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What Is the SBA Loan Credit Score Minimum?

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The U.S. Small Business Administration helps business owners and entrepreneurs fund their operations through a variety of loan options. There is no SBA loan credit score minimum, but there are certain qualifications you must meet to be approved for an SBA loan.

What is an SBA loan?

An SBA loan is a loan that is guaranteed by the U.S. Small Business Administration and it’s designed for entrepreneurs and business owners. The SBA doesn’t grant a loan directly to business owners. Instead, you take the loan out through a bank and the SBA partially it, which protects the lender if you default. SBA loans might be an ideal solution if you can’t qualify for other types of loans.

There are several types of SBA loans that business owners can apply for. The 7(a) loan is a flexible program you can use to fund equipment purchases, refinance debt and more. It is the most common form of SBA loan. Another type of SBA of loan is the export-assistance loan, which is designed for business owners who want to get involved in trading and international exports.

The SBA 504 program helps business owners acquire fixed assets they can use to modernize or expand their existing companies, and the CAPLine program focuses on short-term business funding. If you need only a small amount of funding, you can apply to the Microloan program or SBA Express program. The most popular SBA product, however, remains the traditional, 7(a) guaranteed loan.

SBA loan credit score minimum

A lender reviews your credit history before approving you for an SBA loan. Although there is technically no SBA loan credit score minimum, each lender is determining each applicant’s creditworthiness. The SBA stipulates only that lenders assess a borrower’s credit history and makes a decision based on prudent lending standards.

Minimum credit score for SBA loans by type

Although the SBA doesn’t have any hard credit requirements, banks commonly require minimum credit scores for loan applicants. These credit requirements change for different types of SBA loans:

  • SBA 7(a) loan. This typically requires a minimum credit score of 680.
  • SBA export assistance loan. Generally speaking, this loan requires a minimum credit score of 660.
  • SBA 504 loan. This loan commonly requires a minimum credit score of 680.
  • SBA CAPLine loan. These short-term and working capital loans require a minimum credit of 660.
  • SBA Microloan. This smaller loan often requires a lower minimum credit score of 640.

Other qualifications for SBA loans

There are a few major considerations lenders take into account when reviewing applicants for SBA loans. They assess whether a business can repay the loan, so borrowers must show that their businesses performed well in the past. Borrowers also have to show that they are competent managers. Entrepreneurs, in particular, should be able to demonstrate that they have previous experience in the field when seeking financing for a new business.

The SBA also wants a business to show it has a stake in repaying the loan. A new business should have $1 of cash in reserve for every $3 of the loan. A business with an established history should be able to show it holds $4 (or fewer) of debt for each dollar of the business’ net worth. Sometimes, business owners have to pledge nonbusiness assets to secure a loan.

How to apply for an SBA loan

To apply for an SBA loan, you must go through a bank or other approved SBA lender. One of the ways you can find an approved lender is by using the SBA Lender Match tool, which will ask you to describe what you’ll do with your loan. After that, you’ll receive an email in as few as two days regarding lenders that are willing to work with you.

After you get a list of lenders, speak with each one, compare rates and terms and decide which lender is offering the best loan. Once you’ve chosen your lender, you just have to fill out the paperwork. The SBA Lender Match program features more than 800 lenders, so chances are good you’ll find one to meet your needs.

You need to submit a lot of paperwork with your application, and the SBA has an online checklist of documents you need. Some of these documents include:

  • Personal financial statement
  • Year-end profit and loss statement
  • Personal resume
  • Business income tax returns for the past three years
  • Business license

The bottom line

You can use an SBA loan to fund several different types of business ventures — and you won’t have to worry about any SBA loan credit score minimum. Business owners and entrepreneurs will have to demonstrate expertise in their field, however, and show a solid operating history, as well as meet lenders’ credit minimums. Once you decide what you want to use your loan for, you can contact lenders through the SBA Lender Match tool.


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