Applying for an SBA Loan: Minimum Credit Score Requirements (2024)

FAQs

What is the lowest credit score for SBA loan? ›

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.

Some SBA lenders will accept a minimum credit score in the mid-600s, whereas others will require a credit score of 690 or higher. Live Oak Bank, for example, requires a minimum credit score of 650 for its SBA 7(a) loans. First Federal Bank, on the other hand, requires a minimum score of 700.

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.

It is possible to get a small business loan even if you have bad credit. This is because your credit score doesn't matter as much as the overall financial health of your business. Many lenders require a minimum credit score of 500, at least six months in business, and more than $30,000 in annual revenue.

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

Because they're backed by the U.S. government, they're less risky for banks than issuing their own loans. But SBA loans are usually harder to get than online business loans, which may require less time in business and lend to borrowers with lower credit scores.

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.

Many statistics say that large banks approve SBA loans at rates as low as 20-30%, while smaller banks approve SBA loans at around 40% or less.

Eligibility requirements

Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding. The lender will provide you with a full list of eligibility requirements for your loan.

Drawbacks of SBA Loans

Less competitive rates and terms versus banks. Generally, the most competitive interest rates are available through traditional bank loans, though SBA loans do often offer lower costs than some online lenders. Long approval times. SBA loans can take a long time to fund, up to two to three months.

What are the 5 SBA requirements of a small business? ›

Poor business performance

Lenders may be wary of giving a loan to businesses with low revenue because of concerns about the business's ability to pay back the loan. Oftentimes, the fix for this type of small business loan denial comes back to limiting your debt and strengthening your business's cash flow.

The key steps and eligibility requirements to qualify for a business loan: Strong Credit History: Aim for a credit score above 680. Ensure no major financial red flags, such as bankruptcies or large unresolved debts. Consistent Revenue Stream: Demonstrate a steady inflow of income, ensuring you can manage repayments.

Business Credit Score

FICO SBSS scores range from 0 to 300, with 300 indicating the highest level of creditworthiness. Your score is based on various factors, including your company's payment history, assets, revenue and time in business. Your SBSS score can play a role in your eligibility for an SBA loan.

You need a credit score of 580 or higher to qualify for a $5,000 personal loan in most cases. Other common requirements for a $5,000 loan include being at least 18 years old, having enough income to afford the monthly payments, and owning a valid bank account.

The minimum credit score required for an SBA loan depends on the type of loan. For SBA Microloans, the minimum credit score is typically between 620-640. For SBA 7(a) loans, the minimum credit score is typically 640, but borrowers may find greater success if they can boost their credit score into the 680+ range.

Yes. Some lenders welcome business owners with credit scores as low as 500. These loans focus less on your credit score and more on the strength of your business and your ability to repay the loan. Most business loans for bad credit will have high interest rates and fees.

Even if you meet the SBA's requirements, each lender sets credit score, time in business, and revenue requirements. So, either the SBA or the lender can deny the application if the requirements aren't met.