Understanding credit requirements helps you know your options and improve your chances of approval.
Most business lenders require a personal credit score of 600-650 or higher for approval, though requirements vary by loan type. SBA loans typically need 680+, while alternative lenders may approve scores as low as 550-600 with strong revenue. Your credit score affects both approval chances and interest rates—higher scores get better terms.
Qualifies for all loan types with the best rates and highest amounts.
Qualifies for most programs with competitive rates.
Options available but rates will be higher. May need collateral or down payment.
Limited options. Asset-based loans or co-signer may be required.
Very limited options. Focus on credit repair first.
Most business owners overestimate the role credit plays. While important, lenders look at your entire financial picture:
Reality: Most lenders approve scores of 600-650+. Perfect credit (800+) gets you the best rates, but it's not required for approval. Strong revenue and cash flow can offset lower credit scores.
Reality: Pre-qualification uses a soft credit pull that doesn't affect your score. Only a hard inquiry (when you submit a full application) impacts your credit, and even then, it's usually just a few points.
Reality: For most small businesses, lenders check both. Newer businesses rely heavily on personal credit. Established businesses (2+ years) with strong business credit may qualify based primarily on business credit, but personal credit still matters.
Reality: One late payment can drop your score 50-100 points, but it's not fatal. Lenders look at your overall payment history. If you have 2+ years of on-time payments with one recent late payment, many lenders will still approve you.
If your credit is below 650, here's how to improve it before applying:
Credit utilization (how much of your credit limit you use) is a major factor. Keep balances below 30% of your credit limit, ideally below 10%. Paying down credit cards can boost your score quickly.
Payment history is the biggest factor (35% of your score). Set up autopay for minimum payments to avoid missed payments. Even one 30-day late payment can hurt significantly.
Check your credit reports from all three bureaus (Experian, Equifax, TransUnion) for errors. Dispute incorrect late payments, accounts that aren't yours, or outdated information. Errors are common and fixing them can boost your score.
Length of credit history matters. Keep old accounts open (even if unused) to maintain your credit age. Closing accounts can shorten your history and lower your score.
Establish business credit by opening a business credit card, getting net terms with vendors, and ensuring your business is listed with credit bureaus. This can help you qualify based on business credit rather than personal credit. Learn more about how to build business credit.
Don't let low credit stop you. These options focus less on credit and more on your business's financial health:
Asset-backed loans use equipment as collateral, so credit requirements are lower (often 600+). The equipment secures the loan, reducing lender risk. Learn more about equipment financing options.
Based on your accounts receivable, not credit. You sell unpaid invoices to a factor who advances you cash. Credit requirements are minimal if you have strong receivables. See what invoice factoring is.
Some lenders base approval on monthly revenue rather than credit. You'll pay higher rates, but it's an option if you have consistent revenue ($20k+/month) and lower credit.
Adding a co-signer with strong credit can help you qualify. Most business loans already require a personal guarantee, but a co-signer adds additional security for the lender.
Most lenders check both. For newer businesses (under 2 years), personal credit is primary. For established businesses, both matter, but strong business credit can offset lower personal credit.
Yes, but options are limited and rates higher. Asset-based loans (equipment, real estate) and invoice factoring are your best bets. See our guide on business loans with bad credit.
Paying down debt can improve your score in 30-60 days. Building a positive payment history takes 6-12 months. Disputing errors can improve your score within weeks if successful.
SBA loans typically require 680+ personal credit, though some programs (like SBA Express) may approve 650+ with strong business performance. Learn more about SBA loan requirements.
Complete guide to qualification requirements beyond just credit score.
Steps to establish and improve your business credit profile.
Options available when your credit score is below 600.
Actionable steps to boost your credit before applying.
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