By Meredith Wood

If you have an excellent credit score, there are many options available for obtaining a business loan. In fact, the better your score, the lower the cost of your loan should be. So what constitutes excellent credit?

Most lenders have their own standards for how they view credit scores, but they all use a scale from 300 to 850 points. The higher your score, the better your chances are of not only of getting approved for a loan but of obtaining a lower interest rate.

Of course, a good score doesn’t guarantee that you’ll be approved for the loan you want, but knowing where you stand in terms of your credit score and credit history may help you determine which loan types to apply for.

Your credit score is based on a variety of factors including:

  • How long you’ve had credit
  • The types of credit you have, such as credit cards, auto loans, student loans and mortgages
  • Your payment history
  • Your credit limits and how much of those limits you’re using
  • How much debt you have
  • The number of hard inquiries on your credit report

Ranges vary, depending on which credit score company the lender uses to determine your credit score, but an excellent score is typically about 800 to 850, a very good score is about 740 to 799, a good score is about 670 to 739, a score of 580-669 is considered fair and a score of 300-579 is considered poor.

If you have an excellent or even a good credit score, taking out a loan from a bank or online lender is often your best bet in terms of making sure that you get the best interest rate available. Here are your top options:

Term Loan

A term loan is a loan for an agreed amount of money that must be paid back over a set amount of time. The borrower pays back the loan with interest, and the better the credit score you have, the lower your interest rate will most likely That’s why these are great loans for business owners with a high credit score.

Term loans may be offered as long-term loans or short-term loans. Long-term loans are typically for larger amounts and have lower interest rates than short-term loans. They are paid back with monthly payments usually over 2-5 years. Short-term loans, however, are paid back with daily or weekly payments and are usually paid back within 3-18 months.

Business Lines of Credit

Many lenders offer a revolving line of credit to qualified borrowers, allowing a business to access funds as needed. In this way, a line of credit is similar to a credit card, but often with lower interest rates. They are often used for temporary shortfalls in income and are a great option for any business to have on an as-needed basis. Most line-of-credit loans last for a one-year period and may be renewed almost automatically for an annual fee. Interest rates differ and having a good credit score will help ensure a better rate.

SBA Loans

Small Business Administration (SBA) 7(a) loans are also a great option for borrowers with excellent credit. These loans are partially guaranteed by the SBA—a federal agency that allows lenders to offer flexible terms and low-interest rates. SBA loans are processed through banks, credit unions and specialized lenders, and funds from these type of loans are often used for working capital, expansion, and equipment purchases. SBA loans also typically allow the borrower more time to repay the loan than with a term loan.

One caveat is that the SBA requires a personal guarantee from any business owner with at least a 20% ownership stake. This personal guarantee puts the business owner’s assets at risk if the business becomes unable to make the loan payments. So you want to have a healthy business plan before entering into this agreement.

Outside of the above-mentioned options, there are several other types of loans that exist that are designed for particular types of businesses. For example, there is equipment financing if you’re looking to purchase a particular piece of equipment for your business or working capital loans available for the financing of everyday operations of your business. Peer-to-peer loans are also available through online platforms.

No matter which loan you decide is right for you and your business, having a good or excellent credit score will always help you secure a lower interest rate on your loan and ultimately save you money.

Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more. Meredith is also the Senior Financial and B2B Correspondent for AlleyWire.