The Top Lenders at a Glance
|Minimum Credit Score||Time Until Funding||Visit Site|
|None||Qualify in 10 minutes|
|None||1 day to 8+ weeks depending on lender|
|580||As little as 24 hours||View Rates|
|550||As fast as 1 business day|
|650||Approvals as fast as 20 minutes||View Rates|
What is a Credit Score?
A business credit score represents how reliable your company is when it comes to paying back loans or paying off purchases. Unlike personal credit scores, which are rated between 300 and 850, business credit is expressed as a number between zero and 100.
There are several factors involved in determining a credit score. The three major business credit agencies -- Experian, Equifax, and Dun & Bradstreet -- use a combination of these indicators in different algorithms to calculate your final score. As a result, your business rating might vary slightly between agencies.
Some of the factors considered include:
- Your overall business credit history
- The size of your company
- How long you’ve been establishing credit
- Previous payment history
- Amount of late payments
- Outstanding loans
- Percentage of available credit you’re currently using
- Types of credit in your history
- How often a new line of credit is requested
Information may be collected from banks, credit card issuers, and any institution responsible for lending your business money or extending lines of credit. Not all factors carry the same weight when calculating your credit score, so it can be difficult to know which ones have the greatest effect on your rating.
Fortunately, you have control over most of these factors, and keeping ahead of your payment schedules will ensure you have an excellent credit score when you need it.
Why Credit Score Matters to Your Business
Business credit scores are major financial credentials, indicating to loan providers that you have reliably paid back loans or bills in a timely manner and can be trusted to meet loan payment obligations. The better a credit score, the faster and easier a business will be approved for a loan or line of credit. Expediting the usually long and complex loan process can get your company the money it needs with a minimal amount of hassle.
When you know how to boost your credit score, you may also enjoy some perks from vendors. Suppliers are more comfortable extending credit to businesses with favorable credit ratings. Some will waive the usual down payment requirements on large purchases and give you a more generous time frame in which to pay, allowing your company to afford equipment upgrades without taking out a loan.
How to Improve Your Credit Score
For businesses, a credit rating of 75 or higher is considered excellent. To become aware of your current credit situation, run a credit check. Analyze the report to see if there are any unsettled accounts, outstanding payments, or charges you were unaware of. People often have credit problems based on debt that they never knew they had. Before running the report, however, make sure that doing so won’t negatively impact your score. Too many credit checks in a short period of time can make lenders wary.
If your credit rating is less than perfect, there are a few things you can do to improve it and show lending institutions that you’re serious about paying back their loans:
- Consider a debt consolidation or settlement plan. Make sure to deal with a reputable debt expert as these plans can have an adverse affect on your credit score if not handled properly.
- Stop applying for continuous lines of credit. Multiple requests can reflect negatively. If you’ve been rejected because of poor credit, give yourself some time to rebuild your reputation before trying again.
- Create a regular monthly payment schedule, and make sure to pay bills on time.
- Work with a financial advisor if necessary to get your debt under control and create a solid payment plan.
- Clean up your personal credit, and deal with outstanding personal debts.
Should your credit score remain low despite taking these steps, contact the credit institutions about potentially incorrect information. Sometimes factors used to calculate your score need to be fixed to reflect your company’s true creditworthiness.
The 5 Best Lenders
Kabbage provides credit lines to businesses for covering any expense. Approval gives instant access to funds, and you can draw on the approved amount when you need cash for your business. The terms and fee are easy to understand, and there are no hidden fees. Loans are structured in as credit lines so you can withdraw money as-needed, and the Kabbage card affords you instant access when you need it.
LendingTree was created to help borrowers identify the financing solution they require more efficiently. The company facilitates an instant comparison of several providers to find the best option and offers a wide range of credit and financing solutions. Though LendingTree is not directly a lender, customers are able to narrow down the available choices and select the right loan to match their needs.
Lendio is an online small business loan aggregator that brings business owners and lenders together on one platform. The site is free to use, and offers at over ten distinct loan programs, for every business need, from business acquisition to funding for commercial real estate, increasing your changes to find both a lender and a specific loan program that suits your needs.
By providing access to highly customizable short-term business loans, LoanBuilder, A PayPal Service, offers borrowers the freedom to design loans according to their needs and specific circumstances. It may be an excellent choice for businesses needing access to short-term cash injections and the flexibility to choose unique repayment solutions with weekly payments.
BlueVine provides fast financing solutions for small businesses in need of working capital. With flexible credit lines ranging from $5,000 to $2.5 million and simple invoice factoring options, the company can serve as a viable alternative to traditional lenders. Fewer fees, short terms, and automatic payment options make BlueVine an accessible choice for many small businesses.
Working With Bad Credit
If your business is struggling to grow, a small business loan can help. Alternative lenders are a possible choice if you need to improve your credit score. Getting these loans and paying them back on time can improve your score and make you eligible for traditional loans in the future.
Look for lenders requiring no minimum credit score or that take other factors into account when considering whether to approve your application. Read up on all the information you need to know about personal and business loans, and then utilize one of the best loan providers to get the best rates and services for your business now.