Updated: Feb 24
To further drive the point of how important having a good credit score is, I’m sharing with you some common questions business owners have regarding credit.
Can you start a business with bad credit?
While you can start a business with bad credit, you will have a tough time growing your business. And a business that does not grow is a business that won’t succeed in the long run.
And while there are many loan options for business owners with bad credit, I definitely do not recommend you getting any of those. With a loan for bad credit, you will end up paying way more than what you got, which will hurt your finances instead of helping them.
What credit score is needed for a small business loan?
It all depends on what financial institution you would like to apply with, but, usually, they expect you to have a score of around 630 or up for a small business loan.
Can I get an SBA loan with bad credit?
The short answer is no.
The SBA doesn’t lend money directly, they do it through approved lenders (most commonly banks). And while each lender will have a different credit score minimum—which also varies depending on the SBA program you’re applying for—, they usually don’t approve businesses that have a credit score below 680.
Can I get a loan if I don’t have a credit history?
Usually, banks and financial institutions don’t lend to business owners that do not have a credit score. That why many think not having a credit score and having a negative credit score are the same (hint: they’re not the same thing).
Why do they not lend business owners without a credit score?
Well, financial institutions see people with no credit score as a gamble: either they are great at repaying and keeping their finances healthy, or they’re not. And banks are not known for taking risks that could hurt them.
Fortunately, some lenders, like Amerishop Financial, are always willing to bet on those business owners. We do not require you to have a credit history to apply or be approved for a loan. Furthermore, applying with us won’t hurt your score at all!
To sum up…
We hope this information helped you know how to build commercial credit. Building a good business credit (with or without a card) will allow you to get low-interest loans, credit cards, and better terms with your suppliers. It can even help you get new customers since anyone can check your credit score and verify your credibility.
Your business credit score may vary because each credit agency calculates the scores differently. But generally speaking, the best practices to build commercial credit are: updating your business information at the credit bureaus, establishing financing lines, borrowing from entities that report to these agencies, and paying on time or before the due date.
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