FICO® SBSS℠ Score — A Key SBA Loan Credit Score Explained

There’s a FICO credit score designed just for small business: the FICO® SBSS℠ score. Banks, business credit card issuers, and other lenders may use it to help make lending decisions. The U.S. Small Business Administration (SBA) requires lenders to use this score to pre-screen borrowers for some of the SBA loans it insures.

Just as your personal FICO credit scores can impact your ability to secure financing, your business FICO SBSS score can impact your ability to get small business financing.

What Is a FICO SBSS Score?

FICO® LiquidCredit® Small Business Scoring Service℠ (FICO® SBSS℠ score) is a small business credit score lenders may use. Created by the Fair Isaac Corporation, it’s a credit score small business owners should know about if they are considering a small business loan through a traditional lender such as a bank, or certain SBA loans. But many entrepreneurs have never heard of it, in part because it’s traditionally been hard to access.

Banks aren’t required to disclose that they use the FICO® SBSS℠ score and FICO doesn’t sell this score to borrowers as it does with consumer scores that it sells through myFICO.com. 

Business lenders use this score (and other business credit scores) to help evaluate credit risk. Credit scores can help them make faster, more accurate lending decisions for term loans, lines of credit, equipment loans and other types of small business loans. Lenders may use scores for loan approval, as well as to decide the size of a credit line and interest rates.  

It can help them make decisions in hours, not days.

What Is a Good FICO SBSS Score?

The FICO SBSS score ranges between 0 to 300, with 300 being the highest score. A higher score indicates lower risk.

SBA Small Loans require the lender to prescreen the application using a FICO SBSS score. The current minimum SBSS score for 7(a) Small Loans is 155.

(SBA Small Loans are loans for $500,000 or less, but not including SBA Express, Export Express, CAPLines, Export Working Capital Program (EWCP), and Community Advantage Pilot Program loans.)

If your score falls below their required threshold, it doesn’t necessarily mean your application won’t be approved. To continue, your loan application then must go through a manual approval where other factors may be taken into account.

How is the SBSS Score Calculated?

FICO doesn’t have any credit information about how consumers or businesses pay their bills; it just creates the formulas used to calculate credit scores. Instead, the information it uses to calculate this business score comes from credit reporting agencies, the lender or other data sources. SBSS models use up to four types of information. 

• Consumer credit reports for the principals/guarantors of the business (up to five owners),
• Business credit reports for the business, 
• Application data supplied on the loan application, and 
• Business financial data

Of these, FICO says the information that is most important in terms of helping predict performance are the business owner’s personal credit data followed by business bureau data, financial data, then application data.

If you have no business credit history and limited time in business, you may be able to get a passing FICO SBSS score based on stellar personal credit alone. But it helps to have strong business credit as well.

Banks and lenders can set up the SBSS model they use in different ways, putting more weight on certain information, and less on others.

For example, it can put more weight on your business credit profile or more on your personal credit history. It’s also a very “smart” business credit scoring model because it can automatically go from one business credit bureau to another, in whatever order of priority the lender prefers, until it’s able to generate a score.

So, if the lender prefers using Experian for business credit data as the default, it can get a credit report from Experian. But if that report doesn’t provide enough information, it can automatically get business credit data from Dun & Bradstreet. If there’s not enough business credit data available, it will just use the personal credit data to calculate the SBSS score, potentially along with business financials. 

Currently, a FICO SBSS score can be calculated using consumer credit data from Experian, Equifax or TransUnion as well as business credit data from Dun & Bradstreet, Experian Business or Equifax SBFE. 

Application data can include business checking account balance , time as current owner and principal’s combined net worth.

Because the lender has a choice of credit bureaus to use when accessing data to create this score, your business does not have a single FICO SBSS score. In addition, it will change as information in your credit reports change.

How FICO SBSS Works

Here are some important facts to understand about this business credit score:

• FICO SBSS rank-orders small businesses by their likelihood of making payments on time. The FICO score range is 0 to 300. Higher scores are better in that they indicate lower risk but each lender will choose the minimum score it will accept.
• The minimum score to pass the mandatory prescreen for 7(a) Small Loans is currently 155. But most SBA lenders set their minimum score at 160-165.
• The score can be calculated based upon personal and business credit history and other financial information. A strong history of business credit with timely payments to vendors and suppliers may help boost your SBSS score.
• If you have derogatory or no credit history, it can take months or even years of positive credit activity to move your SBSS score significantly higher. It’s vital to build your credit and ensure it’s healthy before you need it.
• Because businesses are not covered by Fair Credit Reporting Act protections, you can be denied business financing due to your SBSS score, and lenders are not required to notify you the score was used or provide access to your score.

Who Uses the FICO SBSS Score?

FICO has reported that the FICO SBSS score is used by over 7,500 lenders nationwide to help them make lending decisions. The latest version of FICO SBSS 7.0  built for loan amounts up to $1 million for term  loans and lines of credit, and $250,000 for leasing transactions.

As mentioned earlier, certain SBA loans require this score be used to pre-screen applications. Banks may use it to pre-screen their loan applicants but they usually set their cutoff score higher, typically around 160-165.

How Can I Improve My SBSS Score?

Two of the best ways to improve your business’s FICO SBSS Score are:

• Improve your personal credit scores
• Build business credit or improve your business credit scores 

The exact steps you’ll need to take will depend on the information in your personal and/or business credit reports.

Start by reviewing your personal credit scores and make sure yours are as strong as possible. If your business has multiple owners or others who will guarantee the loan, their creditworthiness can be a factor too, so make sure you are aware of any credit problems.  Learn about the main FICO score factors for personal credit below.

Strong business credit can help, so check your business credit with Dun & Bradstreet, Experian Business and Equifax. If your business doesn’t have a D-U-N-S number, you’ll want to get one and start to establish business credit. Net-30 vendor accounts and business credit cards can help build business credit. 

If you don’t have a business bank account, make sure you get one and use it consistently for business expenses. Your business bank account balance may impact this score, and many lenders require and review business bank statements when making small business lending decisions. 

Lastly, build your business. At least two year’s time in business, strong credit and solid financials are key to securing the best small business loans and financing.

What Are the 5 Categories of the FICO Score?

There are five main categories of credit information that affect consumer FICO scores:

• Payment History (35%)
• Debt Utilization (30%)
• Credit History/Credit Age (15%)
• Credit Inquiries/New Credit Checks (10%)
• Types of Credit (10%)

As you can see, payment history—which includes payment history on your accounts like credit cards, car loans and mortgages, as well as negative information like collection accounts or bankruptcy—has the most impact on your credit scores. 

If your credit report lists late payments or other negative information, it may help to know that as that information gets older, it tends to have less impact on your credit scores. Eventually, it will no longer appear on your credit reports (usually after 7 years). Learn more about what you can do about payment history issues on your credit reports.

Another factor that can significantly impact credit scores is credit utilization. Here, credit score models will often compare your balances on your credit cards to your credit limits. High utilization can affect your credit scores. Fortunately this is a factor that can quickly change by paying down balances, increasing credit limits or even by transferring debt. 

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Type of Small Business Loan	Good For	Estimated APR	Required Credit Score
SBA Loans	Low-interest working capital; refinancing debt, equipment	1-15%	155 FICO SBSS *some lenders may require higher
Traditional Bank Loans	Versatile loans for a variety of purposes	4-15%	680+ FICO
Merchant Cash Advance	Quick access to capital if you don’t have great credit	10-350%	550 FICO *sometimes no score is required
Business Lines of Credit	Access to funds when you need them	10-90%	500 – 680+ FICO
Microloans	Businesses with thin credit profiles looking for small loan amounts	12-18%	Varies
Cash Flow Loans	Quick access to cash without great credit	11.0-90%	600 FICO
Alternative Online Loans	Quick access to cash without great credit	11.0-90%	600+ FICO
Business Credit Cards	Fast turnaround time with less required documentation	7-30%	650+ FICO
Equity Crowdfunding	Capital without having to repay; experienced investors can act as mentors	Fees often total 5% of amount raised	n/a
Reward Crowdfunding	Testing out your idea; capital you don’t have to repay	Crowdfunding platform: 0-5%; Payment processing: 3%+$.30 per transaction	n/a
Equipment Financing	Capital to buy equipment that doesn’t require asset (other then equipment)	15-35%	620+ FICO
Invoice Financing	Leveraging future accounts receivable	15-25%	n/a
Trade Credit	Building credit	5-25%	May or may not be applicable

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