This is a question was originally posted on Quora on November 18, 2017 and updated on this blog February 2, 2018.

There are a couple of ways to purchase a business with no credit.  Let me share the best 5 options.

First you can use funds from your 401K or IRA tax free, subject to a few limitations. Most notably the amount you borrow/withdraw should be $50,000 or more and per IRS regulation you must work in the business you are acquiring (can’t be a passive investment). Essentially you are borrowing from yourself so credit is not issue, and you do not pay interest.

A Second alternative would be to have the seller finance the purchase. Depending on the business you are looking to acquire many sellers will offer at least partial financing, which makes this a good option in conjunction with the first option listed above. Nevertheless it would be rare to find a seller who will finance 100% of the sale price so this is not a stand-alone option.

Third, equity financing or crowdfunding may work for the business you are considering. Kickstarter, Indiegogo, GoFundMe, etc. are all ways to crowdfund a business. Crowdfunding is part of the larger equity funding performed by Angel Investors, Venture Capitalists and even the TV show Shark Tank. Equity financing is typically better suited towards entrepreneurs growing or starting a business, but depending on the business you acquire this might work.

Fourth ask friends and family. Many businesses have started or been acquired based on the willingness of a relative to fund the business owner.

Fifth, with a little time and effort you might be able to build credit with a credit card or store card. As you do this and establish a history of onetime payments you can earn higher and higher credit limits. Eventually you may be able to at least finance a portion of your business acquisition with a credit card.

My final suggestion is really a combination of many suggestions. You could use a Hard Money Real Estate Loan, “Hard Money” Equipment Leasing; Invoice Factoring, or other alternative lenders that don’t have a credit requirement. Hard Money real estate loans typically work to finance 60 – 70% of the real estate value whereas equipment lessors who provide leases on business equipment regardless of the borrower’s credit might finance 50% of the value of the equipment being acquired.

All of these suggestions have more risk than your typical bank or SBA loan, but surprisingly many of them are cheaper than traditional loans. In fact the first 2 options (401k/IRA and seller financing) are often used by people with excellent credit either instead of a traditional loan or to supplement a traditional loan. For instance, if you wish to borrow $1 million to purchase a US based business a very common funding structure could be $100,000 from your retirement accounts (10% of the purchase price); $100,000 seller loan (10% of the purchase price) and then finance the remaining 80% with an SBA loan. At the time of this answer the SBA requires at least 20% down payment but only 10% has to come from the buyer and the other 10% can be a loan from the seller subject to certain conditions.

UPDATE: In 2018 the SBA has revised equity requirements and the impact of seller notes to reduce borrower down payments.  The minimum equity injection is now 10% and if the seller assists with seller financing they are restricted from collecting payments on that loan for the entire 10 years the SBA loan is in place.  As lenders revise their underwriting standards seller notes will become less common.  BUT if the business acquisition loan is deemed to have additional risk so that it requires more than a 10% down payment the additional down payment can be split between the buyer and seller (seller providing a portion via a seller note) in a manner similar to the rules in place before 2018.