What is FICO SBSS?

Having strong personal credit is crucial for an entrepreneur, but how strong is the credit of your business?

If you’re applying for a small business loan, like the SBA 7(a) loan, there are two types of credit scores that can make a big difference: your personal credit score and your small business credit score. While your personal credit score is currently the more important of the two, small business credit scores are becoming an increasingly important part of the loan approval process. The most commonly used small business credit score is the FICO SBSS (Small Business Scoring System) score, which through a scoring system between 0-300, ranks businesses by estimating the likelihood that they’ll make their loan payments on time. 

The SBSS is important to keep track of for small business owners because the United States Small Business Administration requires lenders to use the SBSS as a way of pre-screening applicants for the SBA (7)(a) small loan and community advantage loan programs. Applicants whose scores fall under the 155 threshold (as of October 1, 2020) are subject to the discretion of manual approval. Still, obtaining your SBSS, even with its importance, is no easy feat, and many business owners are not even aware of its existence. The FICO SBSS score is currently in use by over 7,500 lenders across the country. Some of the larger institutions that use the SBSS are KeyBank, Huntington National Bank, PNC, RBC, USBank, Zions Bank, HSBC, Santander Bank.

HOW FICO SBSS SCORES ARE CALCULATED

SBSS scores are calculated by using a variety of factors, including: 

  • Personal/business credit score 

  • A business’s assets and liabilities

  • The business’s cash flow/revenue 

  • How long a company has been in business

  • Liens and judgments against the business 

However, it’s difficult to know which of these factors that FICO weighs the most heavily when calculating a business’s SBSS score. Plus, they could be looking at other factors as well, such as background checks or a business’s online history, but it’s impossible to know for sure since FICO’s specific process is proprietary. Fortunately for many small business owners, however, size isn’t a factor. For example, a 3-person company won’t face any penalty for being small, and a 500+ employee firm won’t gain any specific scoring advantage by being large.