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

FAQs

Applying for an SBA Loan: Minimum Credit Score Requirements? ›

SBA 7(a) Credit Score Requirements

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.

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.

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.

In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. 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.

You're not alone if you applied for an SBA loan and were denied. Most small businesses struggle to qualify, with over 50% of applicants being rejected. You can take concrete steps to improve your application, whether applying for the first time, trying to appeal a denial, or reapplying for a loan.

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.

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.

Can I get a business loan with a 580 credit score? ›

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.

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.

The five C's, or characteristics, of credit — character, capacity, capital, conditions and collateral — are a framework used by many lenders to evaluate potential small-business borrowers.

Business credit scores range from zero to 100 and most small business lending companies require a minimum business credit score of 75.

Lenders offer various loan amounts, but personal loans for bad credit generally range from $1,000 to $50,000. But compare potential offers—the exact amount you qualify for will vary depending on your income and how much existing debt you have.

You'll generally need a fair score of 600 or higher to qualify for a small business loan. However, some lenders may approve a loan if your score is as low as 500.

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. All this to say: SBA loan approval rates hover at half or below all loan applications that are submitted.

Do SBA loans require a down payment? Yes, the minimum SBA loan down payment requirement is 10% for 7(a) and 504 loans, although this amount can vary based on a business's cash flow and collateral. For example, weak cash flow or low-value collateral can increase the down payment requirement to 30% of the loan amount.