Do SBA Loans Affect Personal Credit (And How Is It Affected)?

We all have hundreds of questions when it comes to Sba loans, don’t we? These small business loans are there to help grow your business, secure commercial space if needed, and support you in various ways if needed.

But as with any loan, we wonder how it will affect us in the short or long term, especially if we fall behind on our payments. Taking out a loan can be a difficult and overwhelming task, with many of us unsure how it will impact our lives. 

We worry if our Sba loans will affect our personal credit and how it can be affected. It consumes us, and we find ourselves wondering what will happen. Well, wonder no more!

Today, we are here to tell you if an SBA loan can affect your personal credit and how it can affect it. Keep reading to find out all you need to know and pout your Sba loan anxieties to rest.

Do SBA loans affect personal credit?

Let’s get straight into it: does an SBA loan affect your personal credit? Well, it all depends! The main factor that determines whether your SBA loan will affect your credit is if you are personally liable for the loan or not. If you have put your own money up and named yourself liable for the loan repayments, then yes, the loan can affect your credit.

If you fail to keep up with the repayments or start making late payments, then your personal loan can negatively affect your credit.

Your credit score will lower, and you might struggle to get personal loans or credit cards; as a result, if you do find yourself struggling to keep up with the payments, it’s best to speak to your lender or the SBA directly. They can help to rearrange your payments or lower them and spread them over a longer period.

It’s worth noting, though, that doing so can leave you with more interest to pay. Whatever happens, confronting any repayment issues is the best approach and avoids your credit being impacted.

The type of business you have will also determine if your credit will be affected or not. If you are the sole proprietor of the business and your name is listed, you are again liable, meaning that your credit can be affected.

You will be responsible for the loan repayments should the business stops paying or run into trouble. Up until that point, the repayments should come from your business account.

Depending on the loan, you will be personally liable, or your business can be listed as collateral. In these cases, your credit will not be impacted, but your business credit might.

We are going to cover your business credit later, so be sure to stick around. Whether your business is listed as collateral or not, the lender might still ask for a personal guarantee. In these cases, your credit will be impacted if you fail to make payments on time.

Alternatively, if you make your payments on time and pay the correct amount, the SBA loan can positively impact your credit! Fantastic news for those looking to improve their personal credit score. The loan details and payments will need to be sent to the credit bureaus for your SBA loan to impact your personal credit.

You can check with your lender or the SBA directly to find out if the information from your business loan is being sent to the bureaus and request it to be shared if you wish. If the information isn’t being sent, then the business loan shouldn’t impact your credit.

Be sure to check whether you are personally liable for the business loan to help determine if your SBA loan will affect your credit before agreeing to the loan. The last thing you want to do is end up negatively impacting your credit!

Will Sba loans affect my business credit?

Yes, your business credit can be affected by your SBA loan as the SBA loan refers to the business, whether you are listed as liable or not. The business is the one receiving the loan and is therefore responsible for the payments.

Typically, loan lenders and the SBA will send the information from the loan to credit bureaus, including your repayments. Providing that you pay your loan on time and in the correct amount, the business loan can improve your credit score. It will raise and allow you to access other loans and raise your business’s credit and reputation.

However, if you encounter any difficulties and find yourself not making the correct payments on time, your business credit can be negatively impacted. Your credit score will be lowered, and you might find it difficult to secure other business loans or credit cards in the future. While your SBA loan isn’t the only factor determining your credit score, it still factors in and should be considered.

If you find yourself struggling to make your repayments to your business loan, then speak to the lender or the SBA directly. There are expert advisors there that can assess your finances and help you. They might offer you lower payments or spread the costs over a longer period. You will need to pay interest on these payments, but it can be an avenue to explore if you find yourself in any difficulty.

Your SBA loan can impact your business credit both positively or negatively, depending on your payment history. Check that your loan is being reported to the credit bureaus and make your payments on time to ensure that your credit is positively impacted by the SBA loan.

Final Word

And just like that, we have reached the end of our Sba and credit journey today! As you can see, your personal credit should not be affected by your Sba loan unless you have personally guaranteed the loan.

Ensure that you make your repayments on time and in full to ensure that your loan does not negatively impact your personal and business credit. Check what type of loan you have before agreeing to ensure you fully understand the loan and the potential ramifications of your SBA loan. 

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