Many small business owners do not even have a good grasp on business credit scoring, never mind understanding how FICO Small Business Scoring Service scores impact their chances of being approved for a Small Business Administration loan program. A FICO SBSS credit score was designed for small businesses in the United States. United States Banks, business credit card issuers, and others most likely use this score during the decision-making process. The SBA requires lenders to use this score to pre-screen borrowers for some SBA loan programs. Understanding FICO Small Business Scoring Service is important.
How Doe’s FICO SBSS Scoring Work?
The FICO SBSS score ranges between 0 to 300. A higher score indicates lower risk. Aim as high as you can. This will benefit your business. 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. Some banks look for a score of 160 or better.
Review of FICO SBSS
Some important business credit score facts:
- FICO SBSS rank-orders small businesses by their likelihood of making timely payments. The FICO score range is 0 to 300.
- The minimum score to pass the mandatory prescreen for 7(a) Small Loans is 155. (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.
- 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.
Best Way to Build FICO SBSS Score
Our firm specializes in assisting small business with building corporate credit scores with FICO SBSS, Equifax Small Business, Experian Business, and Dun & Bradstreet. These business bureaus are tops in the world. They are used by suppliers, lenders, banks, and other businesses to evaluate the reputation of your business.
We suggest that you develop a group of suppliers, business retail, and other commercial groups that offer terms and report to these bureaus. Not every provider reports. It is key to use providers that report to these bureaus.
Some “easy to be approved” suppliers are Grainger, Uline, and Quill. You need to have at least four active trade-lines reporting these bureaus to generate business credit scores. It is best to add 6-7 trade accounts. This will bolster your image with larger providers.