SBA Loan Requirements: Credit Scores

The reason why SBA loans are so popular is that they are among the best when it comes to the credit flexibility, terms and interest rates when compared to other kinds of loans.

As the Small Business Administration is run by the government, their loans are available from banks, credit unions and other lending institutions. Because of how widely accessible they are and their individual programs that are catered to small businesses and their various aspects.

This makes SBA loans incredibly popular and thousands of applications are made each year. 

Their popularity also makes them incredibly competitive, meaning that you’ll need to make sure that you meet and exceed the requirements put forward to give yourself a better chance of having your application approved.

Having an excellent credit score of 720 and over will be a lot better than those who have a good credit score ranging between 690 and 719 or even less.

For those who want to really delve into researching what loan credit score is the average when applicants put their documents forward, it does change depending on which SBA loan program you are applying for.

For those who are applying for a loan to start up their company then there is a more lenient approach when it comes to checking the credit score. However, if you are taking out any additional loans then your credit score will be scrutinized more thoroughly.

Another thing to remember is that it also depends on the specific requirements of the lender. Some lenders are more lenient than others.

What is the minimum credit score allowed for SBA loans?

Because SBA is a government run organization, there is more coverage when it comes to their relationship with the lender. When a loan is approved, the SBA will put in a guarantee of 80% of the loan so even if the business eventually fails, the lender is going to get their money back.

This makes SBA loan programs easier to access as they automatically reduce the amount of lender risk. Here are the credit scores that you need to keep an eye out for:

Personal Credit Score

As mentioned above, you’ll need to make sure that your own personal credit score is at good standing to be in with a chance of having your application approved.

The most popular SBA loan programs are the SBA 7(a) loan and 504 loan which require a good credit score that is 690 or higher; however, there are other SBA loans which are larger such as the Community Advantage loan and SBA microloan which allows for a lower credit score.

As previously stated, however, this will all be dependent on what the lender’s requirements are. There are other factors that are considered aside from personal credit score that can make a difference in your application as well.

Business Credit Score

The other important credit score that needs to be considered is the business credit score. This is using the FICO Small Business Scoring Service which is known as SBSS and provides a thorough credit history regarding your business.

This is especially important to note if you are applying for an SBA 7(a) loan as the lender will look at your business credit score when prescreening. The SBSS can range from 0 to 300 and you should aim to have a minimum score of 155.

However, depending on the lender, they may be more lenient if you excel in other areas of the application such as sufficient collateral.

Alternatives to Consider

If you have applied for an SBA loan and have found yourself rejected due to your credit score then there are other financial options available that you can consider.

These options tend to have more relaxed requirements but the downside is that their interest rates and terms may be a lot higher than SBA loans so bear this in mind. Here are some of the options you can consider:

Online Term Loans

If you have tried to borrow money from a bank, credit union or other traditional lending institutions and found that they have rejected your application then you should consider applying for a loan from an online lender.

They tend to have lower minimum requirements and are more lenient when it comes to reviewing applications. However, as mentioned above, their interest rates tend to be a lot higher so keep this in mind and factor in the rates into your payment plan.

Commercial Line of Credit

The second option that you can think about is taking out a commercial line of credit. The lender will determine a set amount that you can borrow initially and then once that is paid off, your credit limit will reset and you’ll be able to borrow more. This will increase your credit score and is ideal for those who have a credit score that is lower than 690.

Equipment Financing

The last option is perfect for those who are planning to purchase equipment with their money but don’t have the credit score to back it up.

Equipment financing is more lenient and relaxed in their requirements because the products that will be purchased are immediately listed as sufficient collateral and the money borrowed has to go on the equipment. This isn’t a suitable option for those who need to borrow money for other purposes such as commercial real estate.


Overall, making sure that you choose an appropriate option that you are able to pay the loan back as well as ensuring that you excel in other areas of your application if your credit score isn’t high enough. This can be through collateral or using one of the alternative funding options if you are rejected from SBA. 

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