What Minimum Credit Score for a Business Loan Do I Need?

What Minimum Credit Score for a Business Loan Do I Need?

Published: Sep 24, 2023 by Anita Campbell

When it comes time to qualify for a business loan, your credit score is one of the top factors that lenders consider. We answer several frequently asked questions (FAQ) about your credit score for a business loan below.

What is Considered a Good Credit Score?

credit score for a business loan – magnifying glass held over credit rating system on paper, excellent is checked.

A good personal score to get a business loan is 720 and above. A good business credit score is 80 or above.

Keep in mind the various business credit bureaus have different scoring systems. Every lender chooses its own standards, so there may be variations in scoring levels. However, the 2020 Small Business Credit Survey (p. 12) by the U.S. Federal Reserve Banks lays out the general rule for the small business lending industry:

Low credit risk: 80–100 business credit score or 720+ personal credit score.

Medium credit risk: 50–79 business credit score or a 620–719 personal credit score.

High credit risk: 1–49 business credit score or less than 620 personal credit score.

Borrowers who are low credit risks get the most choices of loan products and the best terms. Borrowers who are high risk have few choices and will pay the most. Getting even a small loan for business could be tough for high risk borrowers.

Is There a Minimum Credit Score for a Business Loan?

credit score for a business loan – graphic of credit score on smartphone w/ different rating # bubbles off to the side

Technically, there is no minimum credit score for a small business loan. Every lender has its own requirements.

That said, there are some general rules of thumb in the industry. In practice, a personal score of 620 is widely recognized as the minimum. More than likely you will need a score of 720 or above for good business loan terms.

Can I Get a Business Loan with a 600 Credit Score?

Business owners often want to know: can I get a business loan with a 600 credit score? Or with some other number such as a 500 credit score?

READ MORE 👁️👉🏾 https://smallbiztrends.com/2023/09/credit-score-for-a-business-loan.html

Source: vetbizresources