What credit score do you need to get a business loan?

Your personal credit score is often one of the main factors business lenders consider when you apply for a loan. While not as important as it might be with a personal loan, it can impact your rate, loan amounts, terms and even what types of financing your company can qualify for. And in some cases, your business credit score might come into play as well.

Is there a minimum credit score to get a business loan?

No, there’s no one minimum credit score for all business loans. But most business lenders have a minimum personal credit score requirement that you’ll have to meet to qualify for a loan. You can sometimes find out what a provider’s credit requirements are by visiting its website — especially if it’s an online lender. Otherwise, you might have to call or visit a branch to learn if you’re eligible.

Must read: Best business loans in Canada

Do I need a business credit score?

Not necessarily, though some lenders also take a look at your business’s credit requirements. Often, lenders will consider both your personal and business credit scores together. It can help if you have a high business credit score, but your options aren’t necessarily limited if you don’t.

You can find out what your business credit score is by contacting one of the credit bureaus like Equifax Canada or TransUnion Canada.

I have business partners. Do their credit scores count, too?

Likely, yes. Most lenders consider the credit scores of all partners who own a significant percentage of the business. Often, you’ll all need to meet the minimum credit requirement to qualify.

What’s a good credit score for a business loan?

Lenders generally consider a credit score of 680 or higher to be good credit. But the higher your credit score is, the more options you have. A higher score also means you’ll be eligible for more competitive rates.

Larger loan amounts might also have higher credit requirements. If you’re interested in borrowing close to the maximum a lender offers, reach out to make sure your credit history is strong enough to qualify.

What are my options based on my credit score?

The types of business loans available to you might vary depending on your credit score, though there’s no one specific cutoff — it varies by lender.

Good to excellent credit: 680 to 800

Most if not all options are on the table if you have a high credit score. This includes financing through banks and the Canada Small Business Financing Program (CSBFP), which tend to have higher credit requirements than other types of lenders. Term loans, lines of credit, and equipment or vehicle financing tend to offer the most competitive deals, especially if they’re from a bank or online lender.

Fair credit: 580 to 679

With fair credit, your choices are slightly more narrow. You likely won’t meet the cutoff for a CSBFP loan — most lenders require a score of 660 or higher. And you could struggle to qualify with a bank or some of the more selective online lenders. You can strengthen your chances of approval by backing your loan with business or personal assets.

Poor credit: 300 to 579

When your credit score drops below 580, the main options available are financing that’s backed by some kind of collateral, like equipment, vehicle or invoice financing. Your other main choice is an advance on your business’s future profits, like factoring or a merchant cash advance. These last two options often don’t have any credit requirements at all. But they can cost the equivalent of a triple-digit APR — similar to a payday loan.

Business loans you could get with bad credit

Finder survey: When did Canadians from different provinces last check their credit score?

What other factors do lenders consider?

Although your credit score is important for your business loan application, it isn’t the only factor lenders consider. Here are a few other details they’ll look at:

• Revenue. Most business lenders have a minimum revenue cutoff, and also require you to show that you bring in enough money each year to afford repayments.
• Time in business. Many lenders want your business to have a track record of doing business for at least 6 months — though at least 2 years is ideal.
• Net operating income. In addition to revenue, most lenders will consider how much money you have available after covering your day-to-day business expenses.
• Business debts. Lenders also typically ask about any outstanding debts in your business’s name. If your debts are equal to or more than your net operating income, you might struggle to qualify.
• Collateral. Any business or personal collateral you can use to back the loan makes you less of a risk to a lender and can make up for a low credit score or short time in business.
• Industry. If you work in what lenders consider to be a high-risk industry — like financial services or cannabis — you could have a hard time qualifying for some types of business loans.

Business loan requirements explained

Bottom line

While there’s no set minimum credit score for a business loan, your options might be limited depending on your personal credit score. And while your business credit score may not necessarily factor in, your business partners’ personal credit ratings typically will. Find out more informationand compare financing options for your company with our guide to business loans.

Frequently asked questions

• Can I get a business loan without a credit check?

  Yes, it’s possible to get a business loan without a credit check. In fact, some types of business loans don’t require a credit check at all because they’re an advance on future earnings. But these tend to have a higher cost than lenders that do run a credit check, so they might not be the best choice even if you have bed credit. You can learn more with our guide to business loans that don’t require a credit check.

• Is there a minimum credit score for Canada Small Business Financing Program (CSBFP) loans?

  Since these loans are approved by various banks, the specific eligibility requirements are set by the institution you apply to. In general, lenders require a good or excellent credit score for all owners with a significant stake in the company. It also might consider your business’s credit score, depending on the type of loan. Read our guide to CSBFP loans to learn more about what to expect.

• Do I need good credit for a startup loan?

  Not necessarily, but having good credit can be more important when applying for startup financing, since lenders don’t have a business track record to base their decision on. If your credit isn’t great, you might want to consider other types of financing for startups like crowdfunding or angel investors.