Driven™ FAQs | Does applying for a small business loan affect personal credit? (2024)

FAQs

Does a small business loan affect personal credit? ›

A business loan can affect personal credit. If you personally guarantee a business loan, your credit will be affected. If you're a sole trader or run a partnership, your finances will also be affected by a business loan. In such instances, your credit scores will reduce if your business delays payments or defaults.

If you received a business loan, it won't appear on your personal credit report, even if you personally guaranteed the loan. However, the SBA pulls a credit report for the individual who files the business loan application, and this will appear on your personal credit report as an inquiry.

If you apply for a business credit card, your personal credit score will likely take a temporary hit due to a hard inquiry from the credit card issuer. However, the impact is usually minor and brief.

Yes, it's possible to get a business loan with bad credit.

5 Further, LLC debt does not count as personal debt unless the business owner personally guaranteed the loan.

If a lender finds out about a business owner using a business line of credit for personal use, they will call in the balance of the note. Furthermore, financial penalty may be taken against the offending party.

Good news—most businesses are structured in a way that establishes a hard division between the owner's personal finances and those of the company's, achieved through an LLC, C-Corp, or S-Corp. This means that the business's loans and overall financial fitness shouldn't impact your ability to apply for a home mortgage.

Since a default means you've missed several payments, your credit score will likely suffer significant damage. That means your business could have trouble qualifying for future lines of business credit.

SBA Express loans can be approved in as little as two to three days. Financing terms are incredibly solid, too, thanks to the SBA's 50% guarantee of the loan amount. Our team connects borrowers with SBA Express lenders every day.

While there's no official required SBA loan minimum credit score from the Small Business Administration, lenders will often set minimum credit score requirements for both personal and business. An SBSS of 140 to 160+ or a personal score of 620 to 640+ are commonly needed to qualify.

What credit score is needed for an SBA loan? ›

SBA-qualified lenders usually set their own criteria when assessing your eligibility. Most lenders will require a minimum FICO score of 620 or higher for their SBA Loans.

In fact, the SBA has a section on their website where you can download data related to 504 and 7(a) loans going back to 1991. Additionally, SBA loan information is also subject to release under the Freedom of Information Act (FOIA).

The Freedom of Information Act (FOIA) became law in 1966. It allows any person to request access to federal records or information. SBA must provide this information unless it is not allowed under the law (exempt).