What Are SBA Loan Credit Score Requirements?

Small businesses that want low-cost, government backed SBA loans may be confused about the different types of SBA programs available and the minimum credit score calculations required to qualify.

Overall, the SBA is fairly conservative where lending standards are concerned. Below, we’ll go over the minimum FICO score SBA loan requirements for each type of SBA loan and what you can do if you don’t think you’ll qualify.

SBA Credit Score Requirements By Loan Type

Here’s a breakdown of the minimum credit rating you’ll usually need to have to qualify for various SBA loans:

SBA 7(a) Loans

The SBA’s flagship loan, the SBA 7(a), is one of the most versatile loans in the financial industry. Businesses can use this loan for everything from buying vacant land to paying operating costs.

You can get up to $5 million with a 7(a) loan, with a maximum term of 10 years for most expenses and 25 years for real estate. The SBA 7(a) credit score requirements are 640 or higher.

SBA CDC/504 Loans

The SBA 504 loan is the SBA 7(a)’s commercial relative. While there’s a fair bit of overlap between the loans with regard to what they can be used for, the 504 was originally intended for buying commercial real estate and financing big-ticket equipment. As such, the term lengths trend a bit longer: 20 to 25 years.

In contrast with 7(a) loans, the 504 loan is a bit less flexible, has lower fees, and fixed interest rates. It also doesn’t require any outside liens. As such, the credit score requirement is higher at 680.

SBA Microloans

SBA Microloans are smaller-dollar (less than $50K) loans offered to businesses at low-interest rates. Whereas SBA 7(a) and 504 loans are typically made through a bank, SBA Microloans are made through a nonprofit or community-based organization.

As for SBA Microloan credit score requirements, it’s possible to be approved with a credit score as low as 575 if you’re otherwise a strong applicant. Most borrowers, though, will want to have a credit score of at least 640.

SBA Disaster Loans (EIDL & Physical Injury Loans)

SBA Disaster Loans are a different game entirely. Whereas applicants for the previous types of loans are heavily vetted during the application process, the goal of disaster loans is to get the money disbursed quickly to distressed areas.

Because of this, SBA Disaster Loan credit score requirements typically don’t come into play for determining eligibility.

That said, the SBA does enforce any other criteria and qualifications for specific EIDLs, so make sure you’re compliant.

SBA CAPLines

SBA CAPLines refers to one of four lines of credit guaranteed by the SBA: Working Capital, Seasonal, Contract, and Builders. These are available with credit limits as high as $5 million.

The SBA CAPLine credit score requirements fall between the 7(a) and 504 loans at 660.

SBA Export Loans

We often don’t think of small businesses when we’re talking about exports, but many small businesses do, in fact, sell internationally. The SBA’s Export Loan programs are designed to help those businesses reach their foreign markets.

The three programs — International Trade Loan, Export Express, and Export Working Capital Program — are pretty different from one another, but they all require a minimum credit score of 660 to qualify.

Why Your Credit Score Is Important To The SBA

The SBA, for the most part, does not originate loans. Instead, the SBA guarantees a percentage of each loan offered through its approved lenders. This means that if you default on your loan, the SBA will be responsible for paying the lender whatever portion of the loan it’s guaranteed. As the SBA is taking on this responsibility, your fitness as a borrower becomes very important. For better or worse, credit scores are a shorthand for determining how likely it is that you’ll pay back your debt.

Likewise, the SBA’s partnered lenders, which also tend to be traditional lending institutions such as banks, also want to minimize their risk. That said, SBA loans tend to be a bit more forgiving than similar products from the same lender. So while you’re credit score still matters, it may not need to be as high a priority as it would be if the SBA weren’t involved at all.

Other SBA Loan Requirements

Your credit score is just one aspect of your borrower profile. Even if you have an amazing credit score, the SBA still wants to see that you have the business acumen to keep your company afloat for an extended amount of time. They also want to see that your revenue can support your business as well as service your debt.

The SBA may have minimum monthly or annual revenue requirements and could also require that you’ve been in business for a few years. The exact requirements vary between programs, so go take a look at our guide to SBA loan requirements for more details.

What To Do If You Don’t Meet SBA Credit Score Requirements

If you don’t meet SBA credit score requirements, don’t give up just yet. Here are steps you can take to strengthen your application and qualify for a loan, either noew or in the future.

Final Thoughts On SBA Loan Credit Score Requirements

Congratulations, you now know the minimum SBA loan requirements on credit scores for each of the SBA’s major loan programs. However, we’ve barely scratched the surface of how these complex programs work. Be sure to arm yourself with all the knowledge you need to make the best borrowing decisions for your business.

Start by checking out the current SBA interest rates. When you’re ready to apply, research lenders to choose the right one, starting with our list of the best SBA lenders.

After submitting your application, learn what to expect when waiting for your SBA loan. Good luck!