What’s The Minimum Credit Score For A Business Loan?
Getting a business loan isn’t always easy, and one of the key factors that can make or break your ability to get approved is your credit score…as well as the credit score associated with your company. If you’re wondering whether or not it’s even a good idea to apply for a business loan, then you should learn about how banks see credit scores for business owners, and what you should expect.
Most Banks Will Want To Look At Your Personal Credit Score
For most banks, personal credit is just as important as your business credit score, especially if you’re looking for a straight business loan. If you have below a 640, you won’t be able to find a bank that will be willing to dole out a loan at all. A score of around 700 may mean that you’ll get approval, but will have to secure that loan with an asset like your home or business equipment. If you want to have an unsecured loan, a FICO score of 800 is almost always necessary. In other words, if you want a loan, your credit score should be as high as possible.
Business Credit Scores Count, Too
Most banks also will not consider funding a business that doesn’t have its own credit score. If you have a business credit score, that’s a good start. However, you may have noticed that it’s significantly lower than your personal credit score. That’s alright, though, since business credit scores range from 0 to 100. A business credit score of 75 is typically viewed as the minimum for a business loan.
It Can Be A Catch-22
The biggest problem that business owners have when applying for a small business loan is that your personal credit and your business credit both can end up getting hit by the simple act of even asking for a loan. In some cases, if the business fails, your own credit score will also get hurt.
There are also a handful of other factors that can make or break your ability to get a loan. Things such as a viable business plan, a very detailed Profit/Loss chart, and the amount of equity you have all will likely come into play. Sadly, this is a good part of the reason why so many businesses get rejected for a loan.
If Your Credit Isn’t Good, There Are Other Options
A bad credit score should never be a reason why you should give up on getting business funding. Small business loans from banks are not the be-all and end-all of business funding. Alternative lenders, merchant cash advances, and other similar sources do exist for this purpose. In fact, some of the options out there don’t even require a credit check at all. Explore your options If you look hard enough, you will be able to get business funding sooner rather than later.