  1. Set up a secured bank account with your banks. Secured accounts require the borrower to put down a cash deposit in order for them to provide an overdraft line of credit.
  2. Open a department store credit card. Many large retailers, including Macy’s, Sears, and Walmart offer credit cards that can help you build your credit history over time.
  3. Ask family members or close friends if they are willing to co-sign for an account with you. Having somebody else on the line might be just what you need to get a credit card in your name.
  4. Become an authorized user on someone else’s account. You can ask a family member or friend if they would add you to one of theirs in order for you to build up some credit history in your name. Just make sure that the person who is adding you has a good track record when it comes to paying their bills on time.
  5. Apply for a secured credit card or small business loan through a lending company that’s willing to work with borrowers without an established credit history. Many alternative lenders are willing to extend loans to people who don’t have any sort of credit score, but you’ll need to do some more searching in order to find the right one for you.

Frequently Asked Questions (FAQ)

There are small business loans with no credit history lenders willing to offer you a loan like the ones listed above.

The SBA doesn’t lend money directly to small businesses, but they do approve guarantees for loans made by private lenders.

Generally, a credit score of above 600 is admirable. However, some institutions can still take something lower.

The lenders listed above are some of the best for this loan product. Check them out.

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