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May 4, 2023 Update: The COVID-19 EIDL program is not accepting new applications, increasing requests, or reconsidering loan requests. As of January 1, 2022, SBA stopped accepting applications for new COVID-19 EIDL loans or advances. As of May 6, 2022, SBA was no longer processing COVID-19 EIDL loan increase requests or requests for reconsideration of previously declined loan applications. If you’re looking into how to get a small business loan specifically because your business has suffered during the COVID-19 pandemic, you may have researched the Economic Injury Disaster Loan (EIDL).This loan, offered by the Small Business Association (SBA), was designed to help businesses that had been negatively impacted by the pandemic cover expenses.ng.The 411 on Credit Scores
Even though the EIDL program is complete, good credit is still desirable.You may already know that you have personal credit scores and a credit report. Did you know that your business also has credit scores and a report?There are certain factors that affect your business’s credit score, such as how much debt your business has and whether its debts have been paid back on time. Each of the three major business credit bureaus (Experian®, Equifax®, and Dun & Bradstreet®) has a slightly different secret formula for how your business’s credit score is calculated.So what’s the importance of your credit score? Many small businesses don’t have an established credit history or one that’s fully separate from their owners’ credit. So if you want to apply for a small business loan, most lenders will look at your credit score to determine eligibility and your rates. (They may also look at your business’s credit score or they may not.) The higher your credit score is, the better the offers your business is likely to qualify for.Other Issues That May Have Disqualified You
The EIDL credit score requirement isn’t the only thing that might have kept you from qualifying for this SBA loan. Here are some common reasons the SBA turned down applications.Unverifiable Info
If the SBA was unable to verify the supporting details of your application, such as your annual revenues, your application might have been denied.If the SBA had concerns that your application might have been fraudulent, you may have been asked to provide additional information. If you didn’t respond within seven days, your application might have been declined.Your Business Didn’t Qualify
There are a number of other qualifications your business must have met for an EIDL, including employing no more than 500 workers and having only owners (who own 20% or more of the business) who are U.S. citizens, non-citizen nationals, or qualified aliens. Recommended: Guide to Applying for and Getting Small Business LoansYour Business Activity Isn’t Eligible
Certain types of businesses aren’t eligible for any SBA loans. These types include the following:- Payday lenders
- Check cashing businesses
- Gambling businesses, including casinos
- Adult entertainment
- Pawn shops
- Real estate developers
- Insurance companies
- Businesses engaging in activity that’s illegal under federal, state, or local law, e.g., a marijuana shop
If your business falls under one of these categories, you may not qualify.Additionally, the SBA may reject your application if you or any owner is:- More than 60 days delinquent on child support
- Currently suspended or debarred from contracting with the federal government or receiving federal grants or loans
- Incarcerated
- Currently or in the past charged with a felony
- Engaged in illegal activity
- Involved in political or lobbying activities
- Currently in bankruptcy
Applying for an EIDL Loan
The SBA is no longer accepting applications for Covid-based EIDL loans.The Takeaway
There are many loan options for businesses with poor credit, including invoice financing, merchant cash advances, and alternative loans. It’s often possible to get funding even if your business has bad credit. Lantern by SoFi can connect you with small business financing solutions that fit your credit and qualifications. By filling out one easy form, you can get an exclusive offer from a lender. Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. Photo credit: iStock/atakan
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About the Author
Susan Guillory
Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards. 
