Starting a small business is difficult enough without all the paperwork small business loans require. With overhead costs, payroll, realty fees, and more, it can be overwhelming to go through the process of applying for a loan. Fortunately, several no-doc startup business loan options are available, depending on your situation.
No doc business loans are lending options that require minimal paperwork. They are the premium option for small businesses looking for startup business loans that need quick and flexible funds. While the money and terms aren’t as favourable as larger loans, access to these funds can provide essential liquidity when you need it most.
While it’s challenging to begin a startup, it’s not impossible with suitable lending options. This article will cover no-doc startup business loan options and the pros and cons of this approach.
What No Doc Startup Business Loans Can I Acquire as a Small Business Owner?
The most challenging phase of any small business is during the startup. Funds are limited, and there’s so much to accomplish. Fortunately, getting funding is possible for a new business if you know your loan options. Further, several options are no doc, requiring little or no paperwork.
The caveat here is that loans will be limited compared to longer-term options. While you won’t get as many funds or favourable APRs as larger loans, these options provide plenty of funding and flexibility for your new business.
0% Credit Card Stacking
One of the best ways you can get funding for your small business is to leverage your personal credit toward your business. A solid strategy to do so is with 0% interest credit card stacking. Essentially, you take out many credit cards at 0% interest using your personal credit. You can then use those cards for your business for virtually any expense.
While you’ll need to manage various cards instead of one loan, and the funding will be considerably lower, this option is still preferable as a startup business loan. Because you’re using your personal credit, you don’t need to justify your startup business’s credit score or business history. Further, applying for countless credit cards boasts minimal paperwork and low APRs.
This option is best for those with excellent personal credit that they can use towards virtually any business expense. Additionally, credit card stacking is one of the most flexible no-doc options for startup businesses.
Personal Loans for Business Purposes
Another way to leverage your personal credit for your startup is with personal term loans for your business. Similarly to credit card stacking, you can take out a personal loan with your credit score and use it towards virtually any business expense. In fact, if you’re in need of more significant funds, BitX Funding can help you stack these loans to get your business where it needs to be.
The most favourable aspect of personal term loans is their flexibility. Because they are not technically business loans, there are far fewer restrictions on how you can spend the money. Personal term loans can go towards maintenance, payroll, equipment, bills, and even to pay off other loans to build credit. Further, BitX Funding can offer unsecured loans with no prepayment penalties.
However, to qualify for personal term loans, you’ll need a personal credit score of at least 700 and $50k or more in verifiable personal income. APRs run about 12% for a 5-7 year loan. Overall, this option is best if you require a quick influx of funds with little paperwork and need more funding than credit card stacking can offer.
Similar to MCAs, equipment financing isn’t as much a term loan as a financing option that allows you to borrow against outstanding invoices. It is an excellent funding option for small businesses that have many outstanding invoices and need funds to grow their business now.
The way invoice financing works is that a business with outstanding invoices can either sell those accounts or take a loan against the sum of total outstanding invoices. Your business can use those funds immediately and pay the loan and interest later. When you sell the invoice, you receive about 80-85% of the value of the invoice. After you pay off the loan, the lender will pay back the remaining amount of the loan minus interest fees.
Invoice financing is a flexible and quick way to access funds you’d otherwise have to wait for. Because the account is sold to the lender, it is already collateralized and provides a no-doc funding option for your business. Further, while the funds are limited to the value of your invoices, they provide you with much-needed liquidity to grow your business.
Pros and Cons of No Doc Startup Business Loans
While getting funding as a startup isn’t easy, it’s possible if you know your options. However, any lending solution has its drawbacks, and it pays to know the advantages and disadvantages of each option.
Lenders generally take on more risk for startup businesses than any other venture. This risk means that no doc startup loans will be difficult to apply for and will have higher interest rates and terms for their loans. However, these lending options boast flexibility and speed in providing much-needed liquidity to growing businesses.
Advantages of No Doc Startup Business Loans
The primary advantages of no-doc loans are their flexibility and speed. Despite any other drawbacks, these loans provide valuable liquidity to up-and-coming businesses that need it most. The funds typically have few requirements and can be put towards any business expense.
Many of these loans don’t require collateral or have a built-in collateralized option to simplify the process. Further, not having extensive documents to submit allows for speedy approval and almost instant funds at your disposal. Overall, no doc startup business loans are a financing solution for startup businesses requiring immediate funding.
Disadvantages of No Doc Startup Business Loans
While no doc startup business loan options are a boon for new businesses, they come with drawbacks to consider. Because of the risk associated with lending to startup businesses, these options limit what they can offer. The most significant downside of these loans is the lack of funds you can access compared to traditional loans and their interest rates. Further, a lack of collateral can increase these interest rates and limit what you can borrow further.
These loans are the best option for business owners who can’t access lending otherwise and need funds immediately. However, consider additional startup loan options if you can get approved for longer-term loans that better fit your business needs.
Get Approved for Startup Business Loans with No Documents Today
The economy is picking up, and individuals are spending more money on small businesses than ever. Now is a great time to start and nurture an up-and-coming small business. However, getting the funds necessary to grow can be challenging, and you may wonder about your financing options. Further, with all the documentation loans require, you may not get the funds you require when you require them.
Fortunately, if you’re a small business owner looking to grow their startup business in 2022, BitX Funding has you covered. We are your online loan experts with a full suite of lending options depending on your situation. If you’re interested in no-doc financing options for your small business, contact us today to get started!