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By Danielle Towner

Five options for business funding without credit

Running a business takes more than just a solid plan. You need money. No matter what level you are in business, funding will help you get it started and keep it growing. If you have not built business credit, lenders will rely on your personal credit profile. When your own credit score is not good, you may feel as if your back is up against a wall. But don't give up just yet. Non-traditional lenders have created many options to fund businesses with credit challenges.


Credit is not the most critical factor with investors. In this case, other numbers are more important. They look at your overall business vision and how you are executing it. If your business is one that will be experience high growth and be around for the long term, you may be worth it for an investor to pour into. Seek out venture capitalists or private investors. If you are not ready for the big investors, start by getting business funding from family or friends.


In recent years, crowdfunding has helped startups and entrepreneurs launch and expand their projects. It's a way for family, friends and investors to contribute in small portions. Their loans or gifts combine to meet your capital need. Credit requirements for crowdfunding platforms are not as rigid as those of traditional loans. With this funding option, you focus on pitching to convince potential lenders to buy into your business concept.

Unsecured business loan

Unsecured business loans have many advantages for growing entrepreneurs. Most obviously, they do not require collateral. In the early stages, you can focus on building assets instead of risking them. You also do not need business credit to qualify for an unsecured loan – you only need decent personal credit history. If you can show you have managed debt responsibly, you should not have a problem qualifying.

Unsecured business line of credit

A line of credit differs from a loan in that it's revolving. Like a credit card, you can use it repetitively. Once you've paid back what you owe, you still have access to business funding. With a loan, you would have to apply for a new one. An unsecured business line of credit is an option to maintain working capital while growing your business. The best part is that lenders report your activity to help build business credit in the process.

Purchase order financing, invoice factoring,
or accounts receivable financing

If you already have consistent business, you can use your invoices as a guarantee. Some use this for a cash advance to fulfill large orders. PO financing gets you money to pay for supplies, hire contractors and pay vendors. Once you complete the order, lenders collect payment for the invoice directly. They give the business the remaining funds after deducting their loan and fee amounts.

Get creative to get credit

Banks are not the only option to get money for your business. In fact, they only account for about 25 percent of financing needs for small businesses. They are hesitant to risk lending to new companies. In that case, you have to use alternative sources. Use lenders that rely on business operations more than credit, and work on your business and personal credit in the process. That way, you'll be ready when greater opportunities come along.

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