Earlier, acquiring a loan was a very time-consuming process as many formalities were mandatory to be fulfilled. Owners of small business used to go to a local bank where they would fill in the application form and provide the bank with all the important paperwork and statements. Even then, the loan approval was not guaranteed as the traditional sources of finances used to give much preference to the credit history of the borrower.
Checking the creditworthiness of the borrower is an important criterion to be followed while granting a loan. It helps the banks in judging the repayment capability of the borrower. That is why traditional lending options are not good for those small businesses that do not have a good credit history. Here comes MCA to the rescue. Merchant Cash Advance providers are the no credit check loan lenders. They do not give any importance to the credit history of a business firm.
1) Why is MCA a great choice?
MCA is a cash advance that is provided to small business owners by the providers of MCA in exchange for a fixed part of the future debit and credit card sales of the business venture. They are more concerned about the sales volume of the business instead of the creditworthiness.
A merchant cash advance is a preferable choice for a small organization having a bad credit history. There are certain providers of this no credit check loan who are ready to grant loans to a small firm with least credit scores.
On the other hand, there are some who do not even include the condition of credit history in their eligibility criteria. If you are a small merchant who is struggling with the issues of no loan because of bad credit, then there are a multitude of programs available for you, which does not include any long-term contracts, extensive paperwork, high rate of interest, and good credit.
2) Why do MCA providers and other providers ignore bad credit?
a) Many pulls
When a money lender views your credit history, it causes a little bit of negative impact on your business as well as personal credit. The number of times credit history of your business is pulled out; more is the negative impact created by it.
Whenever a loan provider pulls the credit of your business, it gets mentioned in the credit report of the business. When other loan providers view that various lenders have pulled your credit, then they may become reluctant in providing you any financial help. This is one of the major reasons why no credit check loan offers ignore bad credit.
b) Credit history
Poor credit history does not necessarily mean that you don’t require any finance for running your business. However, the fact is that the owners of such small companies require a lot more financial assistance as compared to other organizations.
Earlier, there were no sources of finance other than traditional money lenders who generally didn’t give any no credit check loan to the companies. However, over the past few years, alternative lending options have been made available to the small business proprietors. These lenders are more focused on the cash flow. MCA lenders give preference to the sales volume of the business. This has made it easier for the small companies with poor credit to acquire funds.
c) Exploring options
Certain small companies are not ready to accept any deal with any loan provider rather they are more interested in exploring several other options so that their company can compare all the available choices and select the best.
Therefore, in such a case you must only go for the sources of finance who are least concerned about the repayment history of your small firm such as MCA lenders. If you take loan assistance from no credit check loan providers, then they will sign a deal with you without checking your credit.
3) Some other types of no credit check loan providers
a) Invoice factoring
Unpaid invoices are a great means of financial support for small companies with poor credit. According to this method of financing, an unpaid invoice of 90 days is given to the small business. As some other company and invoice make this financing the main base for funding, small companies’ credit does not get pulled.
When the invoice is supplied to the no credit check loan provider, they send a major section of the total amount to the borrowing company in exchange for fee charges. The factoring company sends the rest of the amount after full repayment of the invoice amount.
b) Asset-based loans
Owners of small companies, which are looking for a no credit loan can opt for asset-based loans. If your business organization has assets such as equipment, machinery, inventory, and accounts receivables and you are looking out for working capital solutions for improving your cash-flow, then the best thing for you is to go for asset-based loans. As assets are given as collateral security for this no credit check loan, the risk of the lenders gets reduced.
c) Commercial real estate
There is a chance that these people may give some importance to the credit history of the business but it is possible for you to get a pre-approval without going through any credit check as the base of this source of financing is commercial real estate only.
There are a large number of money lenders who will give much preference to the credit check before giving you the term sheet or preapproval. If you select a wrong broker, then there is a high possibility that you can get stuck in a troublesome problem where your financial documents may reach many lenders simultaneously who will run your credit. Therefore, it is advisable for a small business with poor credit to look for no credit check loan. Many providers of no credit check loan have been discussed above, but the best one out of all is MCA.