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What's the Minimum Credit Score for an EIDL Loan?

What's the Minimum Credit Score for an EIDL Loan?
Susan Guillory

Susan Guillory

Updated October 22, 2021
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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), is designed to help businesses that have been negatively impacted by the pandemic cover expenses. You may be able to borrow up to $2 million with a 30-year repayment term at a 3.75% interest rate if you qualify.If you’re at the start of your research, you probably have questions.How much can I get? Is my business eligible? Is there a minimum credit score you need to have to get an EIDL loan?The short answer is that you must have a credit score of 570 or higher to be eligible for a COVID-19 EIDL up to $500,000, and 625 for a larger loan. But there's a lot more involved than just that simple answer. In this article, we’ll discuss whether you need a certain credit score for an EIDL loan, as well as review other issues that might prevent you from qualifying.

The 411 on Credit Scores

Before we talk about the EIDL loan, let’s talk about credit. 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 small business financing, 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.So it’s in your best interest to pay attention to your credit score as well as to your business’s and work toward building them over time with good financial habits.Now let’s explore the topic of EIDL credit score requirements.

What Is the Minimum Credit Score for an EIDL Loan?

There are several factors that go into determining your eligibility for a COVID-19 EIDL loan, including the size of your business (you must have 500 or fewer employees) and whether you were in business on or before January 31, 2020.Additionally, there’s a required minimum personal credit score for these EIDL loans. Depending on how much you’re borrowing, the requirement can vary. 
  • For $500,000 or less, your EIDL credit score must be 570 or greater to qualify.
  • For more than $500,000, your EIDL credit score must be 625 or greater to qualify. 
If your score isn’t that high, you may not qualify and might want to explore other financing options.

Other Issues That May Disqualify You

The EIDL credit score requirement isn’t the only thing that might keep you from qualifying for this SBA loan. Here are some common reasons the SBA turns down applications.

Unverifiable Info

If the SBA is unable to verify the supporting details of your application, such as your annual revenues, your application may be denied.If the SBA has concerns that your application might be fraudulent, you may be asked to provide additional information. If you don’t respond within seven days, your application may be declined.

Your Business Doesn’t Qualify

There are a number of other qualifications your business must meet 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. If the SBA thinks you haven’t met any of these criteria, it has the right to decline your application. 

Your 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 EIDL Reconsideration

If you apply for an EIDL loan and are turned down but you believe you should have qualified, there’s a process for appeal called EIDL reconsideration. Essentially, you can write a letter stating why you believe you should have qualified and provide supporting documents. The SBA will then reconsider your application in light of the new information.

Applying for an EIDL Loan

If your business meets the minimum credit score for the EIDL loan as well as the other requirements, you can apply for the loan. Right now, applications are being accepted until December 31, 2021, though that deadline is subject to change with the pandemic’s ever-changing status.You can apply for the EIDL loan on the SBA website, but before you do, it’s helpful to gather all the documents you’ll need, including your federal income taxes for 2019 and 2020.In the application, you’ll be asked questions about your business, including its tax ID number, business structure, and time in business. You’ll also need to provide details on its gross revenues and cost of goods sold for 2019 and 2020, as well as the number of employees now and on January 31, 2020.There is a $100 UCC filing fee for loans over $25,000. Collateral is required for loans greater than that amount, and if you want to borrow $200,000 or more, you’ll need to provide a personal guarantee.There’s no published timeline for how long the SBA will take to process EIDL applications, but the better prepared you are to provide all the required information, the faster your application should be processed.

What to Know About the EIDL Loan

Even if you have received EIDL funds previously, you may apply for an increase in funds, up to the cap of $2 million.You can use your EIDL loan to cover normal operating expenses and to pay business debt, including credit card debt, loans, and lines of credit. You can also use it to cover payroll, rent, utilities, and other ordinary business expenses.Should you want to pay off your EIDL loan before the term is up, there is no prepayment penaltyIn addition to the loan funds you may qualify for, there are two different Advance programs still available that, if you qualify, could get you up to $15,000 that you don’t have to pay back. The Targeted EIDL Advance provides up to $10,000 to businesses in low-income communities that experienced more than a 30% reduction in revenue during an eight-week period from March 2, 2020 onward. Qualifying businesses must have no more than 300 employees.The Supplemental Targeted Advance provides an additional $5,000 to businesses in low-income communities with no more than 10 employees that saw a 50% or greater loss in revenue over the same period.

The Takeaway

If your business doesn't meet the minimum credit score for EIDL loans or otherwise doesn’t qualify for one, not to worry. 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 creditSoFi can connect you with small business financing solutions that fit your credit and qualifications. By filling out one easy form, you can get multiple offers from different lenders and choose the one one you think is in alignment with your business.
Photo credit: iStock/atakan
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0921182

About the Author

Susan Guillory

Susan Guillory

Susan Guillory is the president of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.
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