How Good Does My Credit Have to Be to Qualify for an SBA Loan?

SBA loans are designed to provide the capital small business owners need to get off the launching pad, thrive, and grow. However, the Small Business Administration also has strict underwriting guidelines for lenders to follow, and credit ratings play a big part in the approval process.

Personal Credit Scores for SBA Loans

There is no hard number set on minimum credit scores for SBA loans. That said, it only takes a few applications for lenders to see which credit ratings get approvals and which ones are rejected. Generally speaking, to secure an SBA loan, business owners must have a minimum credit score floating between 640 and 680. Ideally, this number should be higher unless all other requirements are in perfect order. The reason the SBA includes personal credit scores is that many entrepreneurs have not had time to work on their business credit ratings. This is one of the few aspects of small business loans where flexibility is allowed in the underwriting process.

Business Credit Scores for SBA Loans

Much like personal credit scores, businesses credit ratings should also range somewhere between 640 and 680. The lowest number accepted is 640, and those are only for SBA microloans. For the larger and more common programs, such as the SBA 7(a) and the SBA 540, the score should be much closer to 680 or higher. The better the business credit score, the easier it is for you to get approval for the amount of capital you need for your business. Remember that the 7(a) and 504 programs can cover everything from working capital to equipment and even commercial real estate.

SBSS Credit Score

The Small Business Scoring Service (SBSS) is one of the three main business credit rating services. The SBSS score isn’t well-known because traditional lending channels are not required to tell business owners that the score exists. But the SBSS score is the main rating every business owner should be aware of, because it is used to pre-screen businesses for the major SBA programs, such as the SBA 7(a) loan. The SBSS is calculated a bit differently than other credit scores, and has a maximum score of 300. Most lenders set the bar at 160. SBSS credit scores can be improved by taking care of personal liabilities and focusing on building positive business credit.

CounselPro Lending specializes in both SBA loan programs and lines of credit for businesses. Contact our offices today to learn more.

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