I was recently applying for a modest line of credit for my growing small business, and my commercial bank loan officer mentioned that, as a part of the loan-approval process, the bank had obtained an SBSS score for my business. What? An SBSS score? That was a new one for me — and I’ve been writing books about business for more than 15 years now. This was definitely something I needed to know more about.
Small Business Scoring Service (SBSS) scores are much like the familiar FICO consumer lending score used by banks, credit card companies, and other lending institutions to make credit decisions for individual consumers. In fact, the SBSS score is produced by the same company that produces the FICO score: Fair Issac. It turns out that many banks today use SBSS scores to make decisions on whether or not to loan money to both startup and established small businesses. According to Fair Issac, the latest version of SBSS is validated for term loans and lines of credit for amounts up to $750,000. So if you’re applying for a loan for that amount or less, chances are the lender you’re dealing with will use your company’s SBSS to help make its decision.
This realization brought me to my next question: What can I do as a business owner to increase my SBSS score?
While my banker didn’t really have an answer to that question — and you’ll find precious little on the topic through a Google search — he did suggest that the primary source of business credit data used to derive a business’s SBSS score likely comes from Dun & Bradstreet. Long story short — if you have a well-established track record with Dun & Bradstreet, with a solid history of business credit and timely payment to vendors, then your SBSS will be better than a company without these things.
So, whether or not you expect to ever need any sort of financing, it is very much in your interest to be sure that your company is in Dun & Bradstreet’s system, and that the information is complete and accurate. If your business is a new one, Dun & Bradstreet offers what they call a DUNS File Creator service to quickly get established in their system for $229. Dun & Bradstreet also offers a variety of business credit monitoring services that allow you to even more closely track and improve your business credit scores.
Don’t wait until you need financing to do what you need to do to make sure your SBSS score is as high as it can possibly be. It’s not something you can change overnight. Like a FICO score, it can take months or even years of positive credit transactions to move a score significantly upwards — and that may be too late to support your business’s near-term growth. Or to save it.
I got my approval. Will you get yours?