How your Personal Credit Score Impacts your Business Loan

Many people new to the business world do not know about the impact of personal credit performance on their businesses. One of the ways that a business can be affected by the business owner’s credit history concerns business loans. As a business owner with a poor credit performance history, you’ve likely shut the door on borrowing funds at attractive interest rates. The only way to resolve this might be to work on your credit score.

A good credit score helps you have lots of options in the lending market, and lenders are very likely to offer better deals to people with a good credit score. But not all types of businesses get affected this way, and not all business loans are out of reach for bad credit-holding business owners. Read on, and you must find out more.

It Depends on What Sort of a Company You Own

The more guarantees within your business that you link to your personal finances, the more your credit performance impacts your company’s credit options. In other words, the business owner’s credit history would not impact a company with limited liability (LLC). This is true even if the LLC is owned by an individual.

However, the owner of a small business has personal finances tied to the business and guarantees the business accounts. This will significantly affect their credit score.

Most lenders are likely to hence consider the credit history of the business owner in the latter case and most lenders are unlikely to consider the credit history of the business owner in the former case, while making a loan offer and decision for the business.

That said, the lender determines and considers the factors for processing and approving a loan, which must be within the legal limits. Under these legal limits, lenders can hence behave from case to case, and the above is an explanation of a logic and trend that causes an impact in general terms.

Some Trusted Alternate Business Lenders Accept Bad Credit History

Alternative business lenders are distinct from banks and institutional lenders. They have the option to lend loans at their discretion within certain federal and state regulations and laws. Some trusted alternate business lenders, including us at Business Advance Funding, accept loan applications. They are for bad-credit business borrowers.

A business owner with bad credit who applies for a loan gets more rigorous business operation checks from us. We also consider the business’s industry. The loan approval relies more on the revenue and financial health of the company than the credit score.

We also provide loans without a hard credit check. When you seek such a loan, we must skip the hard credit pull, which is likely to impact your credit score if you already have a bad credit score and are still applying for a loan. The following section must explain more about this.

Does a Business Loan Impact Personal Credit Score?

In the most general terms, a credit score impacts a credit product. It is likely that the credit product also impacts your credit score. As mentioned above, when you request a no-hard credit check alternate business loan, your credit score is not affected. The loan does not affect your credit score in any way.

Yet, if your business account has many personal guarantees and your personal finances are linked with your business’s finances, business loans are more likely to impact your credit score.

For absolute clarity about any loan product’s impact on your credit score, it is important to seek such information from your lender.

What Happens When You Have Business Partners?

Many people ask us how their business partners’ credit scores affect borrowing. Again, the transaction and the offers are all finally at the discretion of the lender. As a general rule, some lenders would refer to the majority stakeholder’s credit history. Some would refer to the credit history of the owner they communicate with most. Some might pay equal attention to every partner’s credit history. There is no specific rule of thumb here. But many lenders tend to have internal policies and guidelines that cover such situations.

Apply for an Alternate Business Loan that Accepts Bad Credit Scores

We at Business Advance Funding provide business loans irrespective of the personal credit score of the borrower. Yes, a healthy credit score might get you a better offer. Nonetheless, a poor credit score will not disqualify you from our business loan products. To start a query for our alternate business loan, a simple online form will get you started as we verify the information and get in touch with you to offer deals designed to help your business get the financing it needs.