You’re not the only one wondering, “How do I get a loan with no credit?”
Having a credit score in general is paramount, it is especially important when running a small business or large enterprise.
When you’re in need of additional cash, capital and need a loan from a lender, it’s much tougher to get what you need if you have no existing credit score.
Getting approved for financing is not impossible with no credit score, however, there are some key factors to note when you’re trying to get a business loan on zero existing credit.
Getting a Business Loan with No Credit
Here are a few ways to build business credit and improve your chances of getting approved for the loan that your business needs:
As a Business Management Platform, Kiu Global offers various business management solutions, especially for micro-small businesses who have no existing credit, and are looking for a loan.
Kiu Global connects businesses with banks in order to assist business owners with the finances that they need.
Once you use our BMP for a minimum of 90 days, your business transactions will build enough to establish a line of credit, and ultimately get a loan through our partner banks and MFIs.
ASK! Do Not be Afraid to Ask
As cliche as it sounds, realizing that you need a loan is just as scary as when you first opened your business.
Before you commit to the first lender that you talk to, do some research on their requirements to prepare yourself with questions, should you have any.
This will also help you decide which type of loan to take and which lender to choose.
Some online lenders are fairly lenient, however, having no credit score will definitely raise concerns about their willingness to work with you. Don’t let that intimidate you. You’d be surprised to see how much banks are willing to offer support for small businesses.
Clear Business Plan
A concise and organized business plan could help a lender see your vision and what you plan to do with the money that you’re borrowing from them.
Especially with no existing credit score, a business outline could be helpful in convincing the lender that you can commit to the repayment terms.
You should also be ready to provide your lender with your business’s monthly sales earnings to (hopefully) show them that your finances are improving over time.
A lender will be more comfortable working with you if they vividly see that your financial situation is on the rise. If your sales are unpredictable or fairly low, it’s hard to say whether a lender would provide you with a loan.
Considering including these factors in your business plan:
How you plan to use the loan (for equipment, investments, etc.),
How you plan to repay,
How much you plan to repay each period,
On average, how long will it take you to repay,
If you can prove that your business sales are progressively increasing and that having access to better financing will benefit your sales, you will have a better chance of getting the loan.
Be Prepared for a Potentially Higher Interest Rate
If your business has no credit score, you’re considered a higher risk for lenders especially with banks. Therefore, you may receive a higher interest rate than you would if you had an existing credit score.
You should extensively review whether or not your business will be able to responsibly pay the loan amount back, in the agreed time.
Keep in mind that missing any loan payments will result in hurting your business’s credit score, so if you aren’t fully confident that you can take the loan payments on, you likely shouldn’t commit to a loan.
Take the Proper Steps to Build Your Credit
This tip is obvious; however, you could build your score much quicker than you think.
While your credit score won’t build itself overnight, you can surely enhance it within a couple weeks.
It’s important to form healthy financial habits in order to prove your business worthiness.
Kiu BMP will help you get started with building your business's credit portfolio.
After You Get a Loan… Pay Your Bills on Time!
Paying your bills late can lead to a lower-than-average credit score.
If you pay your loan on time or even earlier than your due date, your credit score will automatically improve. And give you some perks; some lenders even offer cashbacks to motivate you in paying on time.
Here are a few easy tricks to ensure that you’re paying your bills on time:
Set a Monthly Reminder on Your Calendar or Smartphone
Utilize Financial Apps (BIDV iBank, Kiu The Bookkeeper App)
Review Your Budget
Whether you’re spending too much each month or are simply forgetful when it comes to paying on time, these tips should help you get into a better habit so that your credit score stays on track.
Business Loans for No Existing Credit
Kiu Global is dedicated to helping our clients receive the business management solutions that they need.
Be sure to check out our page on Sales & Loan Automation to see how you can get set up with a loan through us, even if you have no existing credit.
If you have any other questions, comments or concerns on how to get a business loan on no existing credit, visit our website at KiuGlobal.com!