Business Credit Only Approvals, Business Financing Alternatives, Access Financing, FICO SBSS

In today’s business financing where a small business is seeking a “working capital” type loan the relatively new FICO SBSS (small business scoring system) will apply. This scoring system has been adopted by over ten thousand cash type business lenders which includes the SBA. What this means to your business is that if it has below a 160 score you will most likely be declined.

However, simply having above a 160-business score does not equal an immediate approval. The reality is that these "cash type" business lenders do not use business credit scores or even business credit reports as a standalone factor for approvals. This means that just having great business credit scores will not get your business approved for a working capital cash type loan.

Business cash lenders, such as banks, credit unions, the SBA, and large fintech lenders will use business credit to decline your business and they will also use your business credit to determine the amount, rate and term of your funding offer, but they will most likely not approve based solely on business credit.

There are five main business credit scores that cover all types of business credit and business lending.

Those are Experian, Equifax, CreditSafe, Dun & Bradstreet and FICO. Where FICO is now dominant is the cash type lending space such as SBA loans and the others all having niches that they serve. The other major business credit reports play a role in your business FICO score.

The business lending landscape changes fairly significantly if your business is more than three years old and exceeds one million in gross annual revenue, but that is not a typical small business.

There are thousands of non-bankable lenders making billions in business loans each year

Most of these do not use or even check your business credit reports. These alternative business loans are based on your personal credit, the business revenue or on some type of asset security. The downside to these non-bankable loans is that they tend to be short term, smaller amounts and high interest rates. The typical loan will be under $250,000 with the average being under $100,000. The repayment periods are normal one to two years, and the interest rates can be 35% and up. The reason for this is the high rate of default and the high rate of small business failures within the first three years of business which makes non-bankable lending high risk.

There are also tens of thousands of business-to-business credit providers for every product and service imaginable on net 30, 60 or 90-day business credit extended payment terms. These are not cash lines of credit, but they can be used to offset and conserve working capital. Many of these credit providers will approve based solely on business credit, but again this is not working capital cash.

Additionally, there are many store and fleet cards that will approve your business based solely on business credit, but there too you cannot pull cash off your FuelMan or Home Depot business credit card.

These business-to-business credit lines and the store and fleet business credit cards are excellent sources of reporting business credit tradelines which help you build the strong business credit scores you need for your business to become bankable.