SBA Business FICO Score
About This Lesson
In this lesson, we’re going to cover the following:
- What is the FICO SBSS Score?
- Here’s how SBSS works:
- How is the credit score for SBSS calculated?
- Who uses the FICO SBSS score?
- How can I improve my FICO SBSS score?
Resources
Full Video Transcript
Hello, and welcome to this particular module, SBA Business FICO score, SBSS FICO score. This one is really, really important because this is a score that the SBA and lenders use for business funding. So unlike business credit, corporate credit business funding is saying, Hey, look, I want to get a large infusion of cash. So we need to be able to have this report set up, or at least start establishing this report on the front end. So here’s what we’re going to cover. Number one, what a FICO SBSS score is? Why it’s important? Like I’ve already kind of alluded to the fact that the SBA and lenders uses for term loans or business funding on the front end, how SBSS works? How the credit score is calculated for the SBSS and then who uses the FICO SBSS score, and then how you can improve your FICO SBSS score.
So what is the FICO SBSS score? So, many businesses have a FICO small business credit score that the banks use to help make their lending decisions. Like many people don’t even know this. So just like your personal FICO score, the SBSS score can impact your ability to get business financing and or business funding. So not only does the small business administration or the SBA use this to pre-screen some of the SBA loans and insurers. It also has other lenders that are gonna use it as well. So the FICO liquid credit, small business scoring service or FICO SBSS score is one of the main business credit scores that they are using in order to determine your lendibility. So the FICO SBSS score ranges between zero on the low end and 300 at the highest with 300 being the highest, as I just said, and it’s going to represent your credit worthiness and your ability to pay back or the likelihood to pay back that loan.
So the SBA requires lenders use this score to prescreen SBA 7 (a) loans for $350,000 or less as well as community advantage loans. So if your score falls below either the required threshold of 155 as of October 1st, 2020, your, your, your loan application once go through a manual review, which is what we’re looking to avoid. So from a business funding perspective, we want to make sure our score, it looks good. So it’s one of the credit scores that many business owners should know, but many have never heard of because they just haven’t heard them. So what I want to do is make sure you’re educated, because it’s hard to get this in the hand. It’s hard for you as a consumer or business owner, to even understand how to get access to this report and banks aren’t required to disclose that they use FICO SBSS scores, and there’s very little information online that exists about it.
So now you are in the know, so most lenders are using that because it helps them make faster, more accurate lending decisions. This means those decisions could no longer that were taking hours. They can make decisions in hours as opposed to day, excuse me. So essentially what I’m communicating to you is that you want to, you want to get this report. So the SBSS scores can be used for term loans, funding and lines of credit for amounts up to $1 million, and also like personal credit scores, FICO SBSS ranks order, small businesses from their likelihood of making payments on time. The FICO score ranges anywhere between 0 to 300, and the higher the score, the better. So we want to get that score up. And then also the minimum score to pass the SBA prescreen process is currently 155 as of October 20th, 20 October 1st, 2020, but most SBA lenders have a minimum score of 160 to 165.
Okay. So when we look at how the scores works, the score is going to be calculated based on your personal and your business credit and other financial history. So this is why I was saying upfront, personal credit is so important when it comes to building your business credit from a funding perspective, because a strong business credit history with timely payments to vendors and suppliers will boost your SBSS score, but also your personal FICO score, your personal credit scores are going to also have a rating on this. So if you have derogatory or no credit history, it can take months or even years to get positive credit history to move past your SBSS score, to get a significant higher. So that’s why it’s significant. This. That’s why it’s really vital to build your business credit and ensure it’s healthy before you need it.
This is why I’m saying, and then also makes your personal credit good. So, because businesses are not covered, which is huge for you understand business are not covered by the fair credit reporting act protections. You can be denied business financing due to your SBSS score being low. And lenders are not required to notify you of your score that was used to access the report. So not to where I’m going to show you how to get this, but you’re just being in the note. Now, one of the other things is how was it, how was the credit score for the SBSS calculator? Well, the short answer is, is that the score is calculated by scoring the personal credit of your owner’s IEU, including up the five owners with 20% or more of ownership. So many of you are going to be the 100% owner is also going to look at your business credit in the history of the business, as well as business, financial information, like age of the business number of employees, financial data, revenue, and assets.
It’s truly a global view of the business’s overall financial health. So that’s why I was saying upfront. We want to make sure we’re establishing the Dun & Bradstreet, the Experian, Equifax is kind of irrelevant, but we still want to establish it and have all of these things already in place. So that way all the bureaus are reporting accurate data about you and your company. Also if you don’t have a business credit history or limited business time or limited time in business, you may be able to get it, get a passing FICO score just based on, you know, stellar personal credit alone, but it also is going to help to have a strong business credit as well. So I’m going to recommend is as you’re going through this, you’re going to be building up the business credit. And if you need to improve your personal credit, for whatever reason, you can go enroll in the 700 Credit Score Academy.
And I will show you step-by-step how to get those items removed from your, your personal credit report. Now banks and lenders can use or set up the SBSS model they use in different ways, putting more weight on certain information and less on others. So this is why it’s so important to understand that the, just to have good credit overall. For example, I know it can put more weight on your credit profile, then you’re, then you’re on your business credit profile than it is on your personal. It’s also very smart for your business credit scoring model, because it will automatically go from business credit bureau to another. So in whatever order or priority lender prefers until it generates the score. So essentially what I’m saying is, is that they can choose how they want to do it, just make sure it all looks good.
Now, when it comes to who uses the SBSS FICO score. This can be used for term loans and lines of credit all the way up to a million dollars. So essentially any type of business funding or lines of credit is going to be used for the small business FICO score. And it’s also going to be used by over 7,500 lenders nationwide to help them keep and make lending decisions. So these large banks are going to include Key Bank, Huntington National Bank, PNC, RBC, US Bank, Zions Bank, HBCU, Santander Lending Bank, and many others. So all of these banks offer term loans. IE business funding. So we have to make sure this FICO score is intact and we’re building it. And then also the SBA, because the SBA generally underwrite or insures loans provided by banks are going to require that the banks pre-screen applications and then banks will use it to prescreen their loan applicants.
But they’re usually going to have their cutoff higher and typically around 160 to 165. If your score falls below that, then you may need to, they may view your business as too much of a risk plus banks don’t want to waste their time, filling out lengthy SBA applications. If they’re aren’t confident, you’re going to get denied because of poor credit. So they’re not going to waste their time. So you have to be able to do all this due diligence on the front end, ensure that you’re good. Also, you can take steps right now to start improving your FICO SBSS score. All you need to do is take care of your personal credit and then start building business credit. Now, like I was saying before, NAV will help you check and monitor both your business and your personal credit with that NAV account. And you’re only going to get your Equifax.
I mean, your Experian and your TransUnion Vantage Score. It’s really important that you know, what your FICO score is. So what I’ll do is I’ll include a link to access your personal credit reports below this video as well for that third bureau. And so that way, you know, but you just want to have a handle on this. And then also, um, you just need to show a solid time in business and then financial to read that makes your business look like more of a solid bet. So again, we’re not setting us up for a quick, a quick all in, let me run up a check like future and just not spend the money. We’re setting this up because we want to be a legacy for our family. So we want to be thinking about the end in mind and putting ourselves in a position to really look like a legitimate business.
Okay? So this is going to be pretty much wrap up this module. This one is huge for all of you guys trying to get funding for your business, not corporate credit or business credit, funding and funding means you’re getting a loan upfront to be able to finance or get working capital in your personal and your business credit reports. The combination of all of those is what’s going to make up the SBSS score, which is why I did this one last. So get this stuff knocked out and really quickly. I know I said I was about to end it, but what I want to show you is under your NAV account, how you access this. So when you’re logged into NAV, you’ll be able to, and this is why I was recommending you get the the business loan builder. So once you have this current plan, you’ll be able to go ahead and start building up your SBA or your, your FICO SBSS score right here.
So make sure you sign up for this current plan is going to be well worth it, whether you do quarterly or monthly, I would even recommend signing up for this page service over the Dun & Bradstreet paid service only because of Dun & Bradstreet service. Not saying you shouldn’t do it, but the Dun and Bradstreet service, isn’t gonna give you this much detail in terms of not only your personal business credit scores, but then also your FICO score and give you a tradeline. You absolutely want to sign up for this one. Okay? So this is how you access it also that’s. So right below this video, I’m going to give you the link to access your SBSS FICO score via NAV. So if you set up your NAV account in a previous module and you went for the business loan builder, now you’ve got to deal with this, go through the steps and follow, and you’ll be good to go. All right. So get this done and I’ll see you in the next module.