Credit Reports for Small Business Loans

Why does the Bank pull a Credit Report for a Small Business Loan?

In addition to analyzing your Small Business’s financial statements, the Bank wants to know all about the individuals it is lending to – your credit score reflects how well you handle money. Remember the biggest question the Bank has is if your Small Business can pay back the money the Bank is lending you. In the eyes of the Bank, you ARE your Small Business and how you handle your personal finances is a good indicator of how you will handle your Small Business loan in the future. Low credit scores may be interpreted as not having the proper skills to manage finances.

The Bank looks at:

Payment History:
  • How well has you repaid other loans in the past?
  • Did you miss payments?
  • Did you fail to pay back a debt entirely?
  • Did you ever declare bankruptcy or gone into collections?
Amounts Owed:
  • How much credit card debt do you have?
  • Are your credit cards maxed out?
  • What other outstanding loans do you have and how much do you owe?
Length of Credit History:
  • Your credit score will reflect how well you have handled credit and for how many years. It will also reflect the amount of time that has passed since you opened each credit card or took out a loan along with activity on the accounts.
Types of Credit:
  • Your will take into account how often you apply for new credit, the types of credit you currently used, and the balance remaining on the credit cards and loans.

The Bank looks to see how much debt you can handle in relation to your income, employment history and history of paying bills on time. Your credit score can affect how much the Bank will lend you and what the interest rate will be.