This article is written by Marcus Delgado, a Business Development Officer and SBA lending expert at American Partners Federal Credit Union in Greensboro, North Carolina.
As a Business Development Officer (BDO), I’ve worked with small businesses of all shapes and stages in their growth. While every loan request is unique, there are a few common factors that help determine whether a loan can be funded.
If you’re a small business owner seeking funding, understanding what bankers look for can save you time, money, and stress. More importantly, it can improve your chances of getting a “yes.”
The bottom line for all financial institutions, regardless of the circumstances, is whether you can, and will, repay the loan that funds your business. This has always been the primary concern in the industry. After extensive trial and error throughout the decades, the 5 C’s of Credit were established and widely recognized as an industry-standard for evaluating creditworthiness.
While each lender may weigh these differently, Character and Capacity are often the most influential in my decision-making process, with Collateral coming in close behind.
Your credit history helps in assessing a character as it is a window into how you manage financial responsibilities. Though we don’t outright ask for your credit score in casual conversations, your personal credit score will be pulled and reviewed once you formally apply, even for business loans. Your personal credit matters, especially for startups or small businesses without established business credit.
A score of 680+ opens many doors and signals to lenders that you're a strong candidate. At this score, you will start to notice letters in the mail from banks begging you to get a personal loan or credit card with them!
A score of 620 is often the minimum acceptable range, though it's highly dependent on your full financial picture. If your credit isn’t ideal, an airtight business plan can help balance the scales.