SBA Loan Credit Score Requirements: What You Need to Qualify
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The U.S. Small Business Administration doesn’t set official credit score requirements for its loan programs. Instead, SBA guidelines state that lenders and certified development companies (CDCs) should evaluate a borrower’s creditworthiness just as they would for similarly-sized, non-SBA guaranteed loan applications.
The minimum credit score you’ll need to qualify for an SBA loan, therefore, will vary largely based on your lender and loan type.
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Minimum SBA loan credit score requirements by loan type
Although specifics vary by lender, you can generally expect to see the following minimum SBA loan credit score requirements:
SBA loan type | Minimum credit score requirement |
7(a) loans | 650 or higher. |
7(a) small loans | 650 or higher for personal credit; 155 or higher on SBA business credit score screening. |
CDC/504 loans | 680 or higher. |
Microloans | 620 or higher. |
Disaster loans | Credit history acceptable to the SBA required. |
SBA 7(a) loans
SBA 7(a) loans are issued by participating lenders, such as banks and credit unions, and partially guaranteed by the SBA. These small-business loans are the most popular type of SBA loan.
To qualify for a standard 7(a) loan, you’ll need good personal credit. 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.
In general, these minimum credit score requirements apply to each of the loan types that fall under the 7(a) umbrella, including SBA Express loans, SBA CAPLines, SBA Export Working Capital loans and SBA International Trade loans.
7(a) small loans
Although 7(a) small loans (amounts of $500,000 or less) will have the same minimum personal credit score criteria as other types of SBA 7(a) loans, these products have a separate business credit score requirement.
To qualify for a 7(a) small loan, you’ll need to receive a score of 155 or higher (scores range from 0 to 300) on a FICO Small Business Scoring Service (SBSS) screening.
The SBA uses the SBSS to evaluate your business's credit history and prescreen loan applications. Even if you don’t pass the prescreen, an SBA lender can choose to continue with your application. Preferred lending partners (PLPs) can use their PLP authority to approve applications that don’t receive a score of 155 or higher.
The SBSS prescreen is only required for 7(a) small loans. For other types of SBA 7(a) loans, including Express loans, lenders may use a business credit scoring model — in addition to other methods — to assess your repayment ability.
SBA CDC/504 loans
SBA CDC/504 loans are comprised of funding from three places:
A bank or credit union (50%).
A CDC (40%).
You, the borrower (10%).
Although these loans have a different structure than 7(a) loans, most lenders will still require that you have strong personal credit to qualify. Typically, you should have a minimum credit score of 680 or higher to access this type of SBA loan.
Because SBA 504 loans are used for large fixed-asset purchases and available in amounts up to $5.5 million, your down payment and business finances will also weigh heavily in the lender's decision on whether or not to approve you for a loan.
SBA microloans
SBA microloans are issued by nonprofit intermediaries and available in amounts up to $50,000. Unlike other types of SBA loans, each lender creates its own business loan requirements, and the SBA does not review applications for creditworthiness.
Because these small-dollar loans are designed for new businesses, borrowers with little to no credit history, low-income borrowers, and borrowers in traditionally underserved communities, the SBA loan credit score requirements are much more flexible.
In general, you’ll need a minimum credit score of 620 or higher to qualify for an SBA microloan. Requirements can vary, however, based on the nonprofit intermediary.
New York-based Pursuit Lending, for example, requires a credit score of 640 for its microloan program, whereas the Massachusetts Growth Capital Corporation will work with borrowers who have credit scores as low as 575.
SBA disaster loans
SBA disaster loans offer financing to help small businesses recover from physical and economic damage caused by a declared disaster. There are four types of disaster loans, each designed to address a different need for business owners (as well as homeowners).
The SBA does not typically designate a minimum credit score requirement for these types of loans. According to its guidelines, however, a borrower should show a satisfactory credit history, which means you typically make payments to creditors as agreed unless otherwise justified.
The guidelines also state that the SBA must look at the entirety of your circumstances when evaluating your credit and that you should be given an opportunity to explain any adverse incidents, such as unpaid judgements, charge-offs or unpaid collections.
What to do if you can’t meet SBA loan credit score requirements
Generally, the stronger your credit score, the better your chances are to qualify for an SBA loan — and for that loan to have competitive rates and terms. If you can’t meet a lender’s minimum credit score requirements, however, here are some options to consider:
Boost your other credentials
If your credit score isn’t quite where you need it to be, you might be able to use your other strengths to help your loan application stand out. You might showcase your impressive revenue numbers or sales projections, offer a larger down payment or put up more collateral.
If you can show the lender that you can repay the loan, even if your credit score isn’t perfect, the lender might be a little flexible.
Consider alternatives
If you were looking for an SBA 7(a) loan but have a credit score in the low 600s, for example, you might want to consider alternative funding options.
You can start with the SBA microloan, which has more flexible qualification requirements, or apply for an easy business loan like an online term loan or line of credit.
Build your credit score
If you can afford to wait for financing, taking time to build your credit score can help you qualify for better business loan options in the future. You can strengthen your credit by looking for errors on your credit reports and disputing them with the appropriate credit bureau. You can also try to make payments more often, as well as pay down or pay off debt.
Once you see improvement in your credit score, you might start looking for financing again. Keep in mind that although there are bad-credit business loans available, these options typically have high interest rates and short repayment terms.
Learn more about SBA loan requirements:
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