SBA Loan Requirements: Credit Scores | SBA 7(a) Loans (2024)

FAQs

SBA Loan Requirements: Credit Scores | SBA 7(a) Loans? ›

While there's no official required SBA loan minimum credit score from the Small Business Administration, lenders will often set minimum credit score requirements for both personal and business. An SBSS of 140 to 160+ or a personal score of 620 to 640+ are commonly needed to qualify.

While there's no official required SBA loan minimum credit score from the Small Business Administration, lenders will often set minimum credit score requirements for both personal and business. An SBSS of 140 to 160+ or a personal score of 620 to 640+ are commonly needed to qualify.

For most 7(a) loan programs, SBA guarantees up to 85 percent of loans of $150,000 or less, and up to 75 percent of loans above $150,000. However, SBA provides a 50% guaranty on SBA Express loans.

The 7(a) Loan Program, SBA's primary business loan program, provides loan guaranties to lenders that allow them to provide financial help for small businesses with special requirements. 7(a) loans can be used for: Acquiring, refinancing, or improving real estate and buildings. Short- and long-term working capital.

Thanks to the wide range of permitted loan uses, an SBA Express loan is financing that's easy to approve and is likely perfect for your startup's needs.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

The SBA requires borrowers to make a 10% down payment on 7(a) loans for startup businesses and business acquisitions. For 7(a) loans used for other purposes, the individual lender may require equity if they do so for their other similar (non-SBA) loans.

On average, most SBA loans take 30 to 90 days from applying to funding. 7(a) loan subtypes are backed directly by the SBA. The SBA's turnaround time is 2 to 10 business days, but approval from your chosen lender can take 30 to 60 days. Microloans are loans for smaller amounts of $50,000 or less.

Will SBA 7a loans be forgiven? ›

Business owners defaulting on their SBA loan can apply for loan forgiveness, but that does not guarantee the SBA will approve the request. It is more commonly referred to as an "offer in compromise". The SBA evaluates your case and discusses the matter with the lender.

Loan terms vary depending on the loan type, but most SBA 7(a) loans typically have loan terms of 5, 10 and 25 years.

Do SBA loans require collateral? SBA lenders are not required to take collateral for 7(a) loans of $50,000 or less. For SBA 7(a) loans of more than $50,000, SBA lenders have to follow collateral policies that are similar to the procedures they've established for non-SBA loans.

Every lender sets its own requirements to qualify for an SBA 7(a) loan, but they tend to have strict requirements. The lender must ensure that the business owner is in good financial standing and that the business does not have any outstanding debt from other government-issued loans.

SBA-qualified lenders usually set their own criteria when assessing your eligibility. Most lenders will require a minimum FICO score of 620 or higher for their SBA Loans. Ready to apply for an SBA Loan?

Current SBA 7(a) loan interest rates

11.5%. *Rates calculated with the current prime rate of 8.5%. Updated June 2024.

Most lenders will require a minimum FICO score of 620 or higher for their SBA Loans.

The lender reports this to commercial credit reporting agencies, not personal credit reporting agencies. Even though the business owner receiving the loan must personally guarantee the loan, it's not reflected on a personal credit report.

Can you get a business loan with a 600 credit score? Yes, getting a business loan with a 600 credit score is possible. Traditional bank loans and SBA loans aren't ideal with this credit score. Still, you could be eligible for other forms of funding, like a business term loan or line of credit, through an online lender.