If you’re a small business owner, getting approved for a loan can be a huge challenge. Much of the process is shrouded in mystery, and it can feel like no one really knows how your application’s being judged. Good news though, that’s starting to change.
Thanks to a new SBA policy, most loan applications now start with a FICO business credit score pre-screen. This is big news, people.
Let’s look at what that score is and how it impacts your chances of getting approved.
What applications get pre-screened?
Starting at the beginning of this year, all SBA 7(a) loan applications up to $350,000 are required to go through a business credit score pre-screen. It’s no wonder some industry leaders say 2014 is shaping up to be the year of the small business credit score.
To be clear, if you’re applying for an SBA loan, most likely it’s a 7(a). It’s the SBA’s most common loan program.
What score is being used?
The SBA will be using FICO’s Small Business Scoring Service (SBSS) to make these pre-screen decisions. You’ve probably heard of FICO’s personal credit score—well, this is the same idea, but for your business.
The SBSS score is based on a combination of your consumer, business and borrowing data. Like your personal score, it informs a lender your business’s creditworthiness via a three-digit number. The higher it is, the better.
The SBA has set its minimum SBSS score as 140, but may occasionally change this.
Know your score before you need funding
Since your SBSS credit score can single-handedly crush your hopes for getting a loan, it pays to know what it is and ensure it’s accurate. If the SBA is using it to pre-screen, you can all but guarantee most lenders will start using it to pre-qualify applicants too.
Nav is the ONLY source for businesses to see the #1 business credit score used by the SBA—the FICO SBSS Score. Get your FICO SBSS score with a Nav account.