No Doc Business Loans: Is One Right for Your Business?
Although online lenders offer business loans with no documentation, you will likely pay more if there is less paperwork.
Almost every business loan application will require some paperwork. While there is no such thing as a no doc business loans, some loans require less documentation than traditional business loan applications.
These are a few types of financing that may not require much paperwork. You also need to fill out more paperwork to get the right small business loan.
There are almost no doc options for business loan.
These options have higher fees and longer repayment terms than traditional business loans that you can get at banks or through Small Business Administration. These are viable options if you need the qualifications or need funds quickly.
Unsecured short-term loans for business
Short-term unsecured business loans are available without collateral, such as property or equipment. These loans are easier to obtain than secured loans, and they pay out more quickly. To apply for a short-term unsecured loan, OnDeck will need basic information about the owner and business and three months’ bank statements. Funds may be available as soon as possible.
An unsecured loan might be a good option if you require a quick business loan. Be confident that you can repay it. Short-term loans are often high in interest and have short repayment terms. OnDeck’s maximum term, however, is 24 months. A personal guarantee for an unsecured loan to a business will likely be required, which adds personal liability.
Invoice factoring
Although it is not a loan, invoice factoring can provide money to businesses quickly and with minimal paperwork. Invoice Factoring allows you to free up cash by selling unpaid invoices to third parties at a discounted price. You’ll typically get 85% to 90% upfront and the remainder, minus any fees, once the invoice has been paid.
Invoice factoring allows B2B companies to quickly access capital without meeting the exact requirements of other types of small-business funding.
Equipment Financing
Equipment financing can be an option for companies that require cash to finance the equipment. It may involve less paperwork than a loan term. Equipment financing applicants provide the lender with information about the equipment they borrow to purchase. After approval, the lender makes a lump-sum payment and then sets the interest rate and the timeframe for the financing.
Equipment financing doesn’t usually require collateral or personal guarantees. What you have is sufficient.
Credit card for business
Although a small business credit card requires documentation, it is often less than a loan. It is a good option if you are looking for a fast way to get capital.
However, a business credit card can have its drawbacks. Business credit cards are more likely to have lower spending limits and higher interest rates than traditional business financing. If you do not choose a /0% intro APR business card, expect to pay a variable interest rate of 12% or more, depending on your creditworthiness.
Merchant cash advances
Merchant cash advances are upfront financing you can repay with a percentage of your debit or credit card sales. These advances are easy to get, and you might be eligible with just a few months’ worths of credit card statements.
These advances have an APR of up to triple digits and may require repayment daily. Before you apply for a merchant money advance, consider all other sources of financing small businesses.
How to obtain a business loan with no documentation
You’ll need to work with online lenders to get a small business loan.
Alternative lenders use technology to determine whether an applicant is a good candidate for a loan. Sometimes applicants may be able to get a loan even if they have poor credit, or they will need to provide less documentation about their income.
Conventional lenders, on the other hand, have high standards in terms of documentation, credit, and financial history. SBA loans, for example, can require significant information about an applicant’s personal or business finances, including three years’ worth of balance sheets, income taxes returns, and loan application history.
A business loan will likely offer lower interest rates and flexible repayment terms than any other option.
