How to get a business line of credit with no revenue?

• Traditional bank loan.
• Equipment financing.
• Business lines of credit.
• Business credit cards.
• Invoice financing and factoring.
• Friends and family funding.
• Crowdfunding.

There are many loan products available to small business owners. Yet entrepreneurs with low credit scores or those who prefer to avoid a credit check for other reasons often find the most success with invoice factoring, ACH loans, or business lines of credit.

The qualification criteria for the three financing options above depend less on your credit scores and more on other factors. This doesn’t mean you will receive an automatic approval even with a very poor credit score. But if you have experience in your industry and some positive credit history, you may have a fighting chance at qualifying.

Below are some important details to consider regarding these three financing options:

With invoice factoring, the majority of lenders do not have a minimum credit score requirement. As a result, your application for funding from a factoring company may not involve a credit check at all. Here’s an overview of how this financing option works.

Invoice factoring involves selling your company’s outstanding B2B invoices to a financing company for cash. In general, a factoring company might advance you 70% to 90% of the value of your invoices. The factoring company then works directly with your client to collect the money owed when the invoice due date arrives. Once it collects the funds, the factoring company will return the remaining balance to you, minus a factoring fee (often 3% to 5%).

Lenders don’t typically check your credit when you’re seeking financing through an invoice factoring arrangement. Instead, the credit of your customers could matter. With this type of financing, a factoring company will collect payment from your customers, not you or your business. Therefore, your customer’s creditworthiness could impact your ability to qualify for financing and the fees a lender charges you as well.

An ACH loan could be another financing solution to consider if you need business financing for bad credit or no credit. Most lenders that issue ACH loans require a minimum credit score of 500 to 625. (These lenders often perform only a soft credit inquiry that won’t impact your credit score.) However, a handful of ACH loan lenders may not require a credit score review at all.

One reason ACH loans are so popular among entrepreneurs is their rapid funding speed. Once a lender approves you for an ACH loan, you can often receive your loan proceeds within a couple of days. This funding agility can present a substantial advantage for a small business in the startup phase.

Of course, just as with ultra-fast sports cars, you are likely to pay a premium for the speed of ACH loans. On either a daily or weekly basis, the lender will take an agreed-upon amount from your bank account as an ACH deduction. (Hence, the name.) The amount you can borrow tends to be lower than the loan amounts you might receive via other financing options. But many small business owners feel that the trade-off is fair, thanks to the convenience that ACH loans provide.

Lenders are likely to review your credit when you apply for a business line of credit (LOC). However, some lenders will only perform a soft credit inquiry to assess your business LOC application. (Remember, soft credit inquiries do not have any impact on your credit score, unlike hard credit inquiries that have the potential to impact your credit score.) Other lenders may perform a soft credit check for the pre-approval process and follow up with a hard credit inquiry at the time of funding.

A business line of credit is similar to a business credit card in several ways. An LOC comes with a credit limit, often ranging from $1,000 to $500,000. Depending on the lender, you may have access to the funds within one to two weeks. The financing typically has a one- to two-year maturity.

Perhaps the best feature of a business LOC is its flexibility. If your restaurant needs a new fryer, buy it. If you need to hire employees, go for it. If you want to bulk up your inventory, do it. Nearly any expense that goes toward starting and sustaining your business is fair game.

Like credit cards, this type of financing also gives you access to revolving credit. This differs from most loans, which provide you with a lump sum of money up front. With an LOC, you simply use the credit line whenever necessary. There’s no pressure to spend it, and you’ll pay interest only on the funds your business borrows.