What Credit Card Score Do I Need to Get a Business Loan?

Starting a business, however small is everyone’s dream. Getting some cash from a side hustle if you have another job is very satisfying. And if you want to start a business and make it your main source of income it is even the best. However, there is always a problem of startup capital and funding the business to reach greater heights. Many people have very brilliant ideas but they can’t actualize them because of lack of funds.

One of the very common sources of funds for a business is loans; it is normally the most appropriate because you can access a bigger amount of money which you can repay gradually for a longer period of time. Sometimes getting loans is not as easy as many thinks, it is a process that involves many things that are meant to ascertain that a person is eligible and they can repay the loan given.

One of the most important things you can expect is checking the business credit score, the status of your credit card score will determine what amount of loan you can get, this means that the higher the credit card score, the higher the limit of your loan. There is a minimum credit score requirement that will be needed for you to access any business loan, below that, you will not be able to access any loan.


The minimum credit score requirement for you to be eligible for a business loan

A business credit score is a measure of how reliable you can be in repaying the loan incase the lender gives you one, this is mostly relied on by lender to award you a loan, the credit score checks the history of your loan repayments to assess the risk, for instance, if you have been unable to pay your previous loans, your credit card score will be very low. So how is your credit card score calculated?

Calculation of Credit Card Score

There are various considerations which are made when calculating your credit score, however different companies have their different ways of calculating, but here are the common considerations that are made during calculation.

Payment Index –

This is measured with values between 0 and 100. It is basically to determine the repayment ability of your business. It shows the how frequently you make payments in time; the payment index includes all the information from the investors and the creditors to your business. It helps the lender to just assess the risk.


Business Failure Score –

This is the assessment that determines the probability of your business closing up soon, commonly within a period of one year. It also assesses things like, the number of credit limits you have been using for the past three months, whether you have had late payments in the last two years or not and any non-financial transactions done, it also assesses how long has your oldest financial account been active. This score ranges from 1000 to 1610

Business Credit Risk Score –

This one determines the probability that your business will become delinquent on payments. The aspects considered here include; the size of the company, how long it has been since the opening of the oldest financial account and the availability of the credit limit on credit cards and other accounts.

Those were the considerations that are made when calculating the credit score for your business; however, different companies might have additional considerations to make.

The minimum credit score for business loans comes differently with different types of loans which is determined by the moneylender like, the reason for this is that there are certain types of loans which will require a bit higher score than others, here are some common types of business loan and their minimum scores,

Bank business loans (640 +)

These are the most common loans; the eligibility of these loans requires one to have a minimum credit score of 640 and above, if your credit score makes up to this point and beyond, you will be able to access loans from any bank without having any problems. The best thing about banks is once you are eligible, they will easily give you large amounts of money which you can repay over a long period of time.

Equipment financing loan (600+)

This is the loan that businesses take to buy machineries, vehicles and general business equipment that are necessary for the swift operation of the business. This loan is easily given once you are eligible because the equipment acts as the security, once you fail to repay the loan, the lender can sell the equipment to recover the money. The minimum credit score here comes down to at least 600 and above.

Invoice financing loans (600+)

These are loans taken by the business owners to finance their outstanding invoice so that they can make their payments. It has a minimum score eligibility of 600 and above.

Short-term business loans (550 +)

This has a very low eligibility score because they payment period is quite short. They are normally repaid back between a period of 3 months to 18 months. This is where the online lenders dominate. The type of loan is funded as an emergency and it requires a minimum credit score of 550 and above to be eligible. However, there are rules that govern this, if you have a lower credit score, you will have a higher interest compared to when you have a higher credit score.


Loves to write and keen learner to approaches follow.

Latest Articles

Related Articles