When they apply for a loan, small business owners frequently wonder whether the SBA does a credit check on them. Yes, when you apply for a loan from SBA, a credit check is performed. In reality, one of the variables the SBA takes into account while assessing your loan application is your credit score. It is crucial to remember that SBA has softer credit score standards than conventional lenders. If you match additional criteria, you can be eligible for an SBA loan even if your credit score is low.
What can they use EIDL for is another frequent query from independent contractors. EIDL is a lending program that offers money to small enterprises who have been hurt financially by a catastrophe, like a pandemic or a storm. EIDL can be used by self-employed people to pay for a range of costs, including rent, utilities, payroll, and other running costs. It is crucial to keep in mind that EIDL cannot be used to refinance debt or settle long-term liabilities like taxes or other loans.
Finally, a common question from small business owners is how long they have to repay an SBA loan. The type of loan and its intended use will determine the loan’s repayment period. For instance, a PPP loan has a two-year repayment period while an EIDL loan has a 30-year maximum repayment period. It is significant to remember that SBA loan interest rates and costs vary based on the type of loan, the loan amount, and other criteria.
In conclusion, the SBA undertakes a credit check when you apply for a loan, but it is more forgiving than commercial lenders in terms of credit score criteria. EIDL can be used by independent contractors to pay for a variety of costs, but not for debt consolidation or long-term responsibilities. The type of loan and its intended use will determine the loan’s repayment period. It’s crucial to research the various loan alternatives and eligibility requirements if you’re thinking about applying for an SBA loan so you can choose the loan program that’s best for you.