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Credit Scoring Model Helps Lenders and Small Business Secure Big Gains

Release Date: 
Tuesday, September 2, 2014
Release Number: 
Michael Ashcraft, 502-582-5971

By Regional Administrator Cassius Butts of Region IV, the Southeast

Helping lenders get to “yes” on small business loans has never been more important to America’s economic health, because it’s smaller firms that have driven our recovery, both nationally and locally. Entrepreneurs are creating nearly 67% of private sector jobs. Federal Reserve Board Chair Janet Yellen said, “Small businesses deserve a considerable share of the credit for the investment and hiring” that powered our recovery following the financial crisis and credit freeze.

Throughout the Southeast, SBA is working tirelessly alongside lenders to join our lending network and increase their loan activity to small business owners. We have recently rolled out a credit scoring model for SBA loans of $350,000 or less, combining personal and business credit scores to streamline the lending process. With this model, SBA is eliminating the requirement for lenders to submit cash flow analysis on those loans up to $350,000, cutting time and the cost of applying for an SBA loan. We have tested this system extensively for over 10 years, and the default rate is remarkably low.

This model helps lenders generate more loans and ignite economic activity. Establishing a quicker, cheaper, and more consistent loan process model will allow existing SBA lenders to do more small loans, which will expedite access to capital, especially to those underserved small business owners.  Additionally, this credit scoring model is further enhanced by the well-known FICO Small Business Scoring Service Product. Therefore, both lenders and small businesses will benefit.

SBA’s credit scoring model is working for lenders and small businesses because it has a proven track record of billions of dollars in loans. Approval of smaller loans is a vital part of SBA’s promise of equal opportunity in America.

A study by the Urban Institute found that women and minorities are three to five times more likely to be approved for an SBA-backed loan than a traditional bank loan. In other words, if the SBA does not provide capital to these entrepreneurs, often no one will. Therefore, I encourage our local lenders to work with us at SBA to quickly advance loans and expand capital access by using our quick credit scoring model for small dollar loans.

Contact the SBA Kentucky District Office at 502-582-5971. The Lender Relationship Team can put you in touch with SBA lenders in your area of the Commonwealth.  You can also find additional information at, visit us at  or