What credit score do I need for an SBA loan?
Most SBA lenders look for a personal credit score of 680 or higher, some approve at 650 with strong business cash flow, and scores under 640 are hard to place. Lenders also review the business credit report, prior government loan history, and recent late payments, and a clean two-year history on housing and business debt often matters more than the score.
The typical grid
| Score | How SBA lenders treat it |
|---|---|
| 720 and above | Clean approval on the credit side |
| 680 to 719 | Standard; most lenders approve with normal cash flow |
| 650 to 679 | Some lenders, usually with stronger cash flow or a larger down payment |
| 620 to 649 | Few lenders; needs a compelling business story |
| Under 620 | Rarely approved |
Ranges vary by lender.
What else lenders check
Business credit. A business credit report and any trade references. Slow pay to vendors is a flag.
Government loan history. A prior default on a federal loan, including student loans, can disqualify the borrower under SBA rules until resolved.
Tax compliance. Unfiled returns or unpaid taxes stop the file. Tax liens must be paid or on a documented payment plan.
Bankruptcy and foreclosure. Generally three or more years of seasoning, with an explanation.
Recent lates. A 30-day late on a mortgage or business loan in the last twelve months is a bigger problem than a score in the 660s.
All owners of 20 percent or more. Each is a guarantor and each has credit pulled. One weak owner can hold up the file.
Cash flow can offset credit
SBA lenders underwrite the business first. A business with three years of returns showing the new payment covered 1.5 times will get approved at 660 where a marginal business would not at 700. The reverse is also true: a 780 score does not rescue a business that cannot cover the debt.
Fixing a marginal file
- Pay revolving balances below 30 percent of limits, which can move the score 20 to 50 points in a cycle.
- Resolve any tax issues before applying; a payment plan in place is acceptable to many lenders.
- Write a short explanation for any past event, with dates and what changed.
- Add a co-guarantor with stronger credit if the ownership allows.
- Increase the down payment; lenders will trade credit risk for equity.
Startups
A new business has no business credit, so the owners' personal credit carries more weight. Expect lenders to want 700 or better for a startup, along with industry experience and a larger down payment.
How CommFi handles it
Our lending desk reads the credit reports and the business financials together and tells you which lenders will approve the file as it stands. SBA loans fund through approved lenders with different credit floors, so the desk searches a database of 7,000+ lenders and puts the file in front of the ones that fit, and they compete. Zero upfront fees.
Related reading
Related questions
- What credit score do I need for an SBA loan?
- Most lenders look for 680 or higher. Some approve at 650 with strong business cash flow; under 640 is hard to place.
- Do SBA lenders check business credit?
- Yes, along with personal credit for every owner of 20 percent or more, tax compliance, and prior government loan history.
- Can I get an SBA loan after a bankruptcy?
- Generally after three or more years, with an explanation and clean credit since.
- Does a tax lien disqualify me from an SBA loan?
- Not always. Liens must be paid or on a documented payment plan, and unfiled returns must be filed first.
- Can strong business cash flow make up for a lower credit score?
- Often. SBA lenders underwrite the business first, and coverage of 1.5 or better can carry a score in the 650s.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.