When you apply for a business loan, commercial lenders consider many different factors, including your business credit scores, credit history, financials, collateral, and more.
But in many cases, your credit scores are the most important factor because they indicate how well you’ve managed your debts in the past.
Before you apply for your next business loan, it’s important to know what lenders are looking for and how that can vary for different types of loans.
What Is the Minimum Credit Score for Business Loans?
It’s hard to say exactly what your credit score needs to be to qualify for a small business loan because the threshold can vary depending on the type of loan you’re looking for and the lender that’s offering it.
For example, bank loans and SBA loans tend to have the most stringent credit requirements, while merchant cash advances and other short-term loans usually have looser standards.
However, within each of those categories, there may be lenders across the credit spectrum.
If you want a term loan, for instance, there are lenders that offer low-interest rates for small business owners with high credit scores, and there are also lenders (usually online) that specialize in working with bad credit borrowers, albeit with high-interest rates.
It’s also important to note that, in many cases, lenders may look at your personal and business credit scores. This is especially true if your business is relatively new and you haven’t had the chance to establish a business credit history yet.
But even if your business is well established with a business credit history, some lenders may still prioritize your personal credit scores.
As a result, it’s important to ensure that you’re working on establishing a positive credit history for yourself and your business so that you can improve your odds of success when applying for a business loan.
Which Credit Score Is Usually Used by Lenders?
There’s no standard score used by all commercial lenders, so it’s a good idea to learn about the different types of credit scores they might look at when you apply for credit. Here’s a summary of the most commonly used ones for small business owners:
FICO®
The FICO score is a personal credit score that ranges from 300 to 850. This is the score that most lenders use for consumer loans and credit cards.
It’s also used widely by many business lenders, particularly online lenders and business credit card issuers. You can get access to your FICO score for free through a credit monitoring service like Experian or Discover Credit Scorecard.
FICO SBSS
This score is the business version of the FICO score. It ranges from 0 to 300 and incorporates the owner’s personal credit score, credit history of the business, business financials, and other information.
The Small Business Administration requires its lenders to use this score to screen applicants on certain loans, but it can also be used by other lenders that offer loans and lines of credit up to $1 million.
Other Business Credit Scores
Depending on the lender, they may also use other proprietary business credit scores generated by the major business credit reporting agencies. That includes Dun & Bradstreet (PAYDEX Score) and Experian (Intelliscore Plus).
Each of these scores ranges from 0 to 100. There’s also the Equifax Small Business Credit Risk Score, which ranges from 101 to 992. While they all weigh varying factors differently, the scores all have similar approaches to what’s considered to be good credit vs. fair or poor credit.
Before you apply for a loan, do some research on the lenders you’re considering to find out which credit scores they review. If you can’t find the information online, consider reaching out to the lender directly to get the information you need.
SBA Loan Credit Score Requirements
SBA loans are loans that are partially guaranteed by the Small Business Administration to help small businesses obtain financing at low-interest rates.
The SBA doesn’t set minimum credit score requirements, but the lenders that offer them do, primarily because they’re still on the hook for a portion of the loan if the borrower defaults. The SBA guarantees between 50% and 85% of the loan amount, depending on the loan program.
That said, the government agency does stipulate that lenders use the FICO SBSS score to help determine borrower eligibility for SBA 7(a) Loans of $350,000 or less, as well as Community Advantage Loans.
You’ll typically want an SBSS score of 155 or higher — remember, the range is from 0 to 300 — to be able to qualify for an SBA loan, but some lenders have even higher minimums. As with any loan application, the higher your credit score, the better your chances of approval.
Because the SBSS score incorporates the owner’s personal credit score, some experts recommend a minimum FICO score of 640 to 680.
Keep in mind, though, that there are several different types of SBA loans that are available. Microloans are generally reserved for newer businesses that need $50,000 or less in funding.
If your business doesn’t have a long operating history or business credit history, the lender may rely more on your personal credit score than other factors.
Many other SBA loans may require at least two years in business and strong revenues. You also need to show a track record of operating your business successfully. If you’re a startup, that can include the owner’s past experience with the same type of business.
Bank Loan Credit Score Requirements
Bank loans are term loans and lines of credit offered by commercial banks, local banks, and credit unions.
Among small business loans that aren’t backed by a government agency, bank loans tend to offer some of the most favorable terms, which include longer repayment periods, higher loan amounts, lower interest rates, and more.
That said, bank loans also tend to have strict credit score requirements. If you want to qualify for one of these loans, you’ll typically need a business credit score of 80 or above or a personal FICO credit score of 700 or above.
Of course, there may be lenders that offer bank loans with lower credit score requirements. But as with any similar situation, you can generally expect to pay a higher interest rate on these types of loans.
In addition to your credit score, commercial lenders will also look at your revenues and cash flow, your operating history, other debts, collateral, and the industry you’re in.
With revenues, you typically need to have a strong track record of six figures or more, depending on what you’re looking to get.
You’ll also need to have been in business for a minimum of two or three years, sometimes longer. Many of these loans may require collateral in the form of equipment, vehicles, or any other eligible asset.
And if you work in a high-risk industry, such as restaurants or casinos, you can expect a steeper hill to climb towards approval.
Of course, maintaining excellent credit can help with some of these other factors. But the important thing is that you present an all-around good impression to your lender in order to improve your odds of obtaining affordable financing for your business.
Equipment Financing Credit Score Requirements
If you’re looking for capital to purchase machinery, computers, vehicles, and other equipment for your business, equipment loans are tailored to meet your needs.
Unlike bank loans, which may or may not require collateral, equipment loans function similarly to auto loans and mortgage loans.
They require collateral in the form of the asset you’re purchasing with the loan, and if you can’t repay the debt, the lender will seize the equipment you bought and sell it to recoup the remaining loan balance.
Because equipment loans are secured, they typically have lower minimum credit score requirements.
That requirement can vary depending on where you look, but the standard minimum may be around 650 for your personal credit score and 55 for your business credit score.
Some lenders will provide equipment financing for small business owners with much lower scores.
You may even be able to get one with no personal credit history at all. But as we’ve said over and over again, you’ll want to watch the interest rates on these loans to determine whether it’s worth it for you.
In addition to your credit score, equipment financing lenders will also look at the same factors that are considered for bank loans and SBA loans. But because they’re used for a very specific purpose, there’s a more significant focus on the equipment you’re buying.
More specifically, they may want to know the current condition of the equipment — is it new or used? — and what its expected life is.
Lenders may also want to know how you plan to use the equipment to operate your business and some projections behind those plans. They’ll also require a hefty down payment to show that you have skin in the game.
If your credit score isn’t in good enough shape to get an equipment loan, the good news is that equipment vendors may be willing to lease the equipment to you, which doesn’t require a down payment.
Short-Term Loan Credit Score Requirements
Short-term business loans can include term loans, lines of credit, merchant cash advances, invoice financing, invoice factoring, and other forms of debt that require repayment within a year or two.
It could also refer to small business credit cards, which provide an ongoing revolving line of credit.
These loans tend to have the least strict credit score requirements, but they also charge high-interest rates. You can get one from online lenders, merchant cash advance providers, invoice financing, and factoring companies.
Because short-term loans are mostly used by newer businesses without the operating history and business credit history required for bank loans, they typically focus more on your personal credit score than your business credit scores.
If you’re looking for one of these loans, credit score requirements can vary by lender, but 600 is a common minimum. Of course, there are exceptions.
With merchant cash advances, for instance, providers focus more on your cash flow than your credit score, and invoice factoring doesn’t involve your credit score at all because it’s not technically a loan.
Business credit cards can be available for borrowers with lower credit scores, but you may need to provide an upfront deposit to secure the line of credit you desire.
In terms of other requirements, those can also vary depending on the loan type. With invoice financing and factoring, for instance, lenders care more about the health of your accounts receivable than other factors.
With a merchant cash advance, it’s your credit and debit card sales. With term loans and lines of credit, you may need to meet revenue and operating history requirements.
But if you’re just starting out, it’ll be easier to get a business credit card. Whichever type of short-term loan you’re looking for, it’s important to consider the interest rate and repayment terms to decide if it’s a good fit for you and can help your business.
What Is a Good Business Credit Score?
A good business credit score depends on the scoring model that you’re using. Since lenders may use a variety of business credit scores, here’s how each breaks down.
PAYDEX Score
| Score | Explanation |
| 100 | Payment comes 30 days sooner than terms |
| 90 | Payment comes 20 days sooner than terms |
| 80 | Payment comes on terms |
| 70 | Payment comes 15 days beyond terms |
| 60 | Payment comes 22 days beyond terms |
| 50 | Payment comes 30 days beyond terms |
| 40 | Payment comes 60 days beyond terms |
| 30 | Payment comes 90 days beyond terms |
| 20 | Payment comes 120 days beyond terms |
| 1-19 | Payment comes over 120 days beyond terms |
Experian Intelliscore Plus
| Score Range | Risk Class | Risk Description |
| 76-100 | 1 | Low |
| 51-75 | 2 | Low-medium |
| 26-50 | 3 | Medium |
| 11-25 | 4 | High-medium |
| 1-10 | 5 | High |
FICO SBSS Score
FICO doesn’t provide a rubric for different score ranges. Rather, most lenders typically say you need a score of 155 to 165 within a range of 0 to 300 to get approved, and the higher your score is, the better your chances of securing a loan and getting affordable terms.
Equifax Business Credit Risk Score
Like the FICO SBSS Score, there isn’t a list of ranges for the Equifax Business Credit Risk Score. Your score can be anywhere between 101 and 992, and a score over 556 is generally considered to be good within that range.
FICO Credit Score (Personal Credit Score Range)
| Score | Range |
| 800-850 | Exceptional |
| 740-799 | Very Good |
| 670-739 | Good |
| 580-669 | Fair |
| 300-579 | Poor |
These FICO credit scores are for the FICO 8 score, which is a personal credit score.
CreditStrong Can Help You Build Your Business Credit Score
If you’re looking for a way to improve your business credit scores, the Credit Strong business credit builder loan can help. It’s a good option for newer businesses that don’t yet have a business credit history because it doesn’t require a personal credit check to get approved.
With a credit builder loan, the loan funds will be placed in a separate account and locked while you make your monthly payments — you can choose from a 60-month or a 120-month payment term, but you can also cancel at any time without penalty.
As you make your monthly payments, CreditStrong reports them to commercial credit bureaus. Lenders can then use that information to calculate your business credit scores.
Then, once you’ve completed your repayment term, the loan funds will be released and disbursed to you, minus any unpaid interest or fees, and you can use them to build your business.
The pricing is relatively straightforward and inexpensive, especially compared to short-term loan options.
The Bottom Line
You can get a business loan with just about any credit score, but the types of loans that are available to you and the interest you’ll pay are directly related to your credit scores and other factors.
If you’re considering applying for a business loan, review your credit scores to get an idea of where you stand. If needed, consider taking time to improve your credit before you apply to improve your odds of approval and favorable terms.
