Business Loans Without Personal Credit Check
Find out more about your business loan options and whether a credit check is required today.
Fact checked
Your business’ credit score and your personal score are quite separate figures, but both can come into play when applying for a loan. If your personal credit is a little lacking, it is possible to get a business loan without the need for a personal credit check? Learn about your finance options in Savvy's helpful guide.
Can I get conventional business loans without needing a personal credit check?
In a word, no – you generally can’t get business loan funding without a personal credit check coming in to play. While the idea of sidestepping a credit check might be an attractive one if your credit record isn’t spotless, the reality is that running credit checks on a business’ directors is standard practice for any Australian lender. Partly to check on your past track record with loans and credit, but also for purely administrative reasons – confirming details about you and your business and checking everything is above board. So pretty much any legitimate lender you approach will be running one.
Fortunately, if your credit is less than perfect, that doesn’t need to be the end of your business loan story – there are still options open to you. In recent years, Australia has seen a growing number of loans from private online lenders coming on to the market. Unlike banks – which are notoriously intolerant of poor credit – online lenders have a well-established reputation for being lenient when it comes to credit ratings.
Your choice of loan can also have a huge impact. For example, an unsecured business loan is a type of loan that requires no asset for security, is quick and easy to apply for, and they're well known for being available to customers with widely varying credit. Savvy can help you find and compare a range of these loans – easily comparing a range of Unsecured loans from some of Australia’s top lenders, and choosing the best for your business.
If your credit score is particularly low, there are also a range of loans known as bad credit loans that might still be open to you when few other loans are. These are well wort looking into if you’re in the process of rebuilding after past financial troubles.
Are there alternatives to a traditional business loan without a personal credit check being needed?
There are a few alternative types of business finance that do place far less emphasis on your credit – particularly your personal credit. These options might only be suitable for certain businesses, but they can be a great option if you do qualify.
Invoice financing is a form of business lending suitable for businesses which have a backlog of unpaid invoices (as in money that people owe your business, rather than the reverse). It involves taking a number of those invoices and transferring them to the lender, who then pays you the majority of their value. The lender then collects the debt themselves. And because you don’t need to make any repayments in this process, your credit rating isn’t significant – the lender places much more weight on your customer’s credit rating than yours.
A merchant cash advance is another business lending alternative. It involves borrowing money from a lender, who takes their repayments as a percentage of your business’s cash flow rather than a regular set value amount. And because it’s not technically a loan – it’s technically a “sale of future revenue” – the rules are a little different, and the lender can focus more on your current cash-flow numbers than your recent credit history. The downside is that they’re not cheap – weighing in among the most expensive loans on the market.
How can I improve my loan approval odds, despite bad credit?
Have records that show you're doing better
If there have been issues with finance in the past, having evidence that they’re back on track now and improving steadily might help. Keep track of your records and keep evidence that finances have improved in a safe, assessable location.
Having someone go guarantor
A good guarantor (i.e. someone who’s in a strong financial position) can do a lot to improve the confidence of your lender. In addition to lifting your odds of getting approval, it can mean more borrowing power and better rates.
Contribute some money as a deposit
It helps lender confidence to know you’ve got something invested in the loan as well. So bringing some of your own money to the table and offering it as a deposit can sometimes tip the balance in your favour a little.
Offer an asset as security
Although it slows down the application process, offering a significant asset (such as a property) as security on the loan gives the lender a bit more of a safety net, and can help your application.
