Many small business owners turn to borrowed capital to fuel growth and fund other initiatives, yet access to borrowed capital can sometimes be a challenge. Depending upon where you apply, your business credit profile, and other factors, it might be difficult to get a loan approval. Not all lenders look at the same criteria when evaluating whether or not they’ll approve a small business loan.
But here are three red flags that could put the brakes on any loan application:
1. You have a bad personal credit score
With the exception of maybe the biggest and most tenured small businesses, the need for a business owner to maintain a good personal credit score will never go away. With a personal credit score below 680, for example, it’s unlikely you’ll find success at the bank. And the SBA threshold is around 650 for most applications.
Some non-bank lenders will approve a loan with a lower credit score but will want to see other metrics in place. If your personal score is struggling, making improvements will help increase the odds of success when you need a small business loan.
The first step is to find out where you are. Annualcreditreport.com is one place you can access a free copy of your credit report once per year. You can also check out the three main personal credit bureaus, Experian, Equifax and Transunion, who all offer low cost credit monitoring. Continue reading