If you’ve only recently started your business or have yet to generate significant revenue, you might find it harder to get approved for a traditional loan. Banks and some online lenders look at your business income and time in business, so if you don’t have enough money coming in or are a new business, you might not meet every lender’s requirements.
Fortunately, there are business loans with no documents required that can get you the funds you need to grow your business, even if your revenues are low and your business is new.
What are No-Doc Business Loans?
Business loans with no documents required are just that: loans that require minimal documentation on your company’s finances. Rather than asking for your profit and loss statements and tax returns, a lender offering no-doc business loans may instead look at your credit history (business, personal, or both) and current sales to determine what kind of risk level you present as a borrower.
No-doc business loans may not require collateral like others do. Other lenders require assets like property or cash to be put up to secure the loan, but in this case, that may not be necessary if you meet the minimum credit score requirements.
One thing to note: because business loans with no documents don’t require collateral and have more flexible requirements, they may come with higher interest rates and fees compared to more traditional loans that go through full underwriting. A no-doc loan is a riskier loan for the lender, so they charge more for it. Also, no-doc loans may cap out at lower amounts than other loans.
How to Apply for No-Doc Business Loans
Start by finding a lender that offers business loans with no documents in the amount you’re seeking. Spend some time comparing interest rates and seeing what you qualify for.
Some lenders may not require collateral if your credit score is over a certain threshold. You may also need to show that you’ve been in business for at least six months, and earn a certain amount of income.
A no doc business loan will require some documentation. It just won’t be traditional income verification documents. When you apply, you’ll need to provide some basic information about yourself and your company. You’ll need to verify your identity. You may have to show revenue through merchant processing reports, invoices, or your profit and loss statements. The requirements are far lighter than those for a traditional loans.
Some no-doc lenders approve applications the same day if you apply early enough and provide all the necessary information with your application.
Who Can Benefit from No-Doc Business Loans?
Is a business loan with no documentation right for you? It may be if your business is new but has income. Startups without extensive financial histories can benefit from business loans with no docs. Because they don’t have the credit history, time in business, or income to qualify for traditional financing, no-doc loans may be a better fit.
A no doc business loan could also be a good fit if you want a quick turnaround on your application and the faster funding that could result, plus you need a smaller amount and you can pay it back relatively quickly. Lenders may be able to process a no doc loan faster because there’s less documentation to process.
Pros and Cons of No-Doc Business Loans
Business loans with no documents provide a fast and convenient way to access capital to grow your business. And because they are less stringent in what they require to qualify, you may be approved for financing where other lenders turned you down. If your credit score is high enough, you may not need to provide collateral for the loan.
On the other side, no-doc business loans may have higher costs than traditional financing. They may also have lower borrowing limits.
No-Doc Business Loan Alternatives
Here are a few types of business financing to consider.
Invoice Factoring/Financing
If you invoice clients, invoice factoring or financing could be an option. With the first, you sell unpaid client invoices to a third party in exchange for a percentage of the invoice value. Once the invoice is paid, you’ll receive the rest, minus the fee. The third party is in charge of the invoice once it leaves your hands, and it’s up to them to see that it gets paid.
With invoice financing, you’re borrowing against the value of an unpaid invoice. It’s still your responsibility to see that the invoice is paid by your client.
Merchant Cash Advance
If you process credit and debit card payments, here’s another financing option. You can borrow against future sales with a merchant cash advance. The lender will look at a few months of your statements to verify eligibility.
Where to Find No-Doc Business Loans
Primarily, you’ll find business loans with no documentation required online. A simple search will net dozens of results, so spend some time comparing what each one offers. Here are some factors that could help you rule out some lenders that aren’t a good fit:
- Loan limit
- Collateral requirements
- Credit score requirements
Also, read customer reviews on third-party sites like TrustPilot and BBB.org. They can tell you a lot about what it’s like to work with a particular company. Note that customer reviews on the Better Business Bureaus heavily favor complaints. People who have good experiences are less likely to leave written reviews in general. Rather than calculate the percentage of bad reviews, pay attention to how the company responds. You want a company that is responsive to emails, chats, and phone calls, and one that'll help you when you need it.
Tips for Using No-Doc Business Loans Wisely
Business loans with no documents can be helpful in the moment that you need the cash, but as in all things financial, go into the decision carefully. Take the time to explore all of your options, not just no-doc business loans. If you’re not happy with the choices, consider hitting the pause button while you work on the factors that will make you eligible for more attractive loans.
Before you apply for a loan, create an updated budget that shows how you'll pay it back. Your need to keep up later is not less important than your need for funds now.
Many people scroll down and sign. It’s your money and your business, so know what the contract says. Read the fine print of your loan agreement. Understand the repayment terms and interest rates, as well as any fees and when they kick in. 00
It can be frustrating to find the right financing at the right time, and business loans with no documents provide a reasonable alternative to traditional loans.