credit score for small business loan
The personal credit score requirements for small business loans — most lenders require 650 minimum, SBA loans prefer 680+.
Example
“Her personal credit score of 720 helped secure the SBA loan for the business expansion.”
Memory Tip
PERSONAL SCORE MATTERS — lenders check the owner's personal credit for small business loans.
Why It Matters
Your personal credit score directly determines whether you can qualify for a small business loan and what interest rates you will receive. A higher credit score can save you thousands of dollars in interest payments over the life of the loan, making it one of the most important factors in your ability to grow your business.
Common Misconception
Many people believe that business credit and personal credit are completely separate, but most lenders primarily evaluate your personal credit score when considering small business loan applications. Your personal financial history is what lenders use to assess your reliability and ability to repay the borrowed funds.
In Practice
If you have a credit score of 720 and apply for a 50,000 dollar small business loan at 8 percent interest over five years, you would pay approximately 11,600 dollars in total interest. However, if your score were only 650, the same lender might charge 12 percent interest, resulting in about 17,400 dollars in total interest, costing you an extra 5,800 dollars.
Etymology
Modern small business lending reality — personal credit affects business borrowing.
Common Misspellings
Check your credit score free — no impact
Related Terms
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Other credit terms you should know
See Also
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