Some lenders (typically online or alternative lenders) offer no-doc business loans. Tempting as it might be to get funding without all the paperwork, these loans often come with high interest rates and fast repayment terms.
Picking out the best small-business loan means more than just going with whichever option is most convenient. But if you’re short on time, have bad credit or are interested in a no-doc or low-doc business loan, make sure you understand all its costs — and the impact on your business’s cash flow — before borrowing.
Here are some types of financing that may require minimal paperwork, as well as more information about no-doc business loans.
Business loans with low documentation requirements
The unavoidable reality is that every business loan from a lender (rather than family, friends or individuals) requires some paperwork. What differs is how much of it and what kind of information you need to provide.
Here are some types of business loans that may be less paperwork-heavy. These aren’t necessarily true no-doc business loans, but they’re pretty close.
Unsecured short-term business loans
Unsecured short-term business loans don’t need collateral such as equipment or property. These loans tend to have less paperwork than secured loans and pay out faster. For example, online lender OnDeck requires basic business and owner information and three months of bank statements to apply for its short-term unsecured loans. Funds can be available the same day.
If you need a fast business loan, an unsecured loan may make sense. But be careful and confident in your ability to pay it back — short-term loans tend to have high interest rates and quick repayment terms. OnDeck’s maximum term is 36 months, for instance. You’ll likely need to provide a personal guarantee on an unsecured business loan as well, which creates additional personal liability.
Invoice factoring isn’t explicitly a loan, but it does provide businesses with money quickly and with minimal paperwork. With invoice factoring, you free up cash by selling unpaid customer invoices to a third-party company at a discount. Typically, you’ll get around 85%-90% of your money upfront, with the rest coming, minus fees, after the invoice is paid.
Invoice factoring can let B2B businesses access capital quickly and without the same kind of requirements as other types of small-business funding. For example, it can take minimal information and fewer than 10 minutes to apply with BlueVine. Once approved, the only documentation you need is the invoices you wish to factor, or you can sync with your accounting software to simplify things.
Equipment financing is an option for businesses that need cash to finance a piece of equipment and may come with less paperwork than a term loan. Crest Capital, for example, doesn’t require documentation like tax returns or financial statements for borrowers financing equipment of $250,000 or less. The lender says its approval timeline can be as quick as the same day you apply.
Applicants for equipment financing provide lenders with the price of the equipment they’re borrowing money to buy. The lender then provides a lump-sum payment to the borrower upon approval and sets an interest rate and time frame by which the financing has to be paid off. There’s usually no need for a personal guarantee or collateral for equipment financing — what you’ve purchased serves this role.
Business credit card
Getting a small-business credit card does require documentation, but often much less than a business loan does. Well-qualified candidates — those with good-to-excellent personal credit (a FICO score of at least 690) and upstanding business credit — may get a near-instant approval, which makes this a potential option if you’re looking at no-doc business loans as a quick way to access capital.
Using a business credit card in lieu of a business loan can come with its own drawbacks, however. Cards are likely to come with lower spending limits and higher interest rates than traditional business financing. Expect to pay a variable APR of anywhere from 12% to 22%, depending on your creditworthiness, if you don’t choose a 0% intro APR business credit card.
Merchant cash advances
Merchant cash advances provide upfront funding that you repay with a portion of your credit or debit card sales. These advances require minimal paperwork, as you may be able to qualify with just a few months of your business’s credit card statements.
However, the APRs on these advances can hit triple digits, and repayment may be required daily. Consider all other forms of small-business financing before using a merchant cash advance.
What is a no-doc business loan?
Most business loan applications ask for a significant amount of personal and business data. A no-doc business loan reduces that requirement, which can lead to faster funding. Types of no-doc loans can include:
Actual no-doc loans. These loans don’t require documentation beyond basic information about you and your business to determine creditworthiness. No bank statements, tax returns or other financial records are needed to be approved.
Low-doc loans. These loans still don’t require in-depth financial statements like balance sheets and profit and loss statements, but you’ll need to provide a bit more information — like bank statements or daily credit card receipts.
Stated-income business loans. These loans are a variation of no-doc loans in which you include the income you derive from your business, but you don’t need to verify that number with supporting documentation.
Where to get a no-doc business loan
Some lenders require less information than others when deciding to loan your business money. To get a no-doc business loan, you’ll likely be limited to working with alternative online lenders.
To determine if an applicant makes for a good loan candidate, alternative lenders typically use technology to emphasize or analyze underwriting criteria differently than lenders like banks or credit unions. This can sometimes result in applicants being able to qualify with bad credit or needing to provide less documentation around things like their income.
Conventional lenders often set high requirements, both in terms of documentation and credit and financial history. For example, SBA loans can require a significant amount of information about the applicant’s personal and business finances — including three years of balance sheets, income tax returns and your loan application history.
The trade-off for that effort is a business loan that will likely offer a lower interest rate and more flexible repayment terms than no- or low-doc options.