PayPal Business Loan No Credit Check
If your credit isn’t the best, you may be able to get a business loan without a credit check. However, small business loans with no credit check often come with high fees or high interest rates – especially if approval is “guaranteed.” Beware of such products; reputable lenders will not guarantee you will get a small business loan without checking your credit first.
If your credit makes you unable to qualify for business financing, these providers can be helpful.
Business loans with no credit check
Some alternative online lenders do not need to do credit checks on business loans. Online loans tend to have looser requirements and provide funds faster than traditional bank loans, but they can charge higher interest rates and fees for that convenience.
Here are a few options from the major lenders.
PayPal Working Capital
A PayPal Working Capital loan does not require a credit check; instead, it takes into account your PayPal account history. You must have a PayPal Premier or Business account for at least 90 days to qualify.
The loan offers flexible payments and funds can arrive within minutes. The fixed fee you pay when you apply is based on your loan amount, your selected repayment percentage and your PayPal account history. You donate part of your sales to automatically repay the loan.
One of the best places to look for a capital infusion without a credit check is your payment processor. If you’re one of the more than 30 million businesses that use PayPal, you likely qualify for a working capital loan.
- Loan Limits: Loans are based on your PayPal account history. A business can borrow up to 35% of its annual sales through PayPal. First-time borrowers can borrow up to $150,000 and subsequent loans up to $200,000.
- Rates and Fees: Borrowers pay one fixed fee determined based on the total loan amount, PayPal history and selected repayment percentage. Borrowers can choose 10%-30% of daily sales as the loan repayment rate.
- Term Length: There is no maturity period; the loan is repaid after paying off the balance and fixed fee using the chosen percentage of sales.
- Eligibility: Applicants must have a PayPal Business or Premier account for at least 90 days and process at least $15,000 in annual PayPal revenue for Business accounts or $20,000 for Premier accounts.
PayPal working capital loans have no impact on your credit score, require no collateral or personal guarantees, and should only take a few minutes to apply for and be approved. Worth considering if you need gap financing and are confident future sales will support repayment requirements.
American Express Working Capital
American Express offers a number of programs aimed at helping small businesses maintain positive cash flow. While some, such as AmEx Merchant Financing, require a credit check, the American Express Working Capital option allows current customers to access bridging financing without losing your credit. Here are some specs:
- Loan limits: $1,000 to $750,000
- Rates and Fees: 0.5% – 3% depending on loan term, payment and AmEx purchase history
- Duration of validity: 30, 60 or 90 days
- Eligibility: Must be an active American Express Business Cardholder who uses their card relatively frequently; vendors or customers must be set up to accept American Express.
American Express Working Capital is focused on creating flexible options for positive cash flow. If your accounts payable and receivable timelines don’t match, AmEx Working Capital can keep you in good standing with your vendors and allow you to maintain positive relationships with your customers.
With this option, businesses will never see the loans in their bank accounts. Instead, if sellers are set up to accept American Express, AmEx will pay your sellers directly within five days. You then have 30, 60 or 90 days, depending on the term of your loan, to collect funds from your customers to repay the loan.4
However, the loan amounts plus associated fees must be paid in full at the end of a relatively short period of time, which can be a problem if your receivables are not current.
Square working capital
Since its launch in 2009, Square has become a popular point of sale and payment processor for small businesses. While the company previously offered flexible cash advances to merchants, it now offers small loans called “Square Capital.”
- Credit Limits: $300-$250,000, depending on your sales history with Square5
- Rates and Fees: Square levies a one-time fee averaging 10%-16% of your loan; exact fees and repayment rates are determined by the amount you choose to withdraw.
- Maturity: Loans must be repaid in full within 18 months.
- Eligibility: Must be a Square customer with relatively high processing volume, typically at least $10,000 per year
Once a business shows stable processing volume with Square, they are offered a range of capital that they can choose to collect or not. The exact fees and repayment rates are determined by the amount the business chooses to take, but this burden is very clear before the loan is closed. These sliding rates are because the loans are designed to be repaid within 15 months regardless of the amount the business chooses.6
The day-to-day burden of paying off sales can be tough on small businesses when it comes to managing their cash flow, so Square Capital may not be the best fit for smaller companies that have irregular cash inflows and outflows. If daily sales are not where you expect them to be, there is an option to make a minimum payment of one-eighteenth of the loan every 60 days, although the loan will still have to be repaid in full when it comes due in 18 months.
Why Consider Business Financing Without a Credit Check?
Some lenders check personal credit, some check business credit scores, and some check both. Only a few funding sources do not check credit at all when assessing business loan applications.
Unfortunately, for some business owners, a credit check would be out of the question. Some simply don’t want their credit score affected by a tough inquiry, and others are intimately familiar with their credit score and know that in some cases it can immediately disqualify them.
In other cases, business owners are looking for loans that do not require personal guarantees. Their goal is to completely separate their business and personal finances.
These are all valid reasons for wanting to avoid a credit check. However, the reality is that most business loan options review personal credit. And this is especially true for startups or businesses with few employees or no significant time in business and/or revenue.
Still, there are a variety of options, including working capital loans through your payment processor, merchant cash advances, invoice factoring, and equipment loans that can be much more flexible.
Here we will focus primarily on business loan options for small business owners with bad credit. These small business loans typically consider other qualifying criteria, such as annual income, when approving applicants. We will also introduce business financing that does not require a personal credit check and describe the types of financing that do not require personal guarantees.
Can I get a business loan with bad personal credit?
Lenders often pull credit to see if your personal credit score meets their minimum requirements. Negative items on your personal credit history, such as late payments, collection accounts, or bankruptcies, can lower your score and put you in a high-risk category.
However, it is also important to keep in mind that sometimes business lenders check personal credit primarily to rule out serious problems such as pending bankruptcy or to prevent fraud. In these cases, a low credit score can be perfectly acceptable.
Here are some of the most frequently asked questions about PayPal’s business financing programs:
Is Working Capital Reported To PayPal Credit Bureaus?
PayPal Working Capital does not report payments to personal or commercial credit institutions. PayPal Business Loans, on the other hand, reports your payments to business lending institutions. To clarify, making payments on time will increase your business credit score, but not your personal credit score.
Does PayPal take your credit during the application process?
There is no credit requirement for PayPal Working Capital, so there is no credit during the application process. But PayPal Business Loans have a minimum credit score of 550. Therefore, they will pull your credit during the application process, which can affect your personal credit score.
Is PayPal working capital the same as a merchant cash advance?
However, several circumstances can cause your daily payment to increase even if your sales have not increased. For example, if you don’t have enough money to cover the previous day’s sales, PayPal will deduct “catch-up payments” from your account until you reach that point.
With PayPal Business Loans, PayPal automatically deducts your payments each week.
What happens on the days your business doesn’t sell?
This question only applies to PayPal Working Capital. Technically, PayPal’s daily deductions are from the previous day’s sales. Let’s say you sell on Monday but don’t sell on Tuesday. In this case, PayPal would still have to collect payment for Monday’s sale. So it will take catch-up payments until you have paid at least 5% of the total amount in the last 90 days.