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Virtually any business loan requires at least some documentation to apply for. While true no-document business loans don't really exist, there are some options that require far less documentation than a traditional small business loan.
What is a No Document Business Loan?
A no-document business loan is a business loan that requires minimal documentation at the time of application, such as only a business bank statement. Minimal-document business loans tend to have higher interest rates and shorter repayment periods than bank or SBA loans. However, for borrowers who don't qualify for traditional funding options or who need funds quickly, no-document business loans can offer flexible eligibility requirements and quick funding times.
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Once you find your perfect match, our team will be happy to guide you through the next steps of the process.
How do no doc business loans work?
The documentation that traditional lenders require usually helps portray your company's ability to repay the loan. This ability to repay is usually derived from monthly cash flow and profits. Lenders that require less documentation can do so because they are usually basing their lending decision on other factors, such as the amount of collateral you can pledge or the amount of your invoices they receive. They may also rely on other risk mitigation measures, such as higher interest rates or weekly payments. These methods give lenders more peace of mind that you will be repaid and do not have to look as closely at your company's financial situation.
Business loan options with little to no documentation required
Here we discuss the types of financing that may require minimal paperwork, as well as the pros and cons of choosing a no-paper business loan.
Unsecured short-term business loans
Unsecured short-term business loans do not require physical collateral like equipment or real estate. Compared to secured, longer-term loans, these products tend to require less documentation and are funded faster.
Many short-term lenders only require minimal documentation, and some will even allow you to connect your financial data to their system so they can assess your business information more quickly without asking you to upload a range of documents.
For example, to apply for a short-term loan from OnDeck, you only need to provide basic information about yourself and your business, along with three months' worth of business bank statements. Lenders say the application process takes just a few minutes, and funds can be available as soon as the same day. So if you need a business loan quickly, an unsecured loan might make sense. But you should be careful and confident in your ability to repay. Short-term loans tend to have higher interest rates and shorter repayment terms. OnDeck's maximum term is
twenty four
For example, the monthly interest rate is
99.9
% (based on loans incurred in the half year to 31 March 2024; the minimum offered is the rate received by customers who received at least 5%).You will likely also need to provide a personal guarantee for any unsecured business loans, which will result in additional personal liability.
Business Lines of Credit
Like unsecured short-term loans, many online business lines of credit require minimal documentation. These lines of credit provide flexible funding that can be used for working capital and general business expenses. For example, Fundbox offers a business line of credit of up to $150,000 with a 12- or 24-week repayment term. To apply, sign up for a Fundbox account, enter basic information about yourself and your business, and connect to your accounting software, business checking account, or other sources to provide your financial data. The entire process takes just a few minutes, and if approved, you can receive your funds as soon as the next business day.
In many ways, a business line of credit is similar to a business credit card, which is also a financing option with minimal documentation. A business credit card is a good option for everyday purchases, especially for new companies just getting started.
However, it's important to note that you'll usually need good personal credit to get a business credit card, and you may incur a higher annual percentage rate (APR) if you don't pay off your balance each month.
Invoice Factoring
While invoice factoring isn't technically a loan, it provides quick funding to businesses with minimal paperwork. Invoice factoring (also known as accounts receivable factoring) raises cash by selling unpaid customer invoices to a third-party company at a discount. You typically receive about 85% to 90% of the funds up front and the remainder, minus a fee, after the invoice is paid.
When you sign up for invoice factoring, many factoring companies will allow you to create an account and connect your accounting or invoice software to their online platform.
For example, a company called FundThrough allows you to provide basic information about your business and connect your QuickBooks account to the FundThrough platform. You can then pull invoices from QuickBooks into FundThrough and select which invoices you want to submit for funding. If approved, the funds will be deposited in your bank account the next business day.
This streamlined and simple process allows invoice factoring to help B2B businesses access funds quickly and without the same requirements as other types of small business financing.
Invoice Finance
Similar to invoice factoring, invoice financing, and accounts receivable financing, invoice factoring allows you to raise business capital using unpaid customer invoices. Instead of selling your invoices to a third-party company, you use the invoices as collateral for a business loan.
Applying for invoice financing is as easy as factoring, only faster. Application requirements vary by lender, but typically include bank information, articles of incorporation, and access to invoices.
Merchant Cash Advance
Merchant cash advances (MCAs) offer upfront funding that's repaid with a portion of your credit or debit card sales, plus fees. These advances require minimal documentation — you may be able to qualify by simply providing a few months' worth of your business' credit card statements.
However, it is important to note that MCAs are one of the most expensive types of business financing and require frequent (sometimes daily) payments.
Merchant cash advance APRs can reach triple digits, and these products can quickly create a cycle of debt that is difficult to break out of. If possible, we recommend exploring all other options before turning to an MCA.
The pros and cons of no-document business loans
Strong Points
Cons
Easy application. Compared to traditional financing methods, you don't need to spend a lot of time collecting and preparing documents to apply for a no-document business loan. You can apply for one of these products online quickly and easily, and in many cases the process takes just a few minutes.
Higher interest rates. Because no-doc business loans don’t require as much paperwork, lenders are less confident in your ability to repay. To reduce risk, lenders charge higher interest rates as a result.
Short repayment periods. No documentation required business loans usually have short repayment periods ranging from 12 weeks to 24 months, whereas more traditional loan options can have repayment periods of up to 5, 10, or even 20 years.
Easy to qualify for: Like other online loan options, no-doc business loans tend to have flexible qualification requirements, meaning even startups and borrowers with poor credit can qualify. Risk of a debt cycle: No-doc business loans with high interest rates, short terms and frequent payments can quickly become a problem, especially if your business is already struggling with cash flow. If you can't keep up with payments, you may try to take out another loan or refinance your existing loan to pay it off, which can create a debt cycle that's difficult to break.
How to get a no paper business loan
When you start your search, you should consider how much funding you need and why. You should also consider your business's qualifications, such as your personal credit score, annual revenue, and how long you've been in business, to get an idea of how you'll be valued by various lenders.
When researching and comparing no doc business lenders, you should evaluate the following factors to find the right option for you:
Types of loans available.
Level of interest.
commission.
Repayment terms.
Application process.
Speed of fundraising.
Customer support.
Lender's reputation.
Once you find a lender, you can submit your loan application and get approved within a few business days. The minimum documentation required usually includes:
business plan.
Legal documents and tax ID number for your business.
Invoice Finance Invoice.
Business bank statements.
No-Document Business Loan Alternatives
If you're a startup with few or no business financial documents: If you're a startup with no revenue and no business financial documents, consider crowdfunding, where you raise funds in small amounts through an online platform. If you have bad credit or no personal income: If traditional funding is difficult to obtain because you have bad credit or no personal income, you can also fund your business with loans from friends and family. Make sure you have any agreements in writing to avoid any potential personal disputes.
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FAQ
Are there any business loans that don't require documentation?
Not true. While true no-document business loans don't exist, there are options out there that require minimal documentation to get funding.
Is it hard to get a no documentation business loan?
No-doc business loans are typically reserved for businesses that don't qualify for traditional forms of lending, so they're fairly easy to qualify for, but they can have higher interest rates and shorter repayment terms.
Which banks offer business loans with no documentation required?
Most banks and credit unions don't offer no-paper business loans, and online lenders tend to offer loans with less paperwork.
What do you need for a no documentation business loan?
For a no-document business loan, you'll probably need to provide some basic information about yourself, your business, and your finances. For example, some lenders might ask for a bank statement, while others might require you to connect your financial accounts to their online system. Ultimately, the application details required will vary depending on the lender and the type of loan.