Having a credit score of 680 or higher can increase the strength of your application. However, your company's cash flow is likely to weigh more heavily if you're not generating or projecting enough cash flow to repay the loan, your request may be denied. Lenders generally consider a credit score of 670 or higher to be good credit. But the higher your credit score, the more options you have.
A higher score also means you'll be eligible for more competitive rates. A good personal score for getting a business loan is 720 or higher. A good business credit score is 80 or higher. Generally, you'll want a credit score of at least 700 to get reasonable financing terms for your business.
Companies receive credit ratings just like individuals, but commercial credit reports use a numbering system from 0 to 100, according to the SBA. Factors included in a business credit profile include how often you pay your bills, credit history, and available credit. Most lenders consider a score of 75 to be good and any lower rating can make it difficult to find a business loan, but there are no specific limit scores. Before we begin your SBA 7a loan application, let's look at the necessary credit requirements.
This includes funding through banks and the Small Business Administration (SBA), which tend to have higher credit requirements than other types of lenders. If you offer a personal guarantee as collateral, this could mean that you can apply for it with a slightly lower credit score. If you're interested in taking out a loan close to the maximum offered by a lender, contact you to make sure your credit is strong enough to qualify. You may still qualify for a small business loan, even if you don't meet the minimum credit rating requirement.
As you can see from these FAQs, your personal and business credit history makes a significant difference. Originally a standard Small Business Administration requirement for SBA loans, the 20% rule has now become part of traditional underwriting rules. If you're on the lower end of this spectrum, you'll likely need very strong business credentials to qualify, such as several years in business or significant annual revenues. All loan offers and requirements require credit approval and are subject to change with or without notice.
While the credit rating required for loans guaranteed by the SBA varies by type of loan, lenders generally prefer borrowers with a FICO score of at least 620. While the SBA really aims to provide opportunities to many different types of business owners and doesn't require a certain credit score, realistically, you want to be as strong as you can. Fintech lenders are especially more likely to approve your loan application, even if you don't meet personal credit rating requirements. Jessica Holcomb is the director of content marketing at Funding Circle and specializes in marketing for small businesses and social media.
A higher personal credit score will increase your chances of being accepted for a loan and will also affect your repayment terms and the interest rate charged. Companies must also meet the SBA's small business size standards based on the company's average annual revenue or the average number of employees. .