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Small Business Loan Credit Scoring

The SBA began using credit scoring in June 2012 under the Small Loan Advantage program and since January 2014 credit scoring has been used on all 7(a) loans up to $350,000 (excluding SBA Express and Export Express). The SBA credit scoring tool uses the FICO® Small Business Scoring Service® product (SBSS) to expedite credit decisions. It draws on multiple data sources and more than 100 combinations of consumer and business analytical models to help streamline the loan approval process. The overall statistics on SBA’s $60 billion-plus portfolio show that businesses with scores at, or above the designated cut-off have had very good payment history.

Benefits to using the new credit scoring tool include:

  • It makes the lending process more objective, and ensures consistent credit decisions
  • An automated process allows for faster decisions, especially to small businesses, and
  • It will lower the cost of processing small dollar loans.

Applications for all loans up to $350,000 (except SBA Express and Export Express) are screened for a credit score based on certain information entered by the lender into E-Tran. The credit score is generated immediately as a part of the E-tran process and if the applicant receives an acceptable credit score, the lender may then submit the application via E-Tran. If the applicant does not receive an acceptable credit score, the lender may submit a Standard 7(a) loan application to the Loan Guaranty Processing Center (following the procedures for loans over $350,000) or, if the lender is an SBA Express lender, as an SBA Express application via E-Tran for a 50% guaranty.