What is the Minimum Credit Score for Small Business Loans

Your credit score plays a pivotal role in whether you can secure a small business loan in the Philippines. Lenders see your credit score as a direct reflection of your financial reliability and use it to assess the risk of lending to your business. In the local context, most banks require a minimum credit score of 650 for small business loan applications, but higher scores often improve your chances of approval and secure you better terms.

In fact, a strong credit score not only increases your likelihood of getting approved but can also lead to more favorable interest rates and faster processing times. Conversely, a lower score may limit your loan options or result in higher interest rates. Understanding this, it's crucial to know the minimum credit score required for different loan types and how it influences your borrowing capacity.

In this article, you’ll learn what the minimum credit score requirements are for small business loans, why your score matters, and practical steps you can take to strengthen your loan application.

TL;DR

Most banks require a minimum credit score of 650 for small business loan approval.
Higher scores improve chances of approval, reduce interest rates, and speed up processing.
Alternative lenders may accept scores as low as 600, but terms are less favorable.
Your credit score affects loan amount, repayment terms, and access to funding.

Understanding Credit Scores

A credit score is a three-digit number that reflects your business’s creditworthiness, or your ability to repay borrowed funds on time. For small business loans in the Philippines, lenders use your credit score as a key indicator to decide whether to approve your loan application and what terms to offer you. In the Philippines, credit scores typically range from 300 to 850, with higher scores signaling better financial health and reliability.

Your credit score is calculated based on several components:

Credit history: How long you’ve been using credit and your track record of repayments.
Payment history: Whether you pay bills and debts on time.
Credit utilization: The percentage of your available credit you’re currently using.
Types of credit used: A mix of credit accounts, such as loans and credit cards.
Total amount owed: The sum of all your outstanding debts.

Understanding these factors helps you see where you stand and what you can improve to boost your chances of getting approved for a small business loan.

Now that you know how credit scores are calculated, let’s look at what lenders typically require.

What Is the Minimum Credit Score For a Small Business Loan by Lender Type?

The minimum credit score you need for a small business loan depends on the type of lender you approach. For most banks and credit unions in the Philippines, you’ll generally need a personal or business credit score of at least 650 to be considered, though some lenders may set the bar higher for larger loan amounts or unsecured loans.

If you’re looking at SBA-backed loans (such as the popular SBA 7(a) loan), the minimum personal credit score requirement typically starts around 640, but some lenders may require a score of 690 or above for the most competitive rates. The SBA itself does not lend directly, but its approved lenders follow these guidelines closely, and your FICO® Score is a major factor in the decision process.

When comparing loan options:

Banks and credit unions: Expect stricter credit score requirements (usually 650+), longer operating history, and more documentation.
SBA lenders: Minimum credit score of 640–690, with additional requirements like a 10% down payment and proof of ability to repay.
Alternative lenders: May accept lower credit scores (as low as 600–625), but often charge higher interest rates and offer smaller loan amounts.

Knowing the minimum score is just part of the picture, here’s why your credit score truly matters.

Suggested Read: Medium Enterprises Loans and Support Hub

Importance of Credit Score for Small Business Loans

Your credit score plays a pivotal role in securing financing for your small business. It serves as a reflection of your financial trustworthiness, influencing the decisions of lenders and investors. Understanding its importance can help you make informed choices when applying for loans and give you an edge in the competitive landscape of small business funding.

Why Does Your Credit Score Matters?

Loan Approval: Lenders rely on your credit score to decide if your business qualifies for a loan. A higher score increases your chances of approval.
Interest Rates: Strong credit scores often lead to lower interest rates, saving your business money over time.
Loan Amounts: With a good score, you can access larger loan amounts, giving you more flexibility for growth or operational needs.
Repayment Terms: Lenders may offer more favorable repayment schedules to businesses with higher credit scores.

Impact on Filipino SMBs

Access to Capital: Your credit score can determine whether you get the funds needed for expansion, inventory, or cash flow management.
Speed and Credibility: A strong score can speed up the approval process and boost your reputation with lenders.
Decision-Making: In the Philippines, banks and lenders use CIC-managed credit scores for objective, data-driven decisions.

Risks of a Low Credit Score

Higher Costs: Expect higher interest rates and less favorable terms if your score is low.
Possible Rejection: Some lenders may deny your application altogether, limiting your financing options.

Maintaining a healthy credit score gives your business better access to funding and supports long-term financial stability. Let’s explore why lenders place so much weight on your credit score during the loan process.

Why Do Lenders Look for a Good Credit Score?

Lenders look for a good credit score because it helps them assess the risk of lending to your business. A strong score indicates that you are likely to repay your loan on time, while a low score signals higher risk and potential for default. This evaluation directly influences your approval odds, interest rates, and loan terms.

Risk Assessment: Lenders want to minimize losses, so they use your credit score as a reliable indicator of your repayment behavior.
Faster Decisions: Credit scores allow lenders to make quick, objective decisions on loan applications.
Better Offers: Higher scores can qualify you for larger loan amounts and more favorable terms.

To better understand your score’s impact, here’s how the FICO® system evaluates creditworthiness.

FICO Score Criteria

According to myFICO, your FICO® Score is calculated based on these components:

Payment history (35%): Track record of on-time payments.
Amounts owed (30%): How much debt you currently have.
Length of credit history (15%): How long you’ve used credit.
Credit mix (10%): Variety of credit accounts (loans, cards, etc.).
New credit (10%): Recent credit inquiries and new accounts.

To even have a FICO score, you need:

At least one account open for six months or more,
At least one account reported to the bureau in the past six months,
No indication of deceased on your credit report.

Beyond personal scores, some loans require business-focused scores like the FICO SBSS—here’s what you should know.

FICO SBSS for Small Business Loans and SBA

For small business loans, especially SBA loans, lenders often use the FICO SBSS score, which ranges from 0 to 300. Most SBA lenders require a minimum SBSS score of 160–165 for approval. This score considers both your personal and business credit

history, along with financial and application data.

Don’t have a perfect score? Don’t worry—here’s how you can still access business funding.

How to Secure Small Business Loans Without a Perfect Credit Score?

If your credit score falls short of traditional requirements, you still have options for securing business funding in the Philippines. While banks and most formal lenders prioritize a good credit score, alternative providers like n90 are making business loans more accessible for SMEs that may not meet strict credit benchmarks.

How n90 Supports SMEs with Flexible Lending?

n90 specializes in tailored lending solutions for Philippine SMEs, focusing on your business’s potential and operational health rather than just your credit score. Here’s what sets n90 apart:

Bridge Loans: Short-term funding to cover cash flow gaps or urgent opportunities.
Small Business Loans: Flexible terms for expansion, inventory, or working capital.
Invoice Factoring: Access funds tied up in receivables to boost liquidity.

Who Can Qualify with n90?

You can apply if:

Your business is registered with the BIR, DTI (for sole proprietorships), or SEC (for partnerships/corporations).
You have a valid Philippine ID or Alien Registration Card.
Your annual revenue falls into any of these brackets:
- Above ₱150 million: Up to ₱25 million credit limit, monthly rates below 1%.
- ₱15 million–₱150 million: ₱1–₱10 million credit limit, 1.09%–1.49% monthly rates.
- Below ₱15 million: Up to ₱1.5 million credit limit, 1.50%–1.90% monthly rates.

What to Expect?

Fast approvals—potentially within 24 hours.
Simple documentation: valid ID, business registration, and proof of revenue.
Transparent terms and full support throughout the process.

If your credit score isn’t where you want it to be, companies like n90 can provide the funding flexibility you need to keep your business moving forward, without the barriers set by traditional lenders.

Conclusion

Securing a small business loan in the Philippines often hinges on your credit score, with most lenders preferring scores of 650 or higher for the best terms. However, requirements can vary depending on the lender and loan type, and some options, like SBA loans, may accept scores as low as 620–640 if you meet other criteria. While a strong credit score boosts your chances of approval and favorable rates, alternative lenders are opening doors for SMEs who may not meet traditional benchmarks.

If your credit score isn’t where you want it to be, n90 offers flexible, tailored lending solutions designed for Filipino SMEs. Explore n90’s loan options, get started today and keep your business moving forward with support that fits your needs.

Get in touch with the experts on +63 962 663 1393 to learn more about small business loans.

FAQs

1. What is the ideal credit score for securing a small business loan in the Philippines?

‍Most banks and credit unions prefer a credit score of 650 or above, though some SBA lenders may accept scores as low as 640.

2. Can I get a small business loan with a poor credit score?

‍Yes. While banks may reject low scores, alternative lenders like n90 offer flexible financing options even if your score is below 650.

3. What factors affect my credit score for business loans?

‍Key factors include payment history, credit utilization, credit mix, length of credit history, and total debt owed.

4. What’s the difference between personal and business credit scores?

‍Personal credit reflects your individual repayment behavior, while business credit shows how your company handles debt. Some lenders assess both.

5. How does n90 support SMEs with low credit scores?

‍n90 offers bridge loans, small business loans, and invoice factoring with fast approval, minimal documents, and transparent terms, focusing on business performance, not just credit scores.