If you’re thinking about launching your dream business, one of the most common questions you might ask is: What is the minimum credit score to start a business? While you technically don’t need a specific credit score to start a business, your credit score becomes critically important when you seek financing or apply for business loans.
Understanding how your credit score affects your ability to secure funding can help you make better decisions as you build your enterprise. In this article, we’ll explore what credit score you need to get a business loan, how lenders view different credit tiers, and how the type of lender or loan impacts credit score requirements.
What Credit Score Do You Need to Get a Business Loan?
Your credit score is one of the primary factors lenders use to determine your creditworthiness. While every lender has different criteria, there are some general ranges that can guide you.
Excellent Credit (740 and above)
With excellent credit, you’re in the best position to receive favorable loan terms. Lenders consider you low-risk, which means you can qualify for:
- Larger loan amounts
- Lower interest rates
- Longer repayment terms
Most traditional banks and credit unions prefer borrowers with excellent credit scores, especially for large-term loans.
Good Credit (670–739)
A good credit score still opens many doors for small business funding. With this score range, you can qualify for:
- SBA loans
- Term loans
- Business lines of credit
You may not get the lowest interest rates, but most mainstream lenders—including online lenders—will consider you a strong candidate.
Fair Credit (580–669)
With fair credit, you may still be eligible for financing, but expect:
- Higher interest rates
- Lower loan limits
- More documentation or collateral
At this level, you’ll likely work with alternative lenders or fintech companies willing to take on moderate risk.
Poor Credit (below 580)
If you have poor credit, traditional financing will be very difficult. However, all hope is not lost. You may qualify for:
- Merchant Cash Advances
- Invoice Factoring
- Loans from niche alternative lenders
Be aware that these come with higher fees and shorter repayment terms.
Minimum Credit Score by Lender Type
The minimum credit score to start a business often varies based on the lender you’re working with. Let’s break it down:
Traditional Banks
- Minimum credit score: Typically 680–700+
- Banks have strict underwriting standards and prefer established businesses with strong credit history and revenue.
Credit Unions
- Minimum credit score: Around 650–700
- More flexible than banks, credit unions often work with local businesses and may offer personalized underwriting processes.
Online Lenders
- Minimum credit score: 600–650
- Online lenders tend to be more flexible and faster. They also weigh factors like business revenue and time in operation.
Alternative Lenders
- Minimum credit score: 500–600
- These lenders serve high-risk borrowers and offer products like merchant cash advances or invoice factoring. Terms may not be ideal, but they can offer quick access to funds.
Minimum Credit Score by Loan Type
Different loan products come with different credit score expectations. Below are some common options:
Term Loans
- Minimum credit score: 600–700
- Term loans are lump sums paid over time with interest. Most banks and online lenders offer these, with score requirements depending on the amount and loan provider.
Lines of Credit
- Minimum credit score: 600–700
- Business lines of credit provide flexible access to funds. Credit requirements are usually slightly lower than term loans, especially with online lenders.
Invoice Factoring
- Minimum credit score: 500–600
- This involves selling your unpaid invoices to a third party. Since the invoices act as collateral, your personal credit is less important, making this an option for those with lower scores.
Merchant Cash Advances
- Minimum credit score: 500–580
- This financing product is based on your daily credit card sales rather than your credit score. It’s accessible for those with poor credit, but comes with high fees.
How Does My Personal Credit Score Impact My Ability to Secure a Business Loan?
If you’re a startup or sole proprietor, your personal credit score is often used in place of a business credit profile. Here’s how your score impacts your chances:
1. Startups and New Businesses
Most startups have little to no business credit history. Lenders will heavily rely on your personal credit and income to assess risk. A strong score (670+) boosts your chances.
2. Established Businesses
Once your business has credit history, tax returns, and financial documentation, lenders may shift focus to business credit scores—but your personal score still matters.
3. Co-signers and Collateral
If your credit is lacking, some lenders may require a co-signer or collateral to reduce their risk.
Tips to Improve Your Credit Score Before Applying
If you’re not quite where you want to be credit-wise, consider these strategies:
- Pay down existing debt
- Correct any credit report errors
- Make all future payments on time
- Avoid new hard inquiries before applying for a loan
Improving your credit score not only boosts your chances of approval but may help secure better loan terms in the future.
Why Vyde is the Best Accounting Partner for Your Business
Whether you’re trying to build your credit or prepare for loan applications, having a trusted financial partner makes all the difference. Vyde is more than just an accounting firm—it’s your go-to partner for business success.
- Organize your finances to present clean financials to lenders
- Manage business taxes and avoid costly mistakes during tax season
- Offer real-time financial insights to make smart funding decisions
- Help with bookkeeping, payroll, and compliance—so you stay loan-ready
With Vyde, you’re not just surviving tax season—you’re positioning your business for growth and long-term success.
To sum it up, there’s no set credit score required to start a business, but your credit score plays a major role when seeking financing. Here’s what you need to remember:
- Excellent credit gives you the best rates and widest options
- Good to fair credit opens doors to more flexible lenders
- Poor credit still leaves you with alternative funding options like merchant cash advances and invoice factoring
Depending on the loan type or lender, the minimum credit score can range from 500 to 700+. Knowing where you stand helps you choose the right financing and avoid unnecessary rejections.
Don’t let a low credit score stop you from building your dream business. Vyde is here to guide you—every step of the way. From keeping your books in order to preparing you for financing success, Vyde is the accounting partner you can trust.
Contact Vyde today and get your business loan-ready, tax-ready, and growth-ready.
