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Most lenders require a minimum credit score of around 680 or higher for standard business loan approval. For SBA loans, the threshold typically falls in a similar range, even though the Small Business Administration doesn't set a strict credit requirement. If your score is in the 700s, you're more likely to receive favorable loan terms and access more options. On the other hand, alternative lenders may consider borrowers with scores as low as 500 — 600.
That said, your creditworthiness isn't the only factor that matters. Lenders also assess business revenue, credit history, time in operation, and whether you can offer collateral. These factors shape your eligibility and the kind of small business loan you qualify for.
In this article, we'll break down:
How credit score ranges affect loan approval
The typical requirements for different types of loans
Additional eligibility factors for small business owners
Strategies to strengthen your application
Even if your score isn't ideal, you still have options. Understanding what credit score is needed for a business loan is the first step toward finding the right one.
How Credit Scores Affect Business Loan Eligibility
Lenders use both personal credit scores (typically FICO scores) and business credit scores to assess a borrower's creditworthiness. These scores help predict how likely you are to repay a loan on time. Your credit history (as reported by credit bureaus) influences the interest rate, loan amount, and whether your loan application gets approved at all.
Before applying, it helps to understand how your credit score directly shapes the types of loans you may qualify for, including loan amounts, terms, and providers:
| How Credit Scores Affect Loan Options | |||
|---|---|---|---|
| Loan type | Minimum credit score | Loan amount | Repayment terms |
| SBA 7(a)/504 Loans | 650+ | Up to $5 million | 10 — 25 years |
| Business Lines of Credit | 600+ | Up to $500,000 | Revolving |
| Equipment Financing | 550+ | Varies by asset | 12 — 60 months |
| Short-Term Loans | 550+ | Up to $500,000 | 12 — 15 months |
| Microloans | 620+ | Up to $50,000 | Variable |
| Bad Credit Loans | 500 — 549 | Varies | Short-term (often less than one year) |
Other Factors Lenders Consider
While your credit score is essential, lenders weigh several other business metrics when assessing a loan application. These parameters help determine your eligibility and the type of business financing you may get.
Monthly revenue and cash flow. Strong income and healthy cash flow improve your loan approval odds and may lead to better loan terms. Clarify Capital requires a minimum of $10,000 in monthly revenue and three months of recent bank statements for verification.
Time in business. Many lenders expect at least six months of operational history, while others prefer 12 months or more.
Business bank account. A dedicated account is required to assess income and cash flow accurately.
Annual revenue. Higher annual revenue can qualify you for larger loan amounts and more favorable rates.
Collateral. While some types of SBA loans or traditional lenders may require it — particularly for large or real estate-backed loans — Clarify Capital offers unsecured options.
Loan size. Bigger loans involve more risk, so they typically require stronger financials or additional documentation, such as detailed profit and loss statements, tax returns, or a business plan outlining how the funds will be used.
Industry risk and business type. Lenders consider some sectors as higher risk, which can reduce access to funding or raise interest rates.
These factors, along with your FICO score, credit history, and creditworthiness, all work together to dictate your financing options.
Improving Your Chances of Approval
Start by building business credit with vendor accounts and trade lines that report payment history — this establishes a great business credit score apart from your personal credit.
Below are concrete steps you can take to raise your credit profile and improve your eligibility:
Check your credit reports and dispute errors. Errors in your credit reports can hurt your personal credit score or business credit file.
Pay down debt and reduce credit utilization. Keeping your revolving balances low (under 50%) helps improve your FICO score.
Make all payments on time, every time. Payment history carries heavy weight in scoring models; consistent on-time payments signal strong credit history.
Use a mix of credit types. If possible, responsibly use credit cards, lines of credit, or small loans to diversify your credit profile.
Request credit limit increases (when appropriate). Raising available credit without adding balance can lower utilization and improve scores.
Avoid too many hard inquiries. Multiple new credit applications close together can drag down your score, so space them out.
As evidence of how powerful small changes can be, the Federal Reserve notes that credit‑building products like secured cards and small loans that report payments offer a direct pathway to improving overall credit standing.
Final Takeaways for Business Owners
For most small business owners, a credit score of 680 or higher opens the door to the best loan options, interest rates, and repayment terms. But that doesn't mean all hope is lost with a lower score. A lot of lenders, including alternative and revenue-based providers, offer business financing even when traditional banks won't.
Clarify Capital connects borrowers with a wide range of lenders, each with its own requirements. Through Clarify, you can quickly find out what you qualify for without impacting your credit. Whether you're looking for working capital loans, equipment funding, or a flexible line of credit, there are options at nearly every credit level.
Ready to explore business loans? Clarify Capital can help match you with the right lender today — without impacting your credit. Take the next step; apply today and get fast feedback on your financing eligibility.
FAQs for Business Loan Credit Scores
Many borrowers worry about how their credit profiles affect their chances of getting financing. Below are some common questions and answers to clear up confusion and guide better decisions.
Do Business Loans Check Personal Credit?
Yes, for most small business loans, lenders will examine your personal credit score as part of assessing your creditworthiness and credit history. This is especially true for startups or businesses without an established business credit score. According to the SBA, early-stage loan eligibility often defaults to the owner's personal credit when business credit is thin or nonexistent.
What Is an SBSS Score?
The SBSS score, or FICO Small Business Scoring Service, is a credit scoring model used by the SBA and some lenders to assess small business loan applications. It combines both the business's financial data and the owner's personal credit history, drawing from sources like credit bureaus, public records, and financial statements, to generate a score between zero and 300.
The SBA often uses the SBSS score as part of its loan requirements for the 7(a) program. In fact, it typically applies this score as the first filter before reviewing a loan further. If your SBSS score falls below a certain threshold (often around 160), the SBA may decline your application before any underwriter reviews your documents.
Why Does an SBA Loan Take So Long?
SBA loans may take longer than traditional financing because they involve multiple steps of review. The loan application process requires detailed documentation, including financial statements, tax returns, and a written business plan. After submission, the loan goes through underwriting, risk assessment, and finally, approval by the lender and the SBA itself.
In addition, participating lenders must comply with strict SBA loan requirements, which include verifying eligibility, confirming use of funds, and adhering to SBA-backed loan approval guidelines. These extra steps make sure that taxpayer-backed funds are issued responsibly.
Faster options like SBA Express Loans or SBA Microloans may speed these processes up slightly, but even these can take longer than a typical term loan from an online lender.
How Long Does SBA 7(a) Loan Review Take?
Reviewing SBA 7(a) loans can take anywhere from 60 — 90 days, sometimes longer. That's because the process involves detailed financial analysis, third-party verifications, and back-and-forth between lenders, the Small Business Administration, and the borrower.
The exact timing depends on two main factors: how quickly the borrower submits complete and accurate documentation and how efficiently the lender is at processing SBA-backed loans. If everything is in order, loan approval may happen sooner. But delays are common when extra verifications or additional documents are required.
When Should I Get a Small Business Loan?
A small business loan makes sense when you need funding to support growth or stabilize operations. Common use cases include expanding your team or location, purchasing equipment, or bridging a working capital gap during a low season.
The best time to apply is before cash flow becomes an urgent issue. Planning ahead allows you to explore the right loan programs, compare loan terms, and confirm you qualify while your creditworthiness and business health are strong.
Many small business owners use a loan to invest in long-term gains, like launching a new product line or securing inventory at a discount. Others turn to a working capital program to lighten the blow of cash flow dips without giving up equity.
Can I Get an SBA Loan With Bad Credit?
It's possible, but very difficult. Most lenders that issue SBA loans look for strong personal credit scores, and while the SBA itself doesn't publish a strict minimum, approval generally favors scores in the 680+ range. If your credit is below that, you may need:
A co-signer with good credit
To apply for an SBA Microloan, which is often issued by nonprofits with more flexible criteria
To focus on improving your credit history first
Some alternative loan options may also be available through Clarify Capital or community lenders that cater to small business owners with lower scores.
Emma Parker
Senior Funding Manager
Emma holds a B.S. in finance from NYU and has been working in the business financing industry for over a decade. She is passionate about helping small business owners grow by finding the right funding option that makes sense for them. More about the Clarify team →
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