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Tips to Quickly Raise Your Credit Score and Land a Small Business Loan

Small Business Loans

Tips to Quickly Raise Your Credit Score and Land a Small Business Loan

Updated: August 3rd, 2023

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As a business owner, you’ve got enough headwinds to face without having to deal with unnecessary ones. Cash flow can be tight, especially in an environment where the wheels of the economy are only slowly beginning to turn again. You are ready to start looking toward growth, and a business loan could play a significant role in that plan. 

The small business community has caught on to the benefits of accessing financing. Whether the funds are for an expansion or restocking the shelves now that the economy is showing green shoots of recovery, being able to fund these expenses quickly is paramount. Last year, the Small Business Administration’s most popular loan program, the 7(a), issued more than $23 billion in financing across 52,000 loans. Its 504 program, which is another widely used product, issued nearly $5 billion in funding across more than 6,000 loans.

Business owners are flocking to these programs for the financial freedom they provide and the attractive features they offer. These include below-market interest rates and lengthy maturities. But what do you do when an imperfect credit score gets in between you and the business loan you need? Take a few steps back: “What credit score is needed for an SBA loan?” Fortunately, you can take actions that will yield quick results on your journey toward meeting the SBA 7(a) credit score requirements.  

The more you know about your score, the more you know what credit score is needed for an SBA loan

Knowledge is power, and that applies especially when it comes to your credit. If you want to quickly raise your credit score for a small business loan, you should become well acquainted with your ALL of your credit scores. To start, check them and checking them often. Notice that both your personal and your business credit scores matter. And contrary to popular belief, it isn’t impossible to move the needle on your business score. It just takes a similar amount of effort that you would use to improve your personal score. 

Who are the main credit bureaus?

You’ve got several reporting agencies to juggle here, all of which display variations of your latest score. The key here is to focus on the one that the loan underwriter, or lender, will pull when it comes time to run your credit score for a small business loan. 

You could find this out by getting in touch with a lender and asking them. Once you know, you can stay ahead of the game by accessing a copy of that report and fixing any issues — including any mistakes — that you might find. If you spot any inaccuracies, be sure and contact the relevant agency that pulled the report. The three main bureaus that are behind your business credit score include: 

  • Dun & Bradstreet 
  • Experian Business 
  • Equifax Small Business   

What credit score is needed for a small business loan if I use the SBSS?

The FICO Small Business Scoring Service (SBSS) is the wildcard. It’s brought to you by the folks behind your personal credit score model. The score, which falls in a range of 0-300, is a hybrid of your personal and business creditworthiness. 

If you’re wondering what credit score is needed for an SBA loan, you should know that the Small Business Administration looks at the SBSS score for its popular 7(a) loans for amounts under $350,000. It would be best if you strive for a minimum score of 140, but something closer to 160 will reflect even better on you. Some lenders will have more stringent SBA 7(a) credit score requirements and will look for an SBSS score in the range of 160-180. 

Set up a business credit file

The sooner you get your business on the radar of the commercial credit agencies, the better. This may require you to be on offense when it comes to managing your credit report. When you access your business credit profile, you will learn that not every company reports its trade details. But just a handful of vendors and lenders reporting tradelines to the credit agencies could go a long way. 

And here is another tip — be sure that you’ve got a business credit file. Some steps include: 

  • Request a D-U-N-S number from Dun & Bradstreet. It’s free and lets potential lenders access information on your credit history. 
  • Make sure you’ve got three or four positive trade references on your business report. If not, reach out to some and ask that they report your solid payment history

Pay on time…even if you can’t pay 100% 

When cash flow is tight, do your best to pay your creditors on time anyway. Your payment history weighs substantially on your business credit score. If you aren’t able to pay a supplier, vendor, or other creditors in full, make partial payments. Even that’s better than paying zilch.  

The length of time it takes to boost your credit score for a small business loan has a lot to do with your current scores. If your personal FICO score hovers below 650, it could take months or longer to achieve a credit score the SBA would approve. Keep in mind that it depends on nuances such as what the black marks were and when they happened. In this case, you can overcome evil with good, as your most recent payment history is more important than what happened in the past. 

For a small business loan, keep your personal and business credit scores separate

Both your personal and business credit scores matter or a small business loan, keep them separate and avoid commingling funds. If your personal credit score has some indiscretions, this gives you a better chance to establish an independent, positive track record to meet the SBA 7(a) credit score requirements. Here are some additional steps: 

  • Maintain a business checking account. Open a business credit card and either pay it in full each month or at least make payments. Don’t go overboard and take out more credit than you can afford to pay. 
  • Incorporate your business if you haven’t already. Keep accounts, including utilities, internet, etc. under this name. It can help your credit score for a small business loan and give the lender more confidence about your ability to repay it.  
  • Generate profits. Your credit score is important, but it’s not the only thing that potential lenders will consider. 

Landing the loan and meeting SBA 7(a) credit score requirements

Business owners have historically faced an uphill battle when looking to borrow from traditional banks. But with the combination of the SBA and alternative lenders, there are more opportunities than ever for entrepreneurs to access financing. With some effort and a little patience, you will be well on your way to meeting the ideal credit score for an SBA loan.


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