What Disqualifies You from Getting an SBA Loan?

Loans from the Small Business Administration (SBA) are a fantastic way for small businesses to get money to launch or expand their operations. An SBA loan, however, is not available to everyone. You may not be eligible for an SBA loan if you meet certain criteria.

Having a low credit score is one of the key requirements for being denied an SBA loan. For SBA loans, a credit score of 640 is the minimum requirement, and some lenders may set an even higher bar. It could be challenging to obtain an SBA loan if your credit score is poor. Additionally, you might not be eligible for an SBA loan if you have a history of bankruptcies or foreclosures.

You are also ineligible for an SBA loan if you have any unpaid tax arrears or liens. All tax debts must be settled before the SBA would grant a loan. Before you can qualify for an SBA loan, you must work with the IRS to set up a payment plan and have the lien removed if you have a tax lien.

You might also not be eligible for an SBA loan if you have unpaid federal debts like student loans or mortgages with government backing. Before approving a loan, the SBA requires that all federal debts be current. How Should I Repay My SBA Loan?

SBA loans are repaid over a number of years through a series of monthly payments. Depending on the type of SBA loan you are given, the length of the payback period and the size of the monthly payment will vary. Although some loans may have lengthier repayment terms, the majority of SBA loans need monthly payments for 5–10 years.

The most prevalent SBA loan is the 7(a) loan. It is intended to assist small firms in obtaining funding for a range of needs, such as working capital, inventory, equipment purchases, and real estate. An SBA 7(a) loan may have a maximum loan amount of $5 million and a maximum repayment term of 25 years.

It is still possible to apply for an SBA Economic Injury Disaster Loan (EIDL). Small enterprises that have been impacted by natural disasters or other economic disturbances can apply for low-interest loans through the EIDL program. An EIDL loan can have a maximum loan amount of $2 million and a maximum repayment term of 30 years.

No, Venmo is not acceptable for SBA loans. A peer-to-peer payment app called Venmo is intended for personal, not commercial, transactions. You must apply for an SBA loan through an approved lender and cooperate with their guidelines. The loan monies will subsequently be sent from the lender to your company’s bank account.