To get your startup up and running, you will need funding. Your business isn’t the first one going through such trials. Every great business starts from somewhere and ended up successful, yours can too. And there are multiple ways you can access a startup loan even without a credit.
Getting a Startup Loan with No Credit or revenue
Seeking out a startup loan can feel daunting. Not only do you need to generate revenue, but you also need to have a solid credit score. The good news is that there are still lenders willing to provide startup loans with no credit or revenue, though the terms and interest rates will be different than a traditional business loan.
Why are startup loans with no credit or revenue an option for some hopeful entrepreneurs? Most lenders understand that start-ups don’t always have the best financial track record, so they’re willing to offer loans at low-interest rates over a longer repayment period.
Some lenders may even require as little as 10% down to qualify for a business loan. There are many reasons why these types of loans exist, but one of the biggest reasons is that small business lending has dropped significantly since 2008.
In fact, in 2016 SMB lending fell by $5 billion from the previous year according to data from SBA Lending, which is up 17%. As a result, it’s becoming increasingly difficult for small businesses that want access to capital resources through traditional means. That’s where these startups come in and offer a more flexible lending solution and help out those entrepreneurs looking for funding in this tough economy.
The Best Small Business Loans for Borrowers with Credit Issues
One of the best ways for a startup to acquire funding is by applying for a small business loan. While this may be an option, some people will have difficulties qualifying for one. This is because a small business loan requires that the borrower has good credit and some form of revenue. However, it’s not impossible to get a small business loan without any revenue or credit. There are a few lenders out there that specialize in working with borrowers that are looking to start their businesses but don’t have any credit or revenues to show. Some of these specialized lenders include:
• Microlending sites like LendingClub and Prosper that offer smaller loans
• Crowdfunding sites such as Kickstarter and Indiegogo where you can post your idea and see if someone else shares your vision
• Nonprofit grants, which can be found by doing research on Google or asking your local government
How to Choose Your Best Loan Option
There are many ways that you can generate funding for your startup.
• Loan from investors: If you have a lot of connections and can get in front of the right people, this could be an excellent way to find funding. It will generally cost you more though because it’s not a guaranteed loan. You will also need to convince investors that your business is worthwhile and has potential.
• Loan from family: This might be an option if you have a supportive family willing to support you with funds. Again, it’s not a guaranteed loan so they may come with stipulations such as how much they’re willing to give and when they want the money back, or what the interest rate is. With this type of loan, they may want some form of ownership in your company, which means that if your business doesn’t succeed, then they won’t make any money either.
• Loan from banks: A bank is one source for loans for startups. They are a bit more cautious about lending out large sums of money – especially with no collateral or at high rates – but if you have good credit and revenue, then this route could work well for you.
• Startup business loan: These are loans specifically geared towards startups and come with low-interest rates and terms that are easy to pay off as your business grows and starts generating revenue. Some financial institutions like Upstart, only require people who want loans to have an income or assets (or both). This means that even those people
Work to Bolster Your Credit Score
If you don’t have a revenue stream, you will need to get a business loan. If your credit score is low and you can’t find a lender that will approve you, it’s time to start rebuilding your credit score. One way is to pay off any outstanding balances on your credit cards. This will show potential lenders that you are responsible and capable of paying back the loan with interest.
Another way is to work with an online lender who offers loans without requiring a credit check. These lenders will look at your past payment history and current income as indicators of future success. Even if you’re new to the business, as long as you’re trying hard to grow, these lenders may offer a loan to get the business off the ground.