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No-Doc Business Loans: Is One Right for Your Business?

Online lenders may offer no-doc business loans, but you’ll likely pay more by opting for less paperwork.
Last updated on June 13, 2023

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⏰ Estimated read time: 8 minutes

Applying for virtually any business loan will require at least some paperwork. Although true no-doc business loans don't really exist, there are some options that require far less documentation than traditional small-business loans.

What is a no-doc business loan?

A no-doc business loan refers to a business loan that requires minimal documentation, such as only business bank statements, to apply. Business loans with minimal documentation tend to have higher interest rates and shorter repayment terms than bank or SBA loans. However, for borrowers who can’t qualify for more traditional funding options and/or those who need capital quickly, no-doc business loans can offer flexible qualification requirements and fast funding times.

How do no-doc business loans work?

The documentation that traditional lenders request usually helps them paint a picture of your business’s ability to repay a loan. This repayment ability usually comes from monthly cash flow and profit. Lenders that require less documentation can typically do so because they are basing their lending decision off of other factors, like the amount of collateral you can pledge or your incoming invoices. They may also turn to other risk mitigants like high interest or weekly payments. These methods can help lenders feel more secure that they will be repaid so they don’t need to look so deeply into your business’s financials.

Nearly no-doc business loan options

Here are some types of financing that may require minimal paperwork, as well as the pros and cons of opting for a no-doc business loan.

Unsecured short-term business loans

Unsecured short-term business loans don't require physical collateral, such as equipment or property. Compared to secured, longer-term loans, these products tend to have less documentation and fund faster.
Many short-term lenders only ask for minimal paperwork, and some even allow you to connect your financial data to their system so that they can evaluate your business information more quickly, without asking you to upload various documents.
As an example, in order to apply for a short-term loan from OnDeck, you only need to provide basic information about yourself and your business, as well as three months of business bank statements. According to the lender, the application process can be completed in just 10 minutes and funds can be available as fast as the same day.
Therefore, if you need a quick business loan, an unsecured loan may make sense. But you should 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 24 months, for instance, and interest rates can range as high as % (based on loans originated in the half-year ending March 31, 2023). You’ll likely need to provide a personal guarantee on an unsecured business loan as well, which creates additional personal liability.

Business line of credit

Like unsecured short-term loans, many online business lines of credit have minimal documentation requirements. These credit lines offer flexible funding that can be used for working capital and general business expenses.
For example, Fundbox offers a business line of credit up to $150,000 with repayment terms of 12 or 24 weeks.
To apply, you’ll sign up for a Fundbox account, enter some basic information about yourself and your business and then provide financial data by connecting your accounting software, business checking account or another source. The entire process can be completed in just a few minutes and if approved, you can receive funds as quickly as the next business day.
In many ways, business lines of credit are similar to business credit cards, which can also be a funding option with minimal paperwork. Business credit cards can be a good option for everyday purchases, especially for new companies that are just starting out.
However, it’s important to note that you’ll typically need good personal credit to get a business credit card and annual percentage rates, or APRs, can be high if you don’t pay off your balance every month.

Invoice factoring

Invoice factoring isn’t technically 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% to 90% of your money upfront, with the rest coming — minus fees — after the invoice is paid.
When you apply for invoice factoring, many factoring companies give you the ability to create an account and connect your accounting or invoice software to their online platform.
With the company FundThrough, for example, you can provide basic information about your business and connect your QuickBooks account to the FundThrough platform. Then, you can pull invoices from QuickBooks into FundThrough and select which ones you’d like to submit for funding. Once they’re approved, funds are deposited into your bank account as soon as the next business day.
With this streamlined, simple process, invoice factoring helps business-to-business companies access capital quickly and often without the same kind of requirement as other types of small-business funding.

Merchant cash advances

Merchant cash advances, or MCAs, provide upfront funding that you repay with a portion of your credit or debit card sales, plus a fee. 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, it’s important to note that MCAs are one of the most expensive types of business financing and require frequent (sometimes daily) payments.
APRs on merchant cash advances can reach triple digits and these products can quickly create a cycle of debt that’s difficult to break. If possible, you’ll want to look at all other options before turning to an MCA.

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Pros and cons of no-doc business loans

  • Simple application. Compared to more traditional types of financing, you don’t need to spend too much time gathering or preparing paperwork to apply for a no-doc business loan. You can apply for one of these products quickly and easily online, and in many cases, the process only takes minutes.
  • Higher interest rates. Because you don’t provide as much paperwork with a no-doc business loan, the lender can’t be as confident about your ability to repay the debt. To lessen its risk, the lender charges higher interest rates as a result.
  • Quick access to funds. Many of these online lenders can approve and fund applications within just a few business days, sometimes even faster.
  • Shorter repayment terms. No-doc business loans typically have short terms, anywhere from 12 weeks to 24 months. More traditional loan options, on the other hand, can have repayment terms up to five, 10 or even 20 years.
  • Easy to qualify. Like other online loan options, no-doc business loans tend to have flexible eligibility requirements; startups and borrowers with bad credit may be able to qualify.
  • Risk of debt cycle. With high interest rates, short terms and frequent payments, no-doc business loans can quickly become a problem, especially if your business is already struggling with cash flow. If you can’t keep up with your payments, you may try to take out another loan or refinance your existing one in order to repay, which can create a cycle of debt that’s difficult to break.

How to get a no-doc business loan

To get a business loan with minimal documentation, you’ll likely be limited to working with online lenders.
When you start your search, you’ll want to consider how much funding you need and why you need it. You’ll also want to think about your business’s qualifications — personal credit score, annual revenue and time in business — to get a sense of where you’ll stand with different lenders.
As you research and compare no-doc business lenders, you should evaluate the following factors in order to find the right option for you:
  • Available loan types.
  • Interest rates.
  • Fees.
  • Repayment terms.
  • Application process.
  • Funding speed.
  • Customer support.
  • Lender reputation.
Once you find a lender, you’ll be able to submit your loan application and hopefully receive an approval within a few business days.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.

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