When you apply for a loan, credit card, or other type of financing, the lender will generally check your credit score during the loan application review process. In the small business world, FICO® SBSS℠ is one type of credit score a lender might check. 

Read on to learn more about how this small business credit scoring system works. You’ll also find tips to help you improve your company’s SBSS score so you can set your business up for success the next time it needs to borrow money. 

What Is the FICO® SBSS℠?

FICO Scores are well known (and frequently used) in the consumer lending space. But the company also creates a credit scoring system for business lenders, too. 

The FICO Small Business Scoring Service, also known as FICO SBSS, is a type of commercial credit score. FICO launched SBSS in 1993. Yet despite its frequent use, many business owners have never heard of the score.

Some lenders use FICO SBSS to evaluate the risk for small business applicants. If you want an SBA loan, for example, you’ll need a good FICO SBSS score for certain loan options.

The FICO SBSS works in a unique way. Most business credit scoring models ignore the business owner’s personal credit information. But FICO SBSS bases its score on a combination of factors from your personal and business credit reports. 

There’s a reason why small business lenders appreciate a credit score that evaluates both personal and business credit data. In many ways, your company is an extension of you. 

Do you make good personal financial decisions? If so, a commercial lender might believe those good practices could extend to your small business management habits, too. And, of course, the opposite may be true as well. 

FICO says that knowing more about an applicant’s risk empowers lenders. Lenders can make more informed decisions about whether to approve small business financing applications and how much to charge when they do. 

How Does SBSS Work? 

The FICO Small Business Scoring Service features a range of 0–300. Like most credit scoring models, a higher number means you’re more likely to repay your debts as promised. A score in the mid-to-high 200s typically indicates that you’re a good credit risk.

On the other hand, a low SBSS score could cause you problems in business credit decisions. In the small business lending space (and elsewhere), a low credit score communicates that you may be unreliable with your payments, and possibly a bad investment.

Like most credit scoring systems, the algorithm isn’t available to the public. That’s proprietary information. But here are some details about the FICO SBSS score that we do know:

• Lenders can use the score to evaluate applications for business loans, credit cards, and lines of credit up to $1 million.
  
• A flexible system lets lenders choose to score credit reports from a variety of major consumer and commercial credit reporting agencies including:
  • Business: Dun & Bradstreet, Experian Business, PayNet, and Equifax Commercial
  • Consumer: Equifax, TransUnion, and Experian
    
• FICO uses its LiquidCredit® Service to deliver the SBSS score lenders in a speedy and secure manner.
  
• A higher score could increase your loan approval odds, and potentially help you secure larger business loan amounts and better financing terms.
  
• You may be able to offset personal credit problems, at least to some extent, with strong business credit habits. 

How Is the Credit Score Calculated? 

FICO considers a number of factors from both your business and personal credit reports in order to calculate your SBSS score. Here are some examples: 

• Personal Payment History
• Business Payment History
• Credit Utilization Rates
• Business Age
• Financial Data (Business)
• Number of Employees
• Public Records (Liens and Judgments)
• Liabilities and Assets 
• Revenue
• Cash Flow

The scoring system considers the factors above and others to calculate an applicant’s credit risk level. It also gives lenders a lot of predictive flexibility.

• Lenders can mix and match which business credit report and consumer credit report it wants the scoring model to score.
  
• There are more than 100 model variations that allow lenders to evaluate specific market segments of potential customers (business leasing, term loans, etc.). 

FICO SBSS also has the ability to consider the personal credit of up to five owners of a company (anyone with 20% ownership or more). 

As you can see, there’s a lot of room for variance within the FICO SBSS scoring system. 

Because each lender can specify which factors it wants to be considered (and to what degree), you could potentially see a different score with one lender versus another.

Who is the FICO SBSS Score Used By? 

According to multiple sources, around 7,500 business lenders rely on the FICO Small Business Scoring Service to assess credit risk levels. Some lenders who use the score include: 

• U.S. Bank
• KeyBank
• Huntington National Bank
• Santander Bank
• PNC Bank
• HSBC

The Small Business Administration (SBA) also uses the SBSS score. SBA lenders must use the score to evaluate applicants for several of its loan programs — including SBA 7(a), which is loans over the amount of $350,000. 

There’s another point that’s worth mentioning here. Any credit score is merely a tool that lenders use to evaluate risk. But it’s the lender who sets the approval criteria you need to satisfy to qualify for financing, not FICO. 

Here’s an example to illustrate the previous point. 

• Many lenders set the number 160 as the minimum FICO SBSS score you need to earn before you’re eligible for a loan.
  
• Yet lenders who offer SBA-backed loans might be willing to work with you if you have a FICO SBSS score of 140 or higher (albeit with a manual underwriting process if your score falls below 155). 

How Do I Get My SBSS Score Up? 

The Fair Credit Reporting Act (FCRA) doesn’t apply to businesses. Unlike the consumer credit world, if a lender turns you down due to a low FICO SBSS Score, it doesn’t have to explain why it declined you, or even tell you which scoring model or credit report it used.

Despite this lack of information, there are a few strategies you can use to try to increase your FICO SBSS score. 

Focus On Building Good Personal Credit 

Lenders can tell a FICO SBSS scoring model to pull in data from any of your consumer credit reports — Equifax, TransUnion, or Experian. So, you’ll want to make sure your personal credit score is in good shape.

If you’re looking for ways to improve your credit score, this guide can help you get started. And if you need to build good credit in the first place, you might want to consider opening a few accounts, such as secured credit cards or a credit builder loan with Credit Strong.

Most of all, be sure to pay on time. Late payments arguably pose the most potential danger to your credit score.

The whole point of a consumer credit score (like a FICO Score or VantageScore credit score) is to predict whether you’ll pay 90+ days late in the next 24 months.

Establish a Good Business Credit History 

The FICO Small Business Scoring Service can also consider data from a business credit bureau like Dun & Bradstreet, Experian Business, PayNet, or Equifax Commercial.

So, if you want a good FICO SBSS score, you should also work to establish good credit with the commercial credit reporting agencies. This guide, Business Credit 101, can offer you some in-depth tips on how to accomplish that goal.

In the meantime, open accounts that report to at least one business credit bureau (such as a business tradeline, commercial credit builder loan, small business credit card, etc.). Then, focus on making timely payments. Better yet, you can pay early.

Earning a good FICO SBSS Score can take time. Your best bet is to begin working on your business credit long before you think you’ll need it to apply for any type of financing. 

Bottom Line

A good FICO Score can open doors for you and your business. Solid credit can also help you save money. So, it’s worth the time and effort it takes to learn how the scoring system works, and then strive to earn the best score possible for your company. 

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