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If you’ve looked into SBA 7(a) loans, you’ve probably heard mixed answers about how difficult it is to get approved.
Here’s the straight answer:
It’s Easy If You Have:
- Credit score above 700
- Strong cash flow (DSCR 1.25+)
- Tax returns proving profitability
It’s Hard If:
- Credit is below 680
- Cash flow is tight
- You’re relying on projections instead of past financials
Banks want proof, not promises—which is why so many applications get denied. They want to know (1) that you will pay back the loan and (2) that you can afford to pay it back.
Can You Improve Your Approval Odds?
Yes. Working with professionals who understand the SBA loan process can help you structure your application for success.
At Business Funding Group LLC (BFG), we work with business owners to evaluate eligibility, strengthen applications, and connect them with the right lenders.
Key Factors to Consider When Applying for an SBA 7(a) Loan
When applying for an SBA 7(a) loan, understanding the key factors can improve your chances of approval. These are the factors that you should consider before applying.
1. SBA Loans Are Still Bank Loans
The SBA guarantees up to 75% of the loan, but banks still take on risk—meaning they follow strict underwriting standards. Even with SBA backing, you still need to qualify under the bank’s lending guidelines.
2. Credit Scores Matter More Than You Think
While the SBA doesn’t set a minimum, having a personal credit score above 700 gives you a much better shot at approval.
What impacts your score matters—a 680 credit score due to high utilization is not the same as a 700 score with multiple late payments. Lenders evaluate the reason behind your score, not just the number itself.
4. Cash (Flow) is King
While the SBA allows lenders to lend based on projections, most lenders require historical proof of profitability—which comes from your tax returns.
- Debt Service Coverage Ratio (DSCR) needs to be at least 1.15— but banks prefer 1.25+.
Lenders BFG works with require at least one year of profitable business tax returns plus interim financials that support loan repayment.
Final Answer: Is It Hard to Get an SBA 7(a) Loan?
It’s easy for established businesses with strong financials: 700+ credit, 1.25+ DSCR, and profitable tax returns.
It’s very difficult for businesses with weak credit, poor cash flow, or no financial track record.
How to Improve Your Chances of SBA Loan Approval
If you don’t qualify yet, focus on improving these areas before applying. SBA loans require financial strength, not just a good business plan.
- Increase Your Credit Score – Pay down debt, correct errors, and aim for 700+
- Strengthen Cash Flow – Reduce expenses, increase revenue, and push DSCR to 1.25+
- File Accurate Tax Returns – Lenders rely on tax returns to prove profitability
Need Expert Help? Call BFG
Applying for an SBA loan on your own can be overwhelming. At BFG, we take care of the process so you can focus on running your business!
Due to factors such as decreasing interest rates and more flexible eligibility requirements, securing SBA 7(a) loans is now simpler than before. Try our SBA loan calculator today to get a glance at what an SBA loan can do for you.
Contact BFG for a complimentary call to explore your business objectives and assess your eligibility.