October 26, 2022 By Suzanne Robertson

When you need small business funding, a financial history that’s less-than may sometimes stand in your way– but not always. A poor credit score may put the very highest-quality loans out of reach, but you typically still have a number of other options. Below is some information on seven small business loans that may have easier approval than others, along with some tips on how to identify other loans that might have more lenient qualification criteria.

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6 easy approval small business loans

Here are some funding options that may be easier to qualify for than others. Be sure to get all the details from your lender before you sign on the dotted line.

1. Business line of credit

Where many small business loans require consistent monthly payments, business lines of credit may be flexible. They’re revolving loans instead of installment loans, meaning you can typically use the money you need and pay for only that amount. You can theoretically repay that amount whenever you’d like, but the longer you wait, the more fees you’ll generally owe. And on top of these benefits, business credit lenders typically tend to approve most of their applicants.

Generally, companies with at least six months in business with annual revenue of $25,000 qualify for business lines of credit. Certain business credit lenders may not consider your credit score at all, but others may require a minimum business or personal credit score of 500. Either way, that’s generally more lenient than most other types of loans. You can typically get your funding quickly, too, because of a less rigorous application.

2. Invoice financing and factoring

Invoice financing and factoring are typically easy-approval small business loans primarily because their value depends on your accounts receivable (A/R). Namely, if you’re waiting for, say, $15,000 in unpaid client invoices, you may be able to obtain invoice financing in that amount minus fees. Once your clients pay you, the invoice financing company generally gets their money. That means your A/R value is likely more important than your business and financial history, making qualification relatively easier.

When you secure funding through invoice financing, you’ll generally receive 80 to 90 percent of your invoices’ total value upon funding. Once your clients pay their invoices, you'll subtract your loan amount from their payment total. You’ll then typically pay 2 to 4.5 percent per month of your invoices’ total to your invoice financing or factoring service.

Invoice factoring and financing are typically both quick and easy to apply for and repay. Just keep in mind that, if you choose factoring, the company from which you get your funding will likely also take over your invoice collections and charge more for that service.

Invoice financing is among SmartBiz’s custom financing options – and so are business credit lines. SmartBiz® may help you quickly get connected with the right invoice financier or business credit lender for your business. This way, you may be able to shore up your business finances and cash flow on your own terms and schedule.

3. Short-term loan

Short-term loans typically come from alternative online lenders promising loan approvals in as few as 24 hours. These lenders generally set their qualification criteria low as well, so small business borrowers may anticipate approval.

However, alternative online lenders’ short-term loans are often notorious for their high monthly payments and interest rates. You may get stuck with monthly payments so high you wind up worse off than before you took out the loan. You should review all short-term loans’ terms and conditions before signing on the dotted line.

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4. Equipment loans

If your business needs additional money to purchase equipment, then equipment loans may be a great easy-approval small business loan. These loans’ application process and qualification criteria are both low-stress – generally many businesses can easily apply and be approved. You’ll likely need to provide recent bank statements, your equipment’s invoice, your tax returns, and proof of sufficient revenue to afford the loan, to name a few.

If you get approved for an equipment loan, you’ll likely have to put 10 to 20 percent of your loan amount down to obtain your funding. But that’s generally the main potential barrier to funding – even a low credit score typically doesn’t bar you from equipment financing. You likely won’t need to put down any collateral either since your equipment is the collateral. If you can’t repay your loan, the equipment you bought is the asset at risk of seizure. Note that SBA 7(a) loans offered by banks in the SmartBiz network can be used for equipment purchases and generally have lower rates and longer terms than some equipment loans.

5. Merchant cash advances (MCAs)

Merchant cash advances (MCAs) may be especially easy to qualify for since they’re often based solely on your credit card processing volume. If your credit card processing statements show that you’re generating enough revenue to afford a loan payment, then MCA providers will likely approve you. Typically MCA providers will only occasionally ask for additional information such as bank statements and credit scores, so even low-credit borrowers can easily qualify.

All that said, MCAs are typically notoriously expensive. That’s largely because MCAs generally charge factor rates instead of interest rates. These rates, which typically range from 1.1 to 1.5, may substantially inflate your loan costs. For example, a $60,000 MCA with a factor rate of 1.4 will cost you $60,000 x 1.4 = $84,000 total. That’s $24,000 extra, or 40 percent of your loan amount, which may be a problem. In fact, some MCAs are known to have APRs of up to 300 percent.

6. Friends and family funding

Many entrepreneurs turn to their friends and family to obtain funding. It may be a great idea at heart – when the people in your life have money to fund your dreams, why not ask? You typically won’t need to show them your business or financial history either – you’ll just get the money on good faith alone.

Though highly accessible, friends and family funding generally has a couple of drawbacks you should really consider before pursuing it. First, not every small business owner’s close friends and family have enough money lying around to fund a business. Second, if you wind up unable to repay the loan for any reason, you may put a serious strain on the relationship.

What makes a small business loan easy to get?

Generally, the simpler the criteria and the faster you can get your money, the more likely you’ll get approved. When you’re trying to determine if a certain funding opportunity would be an easy-approval small business loan, consider the following:

  • Qualification standards. Loans that don’t automatically disqualify borrowers with low credit scores or businesses with a short time in business may lead to easier approval.
  • Funding time. Fast funding times typically go hand in hand with an easier approval process. When lenders have fewer criteria on which to assess your eligibility, they may be able to process your loan and distribute funds quicker.
  • Application process. If your application process involves shorter forms and fewer documentation requirements, the lender is typically checking fewer borrower criteria. That generally means better chances for qualification.
  • Loan amounts. Lower loan amounts generally correspond with easier approval more often than not. Smaller loans typically pose less risk to the lender if you fail to repay them, making them easier to obtain.
  • Higher interest rates. In many cases, easy-approval small business loans come with high interest rates. These rates typically minimize the lender’s risk in case their qualification criteria prove so lenient they approve borrowers who really can’t repay their loans. From a lender’s point of view, the loan’s high interest rates are generally a type of insurance policy, generating more money from borrowers who do repay, offsetting any losses from those who can’t.

Find the right easy-approval small business loan with SmartBiz

If you’re worried about your ability to qualify for a loan, consider looking at options with less strict criteria and more likely approval. And you may be able to limit your concerns with a one-to-many application to match you with the best funding option for your needs, along with readily accessible customer service. SmartBiz checks both boxes and connects you with lenders who may be able to help approve you for custom financing, including business credit lines and invoice financing. Check now whether you pre-qualify* for the easy funding you need.

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