Credit scores are often touted as the make-it-or-break-it factor for business loans and credit lines. But even entrepreneurs with high business credit scores may have trouble getting financing.
This is partly because business-credit scores—as well as personal-credit scores—have become a weak indicator of repayment ability, at least in the eyes of some large lenders.
“It’s a lagging indicator,” says Kathie Sowa, a commercial banking executive at Bank of America Corp. “We are underwriting more on a traditional basis. We look at the full picture,” she says.
Some of the metrics Bank of America prefers to rely on include cash flow and collateral to determine a business’s creditworthiness, she says.
Today, Ms. Osterhout’s business is looking to expand. She would like a $50,000 to $100,000 credit line and is trying to find a lender who won’t submit information to her personal credit report.
“I’d like to find a lender that is willing to look at business as a business entity…instead of co-mingling my personal finances with my business,” she explains. “It’s unfair to our businesses as well as our families,” she says.
