SBA Loan Credit Score Requirements

Do you qualify for an SBA loan with your current credit score? You might, depending on the lender. Most lenders require a minimum credit score between 620-640+ to qualify for an SBA loan. PrimeRates can help you find the right lender offering the most competitive terms. Using PrimeRates secure platform you can submit one application online and receive multiple SBA loan offers within seconds. Throughout this blog we will break down different types of SBA loans and different SBA loan lenders and their minimum credit score requirements.

What credit score is needed for a sba loan?

In most cases, borrowers need at least a 640+ credit score to secure most SBA loans. If you are trying to secure an SBA Microloan you may qualify with a 620+ credit score. SBA loans are designed to help and support small businesses that need funding. However, the requirements to qualify and be approved for an SBA loan can be strict. Having a good credit score is just one of the many requirements. A little later we will dive into the additional requirements for an SBA loan.

Is there a minimum credit score for SBA Loans?

Most SBA loan types have a minimum required credit score. A little later on we will break down the loan types and credit score requirements for you. SBA Microloans usually have the lowest credit score requirements. Borrowers can qualify for an SBA Microloan with a minimum credit score of 620+.

Minimum Credit Score For SBA Loans By Type

The Small Business Administration (SBA) is a government agency that guarantees SBA loans. The SBA provides loan guarantees up to 85% of the loan amount through SBA-approved lenders. This means there is less risk for the lender because they will still receive the guaranteed loan amount in the event the borrower defaults on the loan. However, it also helps explain why there is a lengthy application process and strict standards to qualify for an SBA loan. The upside to SBA loans is that you can use the funds for just about any business purpose. In addition, SBA loans usually have lower interest rates, longer loan terms, and higher loan amounts than comparable options. Most SBA loan types require a minimum of two years in business. If you are a startup company you should consider an SBA Microloan. So what are the different types of SBA loans and what is the minimum credit score required? Let’s break it down:

• SBA 7(a) Loans: minimum credit score 640+

SBA 7(a) loans are one of the most popular SBA loan types because they can offer wide usage parameters and high loan amounts. Using the SBA 7(a) loan program you can borrow up to $5 million dollars and receive repayment terms between 10-25 years. Prime interest rates can be between 2.25%-4.75%, depending on repayment terms and loan amount. SBA 7(a) loan can be best used for working capital, refinancing debts, and purchasing equipment, real estate, or another business. 

• SBA 7(a) Express Loans: minimum credit score 640+

SBA 7(a) Express loans can be approved or denied within 36 hours. While they are approved or denied quickly, it can still take funds up to 90 days to become available. SBA 7(a) Express loans can be attractive because you can avoid the lengthy SBA application process. However, you can only borrow up to $350,000 using an SBA 7(a) Express loan. If you are lacking credit or are unable to meet the lending criteria for other loans, SBA 7(a) Express loans may be a good option. Funds provided must be used in accordance with the guidelines for SBA 7(a) loan usage. The SBA usage guidelines cover a wide variety of business uses. 

• SBA CDC/504 Loans: minimum credit score 680+

SBA CDC/504 loans can be best for financing real estate that will be owner-occupied or other fixed assets. In addition to the SBA, a local community development corporation is involved with SBA CDC/504 loans. The SBA requires that the borrower's business needs to physically occupy at least 51% of the commercial building or structure to qualify for an SBA CDC/504 loan. Borrowers can secure SBA CDC/504 loans with fixed interest rates as low as 4.85% with a 10-year term. For a 20-year term, the fixed interest rates can start at 5.07%.

• SBA CAPLines Program: minimum credit score 660+

For short-term or seasonal business funding needs, SBA CAPLine programs can help. SBA CAPLine programs include seasonal lines of credit, contract lines of credit, builder’s lines of credit, standard asset-based lines of credit, and small asset-based lines of credit. All programs can be offered with 5-year terms and loan amounts up to $5 million. Loans or lines of credit can be revolving or fixed. 

• SBA Export Loans: minimum credit score 660+

SBA Export loans are designed to help domestic businesses expand their activity into foreign markets and conduct international transactions. While borrowers are required to provide a 20% guarantee, they only need one year in business to qualify. Borrowers should also be required to prove how the loan can make their exports more competitive in order to qualify. There are three kinds of SBA Export loans; SBA International Trade loans, SBA Export Working Capital loans, and SBA Export Express loans. SBA International Trade loans and SBA Export Working Capital loans can provide up to $5 million. SBA Export Express loans have a limit of $500,000 but offer a much quicker turnaround.

• SBA Microloans: minimum credit score 620-640+

SBA Microloans are designed to help startups or borrowers with an average credit score since applications are not reviewed for creditworthiness. While you can borrow up to $50,000 using an SBA Microloan, the average SBA Microloan amount is around $14,000. SBA Microloans can have higher interest rates than other SBA loans.

• SBA Loan Lenders: Credit Score Minimums

Below we have created a list of SBA lenders and their required credit score minimums. Even if you have the minimum credit score it’s not guaranteed that you will be approved. Most SBA lenders take more than just your credit score into consideration during the approval process.

• Smart Biz 650+
• Lendio 640+
• Live Oak Bank 650+
• Wells Fargo 640+
• Celtic Bank Corporation 640+

How to Qualify For An SBA Loan? Credit Score Isn’t All You Need

In addition to meeting credit score requirements for an SBA loan, you will need to meet other basic requirements as well to qualify.  

Some of the additional basic requirements can include:

• Must be a registered for-profit business
• Business must be operated and located in the U.S. 
• No delinquent or default past government debts
• Other financing options are not available and have been exhausted
• Time and money have been invested into the business by the business owner
• Businesses must meet the SBA’s definition of a small business

If you meet these requirements and begin the approval process you may also need to provide:

• Business plan
• Collateral
• Down payment
• Prove sufficient time in business
• Solid business revenues and profits 
• Ability to repay the loan

Loan Amount:	$30,000 - $350,000
APR Range:	9.7% - 11.04%
Time To Fund:	Typically take several weeks to fund, but can fund as quickly as within seven days.
Loan Term:	Maximum loan term is 10 years.
Origination Fee:	4.00%
How To Qualify:	675+ Personal credit score $50,000+ Annual revenue
Great Option For:	Borrowers with good credit SBA loans Funding real estate purchases Refinancing debt
Credit Check?	Soft credit check and hard pull
Co-Applicants Accepted?	No cosigners
Direct Pay-Off To Creditors?	No
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» MORE: SmartBiz SBA Loan Review

Conclusion

In conclusion, you can qualify for an SBA loan with average to good credit. If you have an average to good credit score you should look into a Microloan. Whether you qualify for an SBA loan or not you can still utilize PrimeRate’s top-rated platform to secure funding for your small business. PrimeRates partners with many reliable lenders that offer multiple types of loans for all credit types. To get started, visit PrimeRates and submit an application. The application will not affect your credit score. Within seconds of submitting your application, you can receive multiple personalized loan offers. This gives you the opportunity to compare offers and terms and select the best offer. 

Looking for a business loan? Apply online today!