Building Personal and Business Credit Scores to Qualify for SBA Loans
You need an excellent business credit score and good personal credit to be eligible for an SBA loan. The same would depend on the lender as well as business factors such as time in business, cash flow, and revenue. Note that online lenders check your personal credit scores, but are slightly more willing to provide loans in the case of credit score requirements. They give importance to credit score requirements and the cash flow of your business. If you wonder who qualifies for SBA loans, the answer is, basically, ‘someone who has a strong credit score.’
The FICO score is usually assessed to make decisions based on lending. This depends on 5 factors, as follows.
- Payment history which forms 35% of your score,
- The amounts of money owed on credit cards and other debt, which accounts for 30% of the score,
- The duration of your credit, which counts to 15% in your credit score,
- Recent credit inquiries, which form 10% of your score, and
- Types of credit in use, which make up 10% of the score.
Timely payment of your bills is crucial for a good credit score. However, one needs to remember that even if you follow this strictly, your credit reports could ruin the final outcome on your credit score.