What’s More Important to a Business Lender: Credit History or Character?

July 8, 2015

Funding Circle july article imageFrom personal credit scores to Facebook followers, have you ever wondered what online small business lenders actually look for?

Unlike banks and other traditional lenders, we use innovative technology at Funding Circle to underwrite loans using hundreds of traditional and progressive data points. Guided by the 5 Cs of Credit, our underwriting team considers a diverse range of factors to evaluate your loan application in a holistic way.

So what’s more important: credit history or character?

Credit History

When we take our first look at your application, we stick with the fundamentals. Our underwriters comb through your application for positive signs of financial stability, including business cash flow, personal cash flow, collateral, and yes – your credit score.

However, unlike a traditional lender, we’re not necessarily hung up on any one of those individual metrics: we know that a credit score isn’t the only indicator of a healthy business. While credit history is important, so too are alternative metrics like real-time cash flow and your passion about the market opportunity.

We know that imperfect personal credit doesn’t define you – or the potential of your business. Our philosophy: if a lender has a sharply defined credit “box,” they might miss out on good small business borrowers! Our successful borrowers typically have a personal FICO score above 620, but we take many factors into consideration when reviewing applications.


One of the most important things an online lender looks for is character: our overall opinion of your trustworthiness and credibility. Most often, a lender’s primary evaluating criteria for character is stability, which can be determined from questions like:

  • Do you make payments on time?
  • How long have you been in business?
  • How much experience do you have within your industry?
  • Do you have a good reputation with your customers and community?

Our technology is cutting-edge, but there’s no substitute for genuine person-to-person trust and conversation. That’s why our loan specialists and underwriters look at all aspects of your business and schedule a phone call to get to know you – not just the number on your credit report.

One creative way to demonstrate your integrity is through your social media footprint. For example, positive customer reviews on Yelp show that your business is successful and has potential to grow, while your polite response to a negative comment on your company’s Facebook page shows you are invested in providing the best experience or product possible for customers.

Want to learn more about what small business lenders actually look for? We’re hosting a free webinar on Thursday, July 23 at 11 a.m. PST | 2 p.m. EST exclusively for NSBA members like you.


You’ll hear from a Funding Circle underwriter about:

  • The advantages of online vs. traditional lending
  • What our underwriters look for in your loan application
  • How to make the 5 Cs of Credit work for you

Funding Circle has lent over $1 billion globally to business owners like you.

Ready to get started? Apply for a loan with Funding Circle today!


*This article was contributed by NSBA partner Funding Circle.