Business loan requirements often seem daunting for business owners. Although every lender have their own requirements, almost every lender will ask to run a credit check on both your personal and business credit score. A good credit score puts you at a greater chance of loan approval.
Personal credit score impacts your chances at getting a loan as much as business credit score. Your personal score evaluates your creditworthiness as an individual. It gives lenders an insight into how well you can handle funds. So, having a stellar credit score both in business and as an individual is advisable. Checkout https://www.siteseeingtoursinc.com/finding-the-right-source-of-financing-for-your-business/ for business financing knowledge.
Is there a minimum credit score?
The answer is NO! There is no minimum credit score. Although it is typical of business lenders and banks to have a minimum credit score, there is no industry-wide minimum in place. Most lenders usually require a minimum credit score of 50 and an ideal credit score of above 70.
This still varies, depending solely on the lenders requirements. Some can require lesser credit scores. Banks on the other hand require a minimum of 60, and a stellar credit score of 80 and above
Always make sure to carry our researches before writing applications, so that you know which lender is most suitable for you. Some lenders might also offer loan advices.
Is credit score always a necessity for business loans?
The answer to this is no, not always. There are lenders that provide loans for small businesses without credit score, especially new businesses. Even banks have programs that offer loans to small businesses in that condition. Click here to know how to quickly raise your credit score.
Your chances of getting the loan increases with a collateral in place. The presence of a collateral in place gives you some sort of leverage. It makes the loan a secured one. With the collateral in place, the willingness of the financial institutions to approve your application is pacified.
And that is because they are assured that if anything happens to your business along the way, they are covered.
What are my options based on my credit score?
- With a credit score of 650 to 800, you are sure to secure; term loans from banks and lenders, lines of credit, SBA loans, equipment financing, vehicle financing, merchant cash advances and, so on. A high credit score is the best thing any small business owner can have. As it eases your way into getting your loan application approved.
- A fair credit score between 500 and 649; term loans from lenders, lines of credit, equipment financing, invoice factoring and financing, vehicle financing, and merchant cash advances are feasible to acquire. This range of credit score, although it narrows your chances, is still okay to secure one.
- Poor credit score of 300 to 479 can get you equipment financing, vehicle financing, invoice financing, and merchant cash advance. This score further narrows your chances of getting loans but never forget that there are provisions made for you.
All these still boils down to the fact that it depends on the lender or bank. Some institutions are stricter than others, that it why it is imminent of you to make researches before applying.