What Credit Score Do You Need for a Business Loan?

The Quick Answer

There's no single credit score that gets you a business loan. It depends entirely on which type of funding you're going after. Here's the reality:

• 500+ credit score: Merchant cash advances and some revenue-based products
• 600+ credit score: Business term loans and lines of credit
• 640+ credit score: SBA loans (690+ preferred)
• 700+ credit score: Business credit stacking (0% APR programs)

The higher your score, the more products you qualify for, the better the terms, and the lower the cost. A 500 credit score and a 750 credit score both get you funded - but the person with 750 might pay $15,000-$25,000 less on the same $50,000.

Credit Score Tiers: What Opens Up at Each Level

Think of your credit score as a key that unlocks different doors. The higher your score, the more doors open - and the better what's behind them.

Credit Score Requirements by Product Type

Let's break down what each product type actually requires - and what else you need beyond credit.

Merchant Cash Advance (MCA): 500+

MCAs have the lowest credit requirements of any business funding product. Most providers approve scores as low as 500-550 because approval is based primarily on your business revenue and bank deposits, not your credit history.

• Minimum credit score: 500 (some providers go lower)
• What matters more: $10,000+/month in revenue, consistent bank deposits
• Time in business: 6+ months
• Cost: Factor rates of 1.2-1.5 (40-150%+ equivalent APR)
• Best for: Fast cash when traditional lenders say no

Read our full MCA guide for an honest breakdown of costs and when MCAs make sense.

Business Term Loan: 600+

Term loans are the middle ground - better rates than MCAs, faster than SBA. Most lenders want to see at least a 600, but the real sweet spot is 650+ where significantly better options open up.

• Minimum credit score: 600 (650+ for best rates)
• What matters more: $120K+/year in revenue, 1+ year in business, clean financials
• Cost: 15-30% APR depending on risk profile
• Amounts: $25,000-$1,000,000+
• Best for: Planned growth, equipment, expansion

Business Line of Credit: 600+

Lines of credit have similar requirements to term loans. The advantage is flexibility - you only pay interest on what you use, and the credit revolves as you pay it back.

• Minimum credit score: 600 (620+ for conventional, 560+ for alternative)
• What matters more: Revenue consistency, bank account health, cash flow
• Cost: 15-35% APR (often interest-only payments)
• Amounts: $10,000-$500,000
• Best for: Ongoing cash flow management, seasonal businesses

SBA Loans: 640+ (690+ Preferred)

SBA loans offer the best rates and longest terms in business lending. The trade-off is stricter requirements and longer timelines.

• Minimum credit score: 640 personal score + 155-160 FICO SBSS score
• Preferred score: 690+ significantly improves approval odds
• What matters more: 2+ years in business, $150K+ revenue, 10% down payment, no government loan defaults
• Cost: 10-14% APR (SBA caps rates by loan size)
• Amounts: Up to $5,000,000
• Best for: Organized businesses that can wait 60-90 days for the best deal

Read our full SBA loan guide or check SBA qualification requirements for detailed breakdowns.

Business Credit Stacking: 700+

Credit stacking is a different animal entirely. Instead of borrowing against your business, you leverage your personal credit to secure multiple business credit cards with 0% introductory APR for 12-18 months.

• Minimum credit score: 700 (750+ for maximum amounts)
• Credit tiers: 700-719 = $10K-$50K, 720-749 = $50K-$100K, 750+ = $100K-$250K
• What matters more: Credit utilization, length of credit history, payment history
• Cost: 0% APR for 12-18 months, then 18-28% if not paid off
• Best for: Startups, new businesses, owners with strong personal credit

Learn how credit stacking works and see funding amounts by credit tier.

What Lenders Look at Beyond Your Credit Score

Here's what most articles won't tell you: your credit score is only one piece of the puzzle. A 700 credit score doesn't guarantee approval. A 580 doesn't guarantee a denial. Lenders look at the whole picture.

1. Annual Revenue

Revenue tells lenders whether you can afford the payments. Different products have different thresholds:

• MCA: $120,000+/year ($10K+/month deposits)
• Term loans: $120,000-$250,000+/year
• SBA loans: $150,000+/year (enough to support DSCR)
• Credit stacking: No revenue requirement (credit-based)

2. Time in Business

Newer businesses are riskier. Each product has a different minimum:

• MCA: 6+ months
• Term loans: 1+ year (2+ for best rates)
• SBA loans: 2+ years (startups can qualify for SBA microloans)
• Credit stacking: No minimum (works for startups)

3. Bank Account Health

For alternative and revenue-based lending, lenders look closely at your bank statements. They want to see:

• Average daily balance: Consistent balances show cash management skills
• Deposit consistency: Regular deposits beat sporadic large ones
• NSF/overdrafts: Multiple overdrafts in 90 days is often an automatic decline
• Number of deposits: More deposits = more revenue streams = lower risk

4. Debt Service Coverage Ratio (DSCR)

For conventional and SBA loans, lenders calculate whether your business earns enough to cover the new loan payments. The formula in plain English: for every $1 in loan payments, you need to earn at least $1.25 in profit.

• Minimum DSCR: 1.15-1.25 for most conventional lenders
• SBA requirement: Typically 1.25+
• How to improve: Pay down existing debt, increase revenue, reduce unnecessary expenses

5. Industry and Use of Funds

Some industries are considered higher risk. This doesn't mean you can't get funded - it means fewer lenders will work with you, and terms may be different.

• Standard industries: Most lenders, best terms
• Higher-risk industries: Restaurants, construction, trucking, auto sales - fewer lenders, but still options
• Restricted industries: Cannabis, firearms, adult entertainment - specialized lenders only

Use of funds also matters. Money for growth (inventory, equipment, hiring, expansion) is a green light. Money to cover past-due bills or payroll emergencies raises concerns.

How Your Credit Score Affects What You Pay

This is the part that surprises most business owners. Your credit score doesn't just determine IF you get approved - it determines HOW MUCH the same money costs. Here's what $50,000 in funding looks like at different credit levels:

*Estimates based on typical market terms. Actual costs depend on lender, risk profile, and business financials.

Look at the total repaid column. On the same $50,000:

• A 500-score borrower using an MCA pays back $65,000-$75,000
• A 700+ borrower using credit stacking pays back $50,000-$54,500
• That's a $15,000-$25,000 difference on the exact same amount

How to Improve Your Credit Score Before Applying

If you're not in an emergency and have 60-90 days, improving your score before applying is the single best thing you can do to reduce your cost of capital.

High-Impact Actions (30-60 Days)

1. Pay down credit card balances - Get utilization below 30%, ideally below 10%. This is the fastest way to boost your score. A card with a $10,000 limit at $8,000 balance is killing your score. Paying it down to $1,000 can add 20-50 points in a single billing cycle.
2. Check for errors on your credit report - Pull your report from all three bureaus. Dispute any inaccuracies (late payments that weren't late, accounts that aren't yours, incorrect balances). Corrections typically take 30-45 days.
3. Don't close old accounts - Length of credit history accounts for 15% of your score. Closing your oldest card shortens your average age and hurts your score.
4. Become an authorized user - If someone you trust has an old credit card with a perfect payment history, being added as an authorized user can add that account's history to your report.

What NOT to Do Before Applying

• Don't apply for new credit cards or loans - Each hard inquiry drops your score 5-10 points
• Don't make any late payments - One 30-day late payment can drop your score 50-100 points
• Don't max out any credit cards - Even temporarily, high utilization kills your score
• Don't close accounts to "clean up" - Closing accounts reduces your available credit and increases utilization

Don't Qualify for What You Want? Here's What to Do

Your credit score puts you in one bracket today. That doesn't mean you're stuck there. Here are real paths forward depending on where you are:

If Your Score Is Under 600

Your immediate options are MCAs and revenue-based products. These are more expensive, but they get you capital now. The smart play:

1. Use the MCA to fund a revenue-generating opportunity
2. While the MCA is being repaid, work on improving your credit
3. Once your score crosses 600-620, refinance into a term loan or line of credit at a fraction of the cost

If Your Score Is 600-639

You're in term loan and line of credit range, but not quite SBA territory. Your options are solid - rates in the 12-30% range with 1-5 year terms. To move up:

1. Take the term loan now if you need capital
2. Make on-time payments (builds both personal and business credit)
3. Pay down credit card balances to push toward 650-690
4. At 640+, you can explore SBA loans with rates under 13%

If Your Score Is 640-699

You're in the sweet spot for most products. SBA is possible (especially with 690+), and conventional term loans give you great rates. To unlock the best options:

1. If you hit 700+, credit stacking opens up with 0% APR for 12-18 months
2. SBA loans at this level can save you thousands compared to conventional alternatives
3. Focus on keeping utilization low and payment history perfect

If Your Score Is 700+ But You Need Money Fast

With a 700+ score, you have every option available. But SBA takes 60-90 days and credit stacking takes 2-3 weeks. If you need capital in days:

1. A business line of credit at your credit level offers great rates with 1-2 week funding
2. Credit stacking can deliver $10K-$250K in 2-3 weeks
3. For true emergencies, even a short-term loan at your credit level will have much better terms than what someone at 500 gets

Frequently Asked Questions