For a commercial loan, the required credit score can vary depending on the lender, loan type, and your overall financial profile. Here’s a clear breakdown:
- Traditional Banks:
- Typically prefer a credit score of 680–700 or higher for standard commercial loans.
- Lower scores may still qualify, but expect higher interest rates or additional collateral.
- SBA (Small Business Administration) Loans:
- Usually require a minimum credit score of 640–660.
- SBA loans are more flexible but still consider the overall financial strength and business history.
- Alternative Lenders / Online Lenders:
- May approve scores as low as 600–620, though rates will be higher.
- Often focus more on cash flow and business performance than just credit score.
- Other Considerations:
- Lenders also look at business revenue, debt-to-income ratio, and collateral.
- Even with a strong credit score, insufficient cash flow or collateral can limit approval.
Bottom line: For a smooth approval with the best rates, aim for 700+. If your score is lower, don’t give up—other factors like strong cash flow or assets can help.