SBA Loan Credit Score Requirements: Do You Qualify?
By setting guidelines for loans and working with lending partners, SBA loans reduce lender risk and make it easier for smaller businesses to receive the funding they need.
There are multiple loan options available, each having their own personal and business credit score requirements. Understanding these requirements can help you determine which loans you may be eligible for.
- SBA lenders each have their own individual requirements for minimum credit scores.
- Some lenders will have minimum requirements for personal or business credit scores that are higher than the SBA’s minimum requirements.
- Different loan products have unique credit score requirements, along with other requirements regarding collateral, down payments or time in business.
Minimum SBA credit score requirements by loan type
SBA loans are backed by the U.S. Small Business Administration, but they’re facilitated through lending partners like banks, online lenders and credit unions. Each lender has its own credit score requirements for the loan products they offer, so there is no single industry-wide minimum across each loan product. It’s important to remember that some lenders will require higher credit scores, while others will still let you borrow if you have a low credit score.
The information we’ve compiled here is based on information from multiple lenders to give you general figures of what to potentially expect. It’s important to remember, too, that lenders will have unique requirements for different loan programs; one bank’s minimum credit score for a 7(a) loan may be different than their minimum score for a working capital loan.
| SBA Loan Type | Min. personal credit score | Min. SBSS score |
|---|---|---|
| 7(a) loans | 650+ | 155 |
| Express loans | 600s, with some requiring 680+ | 155 |
| CDC/504 loans | 600s, with some requiring 680+ | N/A |
| Microloans | 620 to 640+ | N/A |
| Disaster loans | High 500s, High 600s for higher balances | N/A |
| CAPLines | 680+ | N/A |
| Export loans | Varies by lender | N/A |
FICO’s SBSS score is a credit score for small businesses that lenders use when making funding decisions for SBA small loans — even if they don’t disclose that they use it. The score ranges between zero and 300 and is calculated based on the following (in order of importance):
- Consumer credit reports for the principals of the business
- Business credit reports for the business
- Business financial data
- Information from the loan application
The minimum score to pass the pre-screen for 7(a) small loans is 155, but many lenders set their minimum scores between 160 and 165. If you don’t have a strong SBSS score, your application may be denied or go through a manual review process.
Because the SBSS score is calculated based on a number of factors, you can’t access it yourself.
7(a) loans
- Minimum credit score: Varies by lender; generally 650+
- Interest rate: Capped at % for variable loans and % for fixed loans
- Loan amounts: Up to $5,000,000
- Best for: General financing
7(a) loans are a good option for flexible, general financing, as they can be used for a variety of purposes, including:
- Acquiring, refinancing or improving real estate
- Short- and long-term working capital
- Refinancing existing debt
- Purchasing machinery, equipment or tools
- Changes of ownership
While minimum credit rates vary based on lenders, many lenders require a minimum personal credit score of 650 and/or an SBSS of 155.
Express loans
- Minimum credit score: Varies by lender; generally 600s to 680+
- Interest rate: Capped at % for variable loans and % for fixed loans
- Loan amounts: Up to $500,000
- Best for: Fast funding
Express loans allow preferred lenders to use their own approval procedures to qualify borrowers. Lenders can approve applicants faster and without SBA review, but do so in exchange for a lower SBA guarantee percentage. As a result, some lenders may require slightly higher credit scores (between 600-680, depending on the lender) to protect their investments.
Both an individual’s credit score, the business credit score and the business’s financial history will be considered.
CDC/504 loans
- Minimum credit score: Lenders may accept applicants for borrowers with credit scores in the 600 range, but some may require personal credit scores of 680 or higher.
- Interest rate: Varies by lender 504 loan rates are generally pegged to an amount above the current rate for 10-year treasury issues. The exact rate varies by lender.
- Loan amounts: Up to $5,500,000
- Best for: Financing large business investments, like purchasing facilities or equipment
CDC/504 loans provide long-term, fixed-interest financing for major fixed assets that are essential for business growth or job creation. This may include building new facilities, refinancing debt or purchasing machinery that will last at least 10 years. They cannot be used as working capital.
These loans are available through Certified Development Companies (CDCs) for U.S.-based for-profit companies with tangible net worths under $20 million with average net incomes under $6.5 million after federal taxes.
Microloans
- Minimum credit score: Varies by lender; generally 620 to 640+
- Interest rate: 8.00% to 13.00%
- Loan amounts: Up to $50,000
- Best for: Access to small amounts of funding
Microloans help small businesses and certain not-for-profit childcare centers start up or expand, with the average microloan being around $13,000. They’re granted through intermediary lenders, which are nonprofit and community-based organizations, and personal credit score factors heavily into approval.
Many of these loans require collateral and look for personal credit scores in the mid-600 range. And while loan balances are relatively small, they can be used for a variety of purposes, including working capital, inventory, supplies, machinery and more. These loans cannot be used, however, to purchase real estate or pay off existing debt.
Disaster loans
- Minimum credit score: High 500s to low 600s
- Interest rate: Up to %
- Loan amounts: Varies depending on disaster type and borrower needs
- Best for: Anyone experiencing financial hardship due to qualifying disasters
The SBA offers disaster loans to eligible homeowners, renters, nonprofits and businesses who experience financial hardship due to specific disaster circumstances. Different loan types include:
- Physical damage loans to cover repairs or replacement of physical assets damaged in a declared disaster.
- Mitigation assistance loans to make improvements that can prevent future damage.
- Economic Injury Disaster Loans (EIDLs), which cover small business operating expenses after a declared disaster, such as COVID-19.
- Military reservist loan, which helps eligible small businesses cover operating expenses if employees are on active duty leave.
The loan balances vary significantly depending on the type of loan and the type of borrower. Homeowners can apply for up to $500,000 in physical damage loans to replace or repair their primary residence, for example, and renters and homeowners can borrow up to $100,000 to repair or replace personal property like clothing.
You must meet all eligibility criteria, including having a credit score in the high 500s to low 600s. Some collateral may be required for certain types of loans or high loan balances.
CAPLines
- Minimum credit score: Varies by lender; generally 680+
- Interest rate: Capped at % for variable loans and % for fixed loans
- Loan amounts: Up to $5,000,000
- Best for: Short-term or working capital financing
There are multiple programs under the CAPLines umbrella, each of which can be used to access financing to account for seasonal or cyclical needs. Options include:
- Seasonal CAPLines that finance seasonal increases of accounts receivable, inventory and labor costs
- Contract CAPLines that finance the cost of specific contracts
- Builders CAPLines that finance contractors to construct or renovate properties for resale
- Working CAPLines that provide asset-based revolving lines of credit
The maximum maturity on CAPline loans is 10 years, but Builders CAPline loans can’t exceed 60 months plus the estimated time to complete their contract.
Export loans
- Minimum credit score: Varies by lender
- Interest rate: Capped at % for variable loans and % for fixed loans
- Loan amounts: Up to $500,000 for Export Express loans, $5,000,000 for Export Working Capital loans or International Trade loans
- Best for: Exporters who need financing
There are multiple export loan options available under the 7(a) program, designed to offer funding to exporting businesses that are traditionally considered to be riskier to other lenders.
Some loans require collateral, including Export Express loans over $50,000. Working capital loans will consider foreign accounts receivable and inventory to be sufficient capital in most cases.
Because these are 7(a) products, you’re likely to want a credit score in the mid- to high-600 range for your best chance at funding.
Additional SBA loan requirements
While your personal and business credit scores will play an important role in loan approval, there are other requirements that factor into the decision. These will vary depending on the type of loan you want to apply for and the funding you’re requesting, but often include:
- Financial history: If your business has strong cash flow and is in good standing, that reflects well on your ability to make payments moving forward.
- Collateral: Some loans will require collateral. Most 7(a) loans over $50,000 will require collateral, for example.
- Down payments: Some loans require down payments; 7(a) loans over $500,000 and 504 loans, for example, may have 10% to 30% down payment requirements.
- Time in business: If your business is established, that works in your favor — especially with many lenders requiring at least two years for some loan products and at least six months for others.
- Revenue: Some programs have limits on who can receive funding based on revenue; 504 loans, for example, are only available to businesses whose net worth is less than $20 million.
How to improve your credit score
Improving your credit score may help you qualify for more loans, better loan terms or potentially higher loan balances. Let’s look at a few steps you can take to reliably improve your credit score.
Dispute errors on your credit report
If there are any errors on your credit report that are impacting your score (like reported late payments), you can dispute them. This is one of the fastest ways to increase your score if there are errors on your report, as credit bureaus must complete a report within 30 days.
You’ll need to dispute errors with each credit bureau, as each has its own process. All require you to submit dispute letters to explain what you want to have removed and why. You can see instructions for each bureau here:
Improve your credit utilization rate
Improving your credit utilization rate simply means using less of your available credit — and it can help boost your credit score. Low credit utilization will help improve your score and is considered to reflect financial responsibility.
This is another quick way to improve your credit, because it can take effect quickly. To lower your credit utilization:
- Pay down as much existing debt as possible.
- Keep your accounts open — even if you aren’t using them.
- Avoid carrying high balances, especially on credit cards.
Make on time payments
Payment history makes up 35% of your FICO score, so making on-time payments for your mortgage, credit cards and loans is essential. Creating payment reminders for yourself or setting up autopay with your creditors are good ways to ensure you don’t miss any payments.
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