Do SBA Loans Affect Personal Credit (Does a Business Loan Affect Personal Credit)

When you make the decision to take out a business loan, this is not one that is taken lightly. Any sort of loan carries a lot of responsibility because you will have to put collateral down to be able to obtain said loan.

But sometimes, there is no other option. You simply have to take out a loan in order for your business to survive. 

In the process of applying for a business loan, you will have to supply a lot of information in relation to both you and your business. This will include a report on both your business and personal credit rating.

Due to this, you might be worried that your personal credit could be impacted by the fact that you have taken out a loan for your business. 

In this quick guide, we’ll be taking a look at whether, or not, SBA loans affect personal credit, and lots more. 

What Are SBA Loans?

Before we go any further, let’s quickly establish exactly what we mean by an ‘SBA Loan’. When we speak of SBA loans, we are referring to a series of loans that are offered by banks and lenders, which are guaranteed by the SBA.

The SBA (Small Business Administration) is a federal government agency that was set up in the 1950s to support small businesses. It was set up to ensure that small businesses survived through the financial difficulties caused by the Great Depression and World War 2, and this agency still exists today.

The SBA offers a variety of different loans, but the SBA 7(a) loan is by far the most popular. 

When you apply for an SBA loan, you apply for one from a bank or a lender. You do not apply for a loan from the SBA. If you are accepted for a loan, that loan will be given to you from the bank or lender.

The SBA will not give you any money. They will simply guarantee that the bank will not lose any money by giving you that loan. This makes you a much lower risk, and is the primary reason why SBA loans are so widely accepted.

As part of your SBA loan application, you will need to supply a copy of your personal credit report. This might lead you to believe that your personal credit rating is at risk by taking out this loan, so is this the case? Let’s find out. 

Do SBA Loans Use Personal Credit?

Yes, your personal credit rating will be used in the application process for an SBA loan.

This isn’t only the case for SBA loans, most lending agencies will require a copy of your personal credit score alongside your business credit score. At first, this can seem a little odd. But in reality, it actually makes sense. 

When you apply for a business loan, there also has to be a person’s name attached to this. While the money is going to the business, the business is not the borrower, the person who supplies their personal credit information is.

So, when a bank is considering giving a business a loan, they need to know that the person they are giving it to is also trustworthy. 

If you have a good credit score, then you might find the idea of putting this on the line for your business quite scary.

But there is no need to worry. Yes, you do have to supply a copy of your personal credit report, however if you are accepted for a business loan, the bank/lender will not report back to personal credit agencies.

They will only report back to commercial credit bureaus. So, if any issues do occur with your loan, it is only your business credit rating that will be impacted. Not your personal credit rating. 

Will My Business Loan Affect My Personal Finances?

As we have established, no, your business loan and any issues that occur with it, will not affect your personal finances. Your personal finances are only taken into account during the application process to assess how risky the loan is, and how much of a risk you are.

But after the loan has been approved, your personal finances quickly become unimportant. As we have said, lenders who offer business loans will only report back to commercial credit bureaus, not personal ones.

So, your personal credit and finances will not be impacted by your business loan. But your business loan could be affected by your personal finances. 

During the application process, banks offering SBA loans will take a lot of different pieces of information into account. You will have supplied the bank with your personal and business credit reports, and this will have a big impact on whether, or not, they accept you.

Your business credit report could be excellent, but if you have a poor personal financial history, this could seriously affect your chances of being accepted for that loan, 

A lot of people struggle to understand why their personal finances should have an impact on their business. Surely, if their business has a good credit history, it doesn’t matter what the owner’s history is, right? Sadly this isn’t the case.

The business in question has a good credit history because of the person who has made the decisions. If you are the one applying for the loan, then that person making future financial decisions will be you.

A poor credit score implies that you have a history of making bad financial decisions, and this will be a risk for the bank/lender offering the business loan. 

So, your personal credit and finances will not be impacted by your business loan, but your business loan could be impacted by your personal finance history. 


In short, your personal credit history and finances will be taken into consideration when you apply for a business loan. But, once you have been accepted for that loan, your personal finances will no longer matter.

The bank/lender will only report back to commercial credit bureaus, not personal credit bureaus. So any issues that could be encountered with that loan will not be reflected in your personal credit score. 

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