SBA loan with bad credit

Can You Get A Small Business Administration (SBA) Loan with Bad Credit

by Amanda Bailey Mar 31, 2023

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Table of Contents:

  1. Getting an SBA Loan with Poor Credit Tips and Options
  2. Creating a Strong Foundation for Business Fundability
  3. Build Strong Business Credit
  4. Expand Your Business Credit Portfolio
  5. Important Factors to Consider
  6. Get Ready
  7. Bad Credit Impact on SBA Eligibility
  8. Exhausted Other Funding Sources
  9. Important Factors to Consider
  10. Get Ready
  11. Exhausted Other Funding Sources
  12. SBA Loan Approval to Funding Timeline

Yes, but it's complicated. The SBA doesn't specify a minimum personal credit score for the best business funding in USA but requires a minimum FICO SBSS business credit score of 140. Approval is more likely with a score of 160. SBA loans are processed through partner lenders, not the SBA directly. Your personal credit score can affect the FICO SBSS and the lender decides the impact. Lenders can set qualifications above SBAs, so even with bad personal credit, you may qualify with one lender but not another.

The best option is to boost other strengths and find a lender that doesn't heavily consider personal credit. Online lenders may be the best choice for bad credit funding solutions in the USA, but may charge higher interest. Some offer SBA loans."

Getting an SBA Loan with Poor Credit Tips and Options

While having a strong personal credit score can improve your chances of approval for a small business loan, it is not a requirement for all SBA loans. Other factors, such as current debt and cash flow, also play a role.

To increase your chances of approval, focus on improving your consumer credit score by paying bills consistently and on time, and keeping your debt ratio below 30%.

Consider both traditional and alternative lenders, as their specific requirements may vary. Some alternative lenders, like Wealth Builders 365, provide SBA-backed business loans.

Keep in mind, you may want to apply for additional funding options, such as a business line of credit, in the future. It's best to choose a lender that fits your needs and financial situation.

Creating a Strong Foundation for Business Fundability

For a small business to be eligible for funding in its name, it needs to have a solid foundation in terms of funding. This includes having vendor credit or a business credit card, as well as a business line or loan.

Without a fundable structure, securing a small business loan, credit card or any other financing will be challenging, and building business credit will be almost impossible.

To ensure funding, small businesses should have:

  • Clearly defined and separate business contact information
  • An Employer Identification Number (EIN)
  • Incorporation
  • Required licenses and permits
  • A professional website with a web domain
  • A dedicated business bank account in the business's name


Having a separate and well-established business bank account is crucial as it forms a part of the business's banking history which is essential for obtaining business financing. The longer the bank's history, the better it is for the business.

Build Strong Business Credit

If you already have established business credit, then this step can be skipped. However, if you have poor business credit or none at all, this is where to start.

Begin establishing your business credit history to increase your chances of being approved for business loans and credit cards, including online loans for bad credit USA and loans for start up businesses.


Find vendor tradelines that you can get approved for and will report positive payment history to the business credit reporting agencies. These are referred to as starter vendors and don't typically check credit history.

By getting these accounts, even with poor credit, you can establish or improve your business credit, making your personal credit report less of a concern.

Expand Your Business Credit Portfolio

As you responsibly use starter vendor credit and your business credit score grows, add more accounts to your portfolio. This may include business credit lines and credit cards that report to the business credit bureaus, further boosting your score.

A stronger business credit history may improve your chances of loan approval, including online loans for bad credit USA and loans for start up businesses, as lenders may be more lenient on personal credit requirements if they see a strong business credit score. Additionally, a strong business credit score may counterbalance a weak personal credit score in FICO SBSS calculations.

Important Factors to Consider

When Applying Establishing a strong relationship with a lender who understands your business and its industry is crucial, whether you're working with traditional or alternative lenders.

Before applying, research each lender's eligibility requirements to avoid wasting time on applications with little chance of approval.

Ensure your business information is accurate and verifiable. Include your business name and address on the application, as lenders will compare it to the information on file with the Secretary of State. Any discrepancies may result in a denial.

Get Ready

Ensure you have all necessary documents ready before applying for small business loans in USA. Lenders can provide you with a list of required items.

Documents proving cash flow to repay the loan and other requirements are necessary. Having everything organized will simplify the lender's job and increase your chances of obtaining funding, making the process quicker in the end.

Bad Credit Impact on SBA Eligibility

  • For-Profit Business Only
  • Non-profits are not eligible.
  • Within the US businesses must operate in the US.
  • Owner's Personal Investment Owners must invest both time and money.


Exhausted Other Funding Sources

Businesses must show a need beyond existing financing options, such as merchant cash advance or invoice financing.

Must Meet SBA's Small Business

Definition Determined by SBA size standards based on industry and considering revenue and employees.

Approved Industry

High-risk or illegal industries may not qualify for SBA loans per the Small Business Administration.

SBA Loan Approval to Funding Timeline

Loan Approval time can vary from a few weeks to several months, depending on the loan program and lender. After approval, term loan funds can be received in as few as 4-5 days, up to 14 days. Consider this timing for cash flow planning. Getting an SBA-backed loan, including a business credit builder loan, can be time-consuming due to paperwork and bureaucracy, not strict requirements.

If you meet the criteria and require funding, an SBA loan, including a business credit builder loan, can be a suitable option, especially if avoiding a personal loan. Remember, there are multiple financing options, and the best one depends on your business credit score. Find the best small business loan that fits your needs, as there are alternatives to SBA loans, including business credit builder loans, if one of their programs doesn't work for you currently.

In conclusion, when applying for a small business loan, including an SBA loan or a business credit builder loan, it is important to have all necessary documents ready and be aware of the loan program and lender's requirements. Approval time can vary, but after approval, funds can typically be received within a few days to two weeks. The timeline should be taken into account when making cash flow decisions. While obtaining an SBA loan can be a time-consuming process due to paperwork, it can be a suitable option for businesses that meet the criteria and require funding. It is important to remember that there are multiple financing options available, and the best one depends on your business credit score.

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