Business Loan Credit Scores: What to Know in 2025

Business Loan Credit Scores: What to Know in 2025

When it comes to securing financing for your business, your credit score plays a pivotal role. Whether you’re eyeing a traditional business loan or an SBA-backed loan, understanding where you stand credit-wise can make or break your application.

The Average Credit Score in the U.S.

Let’s start with the basics. As of recent data, the average FICO score in the U.S. is 717, which falls comfortably in the "good" range (670–739) according to FICO standards. Meanwhile, the average VantageScore 3.0 is 700, and the VantageScore 4.0—a model used by TransUnion, Experian, and Equifax—sits at 702 as of March 2024.

Here’s how credit scores break down across common ranges:

• 800–850: Excellent

• 740–799: Very Good

• 670–739: Good

• 580–669: Fair

• 300–579: Poor

A score of 717 (FICO) or 702 (VantageScore 4.0) is solid—well above the 620 often needed for a conventional mortgage—but it’s still about 40–50 points shy of the 760+ threshold that unlocks the best loan terms and interest rates.

Average Credit Score for Business Loans

For business loans, your personal credit score often matters just as much as your business’s financial health, especially for small businesses or startups. While there’s no universal minimum credit score for business loans (it varies by lender and loan type), a score of 680 or higher is generally considered "good" for most conventional business loans. A score of 720 or higher is deemed "excellent," often leading to lower interest rates and more favorable terms.

Lenders assess risk based on their own criteria, but here’s a general benchmark:

• Conventional Business Loans: Most lenders prefer a minimum score of 680-700, though some may accept as low as 640 if your business has strong revenue and time in operation.

• Franchise Loans: A score of 700+ is typically favored for competitive rates, though requirements can range widely depending on the lender.

SBA Loans: Credit Score Requirements

The U.S. Small Business Administration (SBA) offers a variety of loan programs—like the popular 7(a) loan, Express loans, and Microloans—to help small businesses thrive. While the SBA itself doesn’t impose a strict minimum credit score, it defers to its network of lenders, who set their own standards. Here’s what you need to know about credit scores for SBA loans in 2025.

Loans Over $500,000:
For SBA loans exceeding $500,000—such as the SBA 7(a) program—lenders typically require a personal FICO score between 625 and 680, with many preferring 650 or higher. Some top-tier lenders may even set the bar at 680 to ensure lower risk, especially for larger loan amounts. This range aligns with the "fair" to "good" credit categories, though a higher score (e.g., 700+) can improve your approval odds and terms.

Loans Under $500,000: The SBSS Score:
For smaller SBA 7(a) loans (up to $500,000), the SBA uses the FICO Small Business Scoring Service (SBSS) score as an initial screening tool. The SBSS score, which ranges from 0 to 300, is distinct from your personal FICO score. It’s calculated using a blend of:

• Consumer credit bureau data (your personal credit history)

• Business bureau data (your company’s credit profile)

• Borrower financials (e.g., cash flow, debt-to-income ratio)

• Application data (details from your loan request)

The minimum SBSS score required is currently 155, though this threshold can shift periodically based on SBA policy updates. Some lenders may set a higher internal cutoff (e.g., 160–170) to further mitigate risk. Unlike personal FICO scores, the SBSS score isn’t something you can easily check on your own—it’s generated during the loan application process.

SBA Loan Program Variations

Different SBA programs come with slightly different credit expectations:

• SBA 7(a) Loans: Minimum FICO scores often start at 650, with 680+ preferred by many lenders.

• SBA Express Loans: These faster-turnaround loans may accept scores as low as 640–650, appealing to borrowers needing quick funding.

• SBA Microloans: Designed for smaller amounts (up to $50,000), these loans can accommodate scores in the 620–640 range, making them more accessible for newer businesses or those with fair credit.

Beyond credit scores, SBA lenders also weigh factors like payment history, credit utilization, length of credit history, annual revenue, time in business, and available collateral or cash flow. A lower score might still win approval if your business fundamentals are strong.

Why Is My Lender’s Score Different From Mine?

You might check your credit and see a healthy 720, only to find your lender reports a 685. Why the discrepancy? It boils down to the variety of FICO score versions in use. Many SBA lenders rely on the TransUnion FICO 4 version, which isn’t commonly available to consumers. Meanwhile, popular credit monitoring services often show versions like FICO 8, FICO 9, or even VantageScore models.

The TransUnion FICO 4 tends to produce lower scores—sometimes by 40–50 points—than more consumer-friendly versions. This gap can catch borrowers off guard, especially since FICO 4 emphasizes factors like payment history (35% of your score) and credit utilization more heavily in some cases. If your lender’s pull surprises you, ask which version they’re using to better understand the difference.

When Is My Credit Score Pulled?

For SBA loans processed through preferred lenders (those with delegated authority from the SBA), a hard credit pull typically doesn’t happen until the loan proposal is executed—meaning after initial screening and paperwork. This helps protect your score from unnecessary dings during the early stages.

How Can I Increase My Score?

FICO scores (300–850) are calculated by the three major credit bureaus—TransUnion, Equifax, and Experian—using data like:

• Payment history (35%): Pay on time, every time.

• Amounts owed (30%): Keep credit utilization below 30%.

• Length of credit history (15%): Older accounts boost your score.

• New credit (10%): Avoid opening too many accounts at once.

• Credit mix (10%): A mix of credit types (e.g., credit cards, loans) can help.

Under the Fair Credit Reporting Act (FCRA), your score excludes personal details like age, race, gender, or location. To improve your score:

• Pay down high balances.

• Dispute inaccuracies on your credit report.

• Avoid late payments—set up reminders or autopay.

Final Thoughts

Whether you’re aiming for a traditional business loan or an SBA-backed option, your credit score is a key piece of the puzzle. The average American’s FICO score of 717 or VantageScore of 700–702 offers a solid starting point, but business loans often demand more—think 680+ for conventional loans and 625–680 for SBA loans, plus an SBSS score of 155+ for smaller SBA amounts.

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