Lending Library

SBA loan credit score requirements: Qualify for financing success

August 12, 2025

5 min read

SBA loans don’t have official credit score requirements. But to obtain financing for your business, you’ll typically need a minimum credit score—it just might be set by the individual lender.

The SBA has also recently changed its funding requirements, so new borrowers should know what lenders expect before applying. That said, these are the typical credit-based criteria for different SBA loans, the importance of credit, and tips to improve your credit profile as a small business owner.

Why credit scores matter for SBA loans

SBA loans are business loans partially backed by the U.S. Small Business Administration. Some, like SBA 7(a) loans, are guaranteed between 50% and 90%. Even with this partial government guarantee, lenders still evaluate risk carefully.

Checking a borrower’s credit score and history is part of the standard underwriting process. A higher score generally means the individual is more likely to pay back what they owe. The better the credit, the lower the risk to the lender.

Lenders may check the borrower’s personal credit score when determining whether to offer financing. A FICO credit score of 670 or above is generally considered “good” credit.

Be aware that business credit, which is often used for larger or mature businesses, may also be used to evaluate your application. As of July 2025, the minimum FICO Small Business Scoring Service (SBSS) score for some SBA loans is 165. This is up from 155.

Minimum credit score requirements by SBA loan type (2025 estimates)

There are multiple types of financing available for your business, from the popular SBA 7(a) loan to Disaster loans. Credit score requirements for these loans depend on the lender and loan type, but these are the typical minimums.

SBA 7(a) Loan

SBA 7(a) loans offer small business owners a way to finance things like commercial real estate, furniture, and machinery. Funds can also be used to refinance business-related debt or as working capital.

Several types of SBA 7(a) loans exist, including:

Standard 7(a) loans—these range from $350,001 to $5 million and have a 75% SBA guarantee
7(a) small loans—these cap out at $350,000 and have between a 75% and 85% guarantee, depending on the financed amount
SBA Express loans—eligible business owners may take out up to $500,000 with a 50% guarantee

Other 7(a) loan programs include the Export Express Loan program, Export Working Capital Program, CAPLines program (a business line of credit), and the International Trade Loan program. Maximum amounts, percentage guarantees, and collateral requirements vary.

Typically, borrowers must have a minimum personal credit score of 650 to qualify for an SBA loan. The minimum SBSS score is 165.

SBA loans are more flexible with strong financials—that is, the ability to demonstrate steady, high business cash flow. Having collateral may also help offset a lower credit score.

SBA 504 Loan

An SBA 504 loan is one that’s jointly funded by a Certified Development Company (CDC) and a traditional lender. They cap out at $5.5 million, with some exceptions.

These loans are similar to the 7(a) program, but can be stricter if real estate is involved. Funds can only be used for specific purposes, such as purchasing land or new facilities.

In exchange for funds, the lender will place a first lien on the real estate property, while the SBA places a second lien on it. Sometimes, collateral is also required. Again, there are no preset credit score requirements, so shoot to have a score of 650 or above.

SBA Microloan

SBA microloans come in smaller amounts up to $50,000. They’re flexible in that business owners can use them for things like working capital, furniture, equipment, machinery, and inventory or supplies. However, they can’t be used for real estate or debt repayment.

It’s possible to get a microloan through a qualified nonprofit, community-based organization. Borrowers may qualify with a strong business plan, solid financials, mentoring, and a lower credit score of around 620.

Economic Injury Disaster Loans

The SBA’s disaster loans are geared toward small businesses that have suffered economic damages due to a declared disaster. Minimums vary but cap out at $2 million (when combined with a physical disaster loan). Exact amounts are based on the business’s financial needs in relation to the disaster.

While disaster loans have no specific credit score requirement, lenders may consider the borrower’s financials and overall credit. Collateral is required for loans exceeding $50,000.

What lenders look for — beyond the score

SBA loan requirements, including business loan credit score, can vary by lender. This is true even of SBA-backed programs.

Since every SBA loan program has its own criteria, it’s important to do your research. It also helps to have a strong overall financial and credit profile before applying.

Beyond that, these are some things lenders often look for besides your credit score:

Overall credit profile, including payment history, credit utilization, and length of credit history
Recent delinquencies or bankruptcies on your credit report
Overall financial health of your business (including cash flow and debts)
Solid business plan and clear financial statements
Owner’s invested equity in the business
Collateral (such as business real estate)

Having a down payment could also help you qualify. Know that SBA loans generally have lower down payment requirements than other forms of business financing.

Applying for a larger loan may also require a larger down payment, stronger financials, or higher credit score. It all depends on the lender and program.

How to improve your credit score before applying

With SBA loans, credit score matters. If yours needs some work, here are some tips to improve your credit score.

Check your personal and business credit reports—and dispute any errors bringing down your score
Pay down outstanding balances—personal and business
Avoid new credit inquiries before applying—a hard inquiry can cause your score to drop by up to five points
Work with a credit advisor if needed

Try to wait until your credit score reaches at least 650 before applying for an SBA loan. This will increase your approval odds—but remember, some lenders will still work with borrowers with a lower score.

Can you still qualify with a low credit score?

It’s possible to get a business loan even with a lower credit score. SBA lenders may work with borrowers who have:

Strong cash flow (boost your business revenue!)
Valuable collateral or a large down payment
Been in business for several years or more
A co-signer or guarantor
Significant business equity

If you don’t qualify, consider an alternative SBA lender or microloan instead.

Credit is a key part of the equation

When it comes to getting an SBA loan, your credit score is important. But it’s not the only factor. Having a business with strong financials, proven longevity, and a solid plan could help you qualify for financing.

Review your business (and personal) financials and credit holistically. Taking the time to prepare can boost your approval odds and maximize your overall success.

Ready to get started? Apply now with Lendio and get funded in as little as 24 hours.

How to increase credit score: 7 tips to improve credit

August 6, 2025

7 min read

A healthy credit score can open doors for business growth—whether you’re applying for financing, securing better rates, or simply keeping your financial footing strong. But for many small business owners, a less-than-perfect personal credit score can be a major roadblock.

The good news? It can be improved with time, strategy, and the right steps. We’ll cover what you need to know to improve your credit, and offer you tips on what high-impact moves you can make to start boosting your credit score today.

Do personal credit scores impact business credit scores?

Personal credit scores do affect your business credit, especially early on. Many lenders use your personal credit to evaluate your ability to manage debt, and in some cases, they’ll require a personal guarantee. That means your business's financial behavior can also impact your personal credit.

As your business matures, strong business credit habits (like on-time payments and positive tradelines) reduce the weight of your personal score. You should always expect that small business lenders will check your personal credit score on loan applications, though, so it’s important not to lose sight of maintaining your personal credit health.

Want to learn more about personal credit scores vs. business credit scores? Read our guide.

Set realistic expectations about increasing your credit score fast

If you find yourself sitting in front of Google, searching “how do I raise my credit score in 30 days,” you’re not alone. Wanting to improve your credit score quickly in order to continue with your business goals is common. However, you will only become more frustrated if you have unrealistic expectations. There are often no overnight miracles when it comes to boosting your credit score. Many of the factors that determine your credit score rely on historical data. For example, payment history scoring can only improve with time.

However, there are strategic moves you can make over 3, 6, and 12 months that will create a noticeable bump in your overall personal credit score. By focusing more narrowly on high-impact changes to the factors that weigh heavily on your credit score, you can see noticeable improvements within 6 months.

Your starting credit score matters

Another factor to consider in how fast your credit score can improve is the score you’re starting with. Credit score ranges will have an impact on how fast your credit score can realistically improve in a short window.

If your score starts in the low 500s, aggressive action—like reducing debt and fixing errors—can lead to 50–100 point gains within six months. If you’re starting in the 600–700s, changes may be more gradual (e.g., 20–50 points) as your profile nears the top tier.

We’ll break down some realistic moves to improve your credit score fast in the next section.

Your timeline to better credit: what to do in the next 3, 6, and 12 months

If your goal is to boost your credit score quickly, you’ll want to start with the actions that will have the most impact based on how credit scores are calculated and your starting credit score.

What to focus on in the first 3 months

At this stage, focus on quick wins that move the needle fast: reduce utilization, make consistent payments, and correct any errors.

Score Range	Key Moves	Score Factor
Poor (300-579)	-Set up auto-pay or payment alerts -Dispute credit report errors -Pay down cards below 30%	Payment History (35%) Credit Utilization (30%)
Fair (580-669)	-Reduce credit utilization -Avoid new credit inquiries -Pay multiple times per month	Credit Utilization (30%) New Credit (10%)
Good (650-750+)	-Keep credit utilization under 10% -Pay early (before your statement date) -Maintain a clean payment record	Credit Utilization (30%) Payment History (35%)

What to focus on in the next 6 months

At this stage, you can build on your previous moves by introducing new strategies to build depth and a healthy mix into your credit profile.

Score Range	Key Moves	Score Factor
Poor (300-579)	-Become an authorized user on a trusted account -Open a secured credit card	Length of Credit History (15%) Credit Mix (10%)
Fair (580-669)	-Maintain low balances -Avoid closing old accounts -Add a different credit type (e.g., loan)	Credit Utilization (30%) Credit Mix (10%)
Good (650-750+)	-Use all accounts lightly -Review your credit report again -Age your accounts without inquiries	Length of Credit History (15%) New Credit (10%)

What to focus on in the next 12 months

At this stage, you will focus on long-term gains through consistency and diversification.

Score Range	Key Moves	Score Factor
Poor (300-579)	-Maintain all positive behaviors -Consider a credit-builder loan -Avoid new negatives	Payment History (35%) Credit Mix (10%)
Fair (580-669)	-Ask for credit limit increases -Strategically open one new account -Keep old cards active	Credit Utilization (30%) Length of Credit History (15%)
Good (650-750+)	-Push towards 760+ by optimizing mix -Keep inquiries minimal -Focus on the rate shopping advantage	Credit Mix (10%) New Credit (10%)

Assuming you take these actions at each stage of the timeline, and then continue applying best practices from each stage while building on the prior period's progress, these are the score improvements you might see after 12 months.

Starting Score	3 Months	6 Months	12 Months
Poor (300-579)	+400-100 points	+60-150 points	+100-200 points
Fair (580-669)	+20-60 points	+40-80 points	+60-100 points
Good (650-750+)	+5-20 points	+10-30 points	+20-50 points

*Estimated score gains are cumulative and assume you consistently apply credit-building strategies from earlier stages. Results may vary based on your unique credit profile, history, and financial behavior.

7 ways to improve your credit score

Regardless of your credit score or desired timeline for improvement, these tactical tips will help you improve your credit score, especially when combined consistently over time.

1. Pay every bill on time

Impacts: Payment History (35%)

Payment history is the single most important factor in your credit score. It shows that you can handle debt and be trusted to pay it back. When you miss payments by 30+ days, whether it’s a credit card, utility bill, or loan, it can have a negative effect on your credit report for 7 years, depressing your score. Paying your bills on time is by far the best thing you can do to rebuild less-than-stellar credit.

Tip: Set up automatic payments or calendar reminder alerts for minimums. Even one missed payment can cost you a lot of points if your score is already struggling.

2. Keep credit card balances below 10% of your limit

Impacts: Credit Utilization (30%)

While 30% is commonly advised, 10% or lower is the real sweet spot. Anything above 10% will chip away at that 30% of the overall credit score affected by credit cards:

A 10−30% balance takes away up to 10%
A 30–50% balance takes away 10−25%
A 50−90% balance takes away 25–90%

Tip: If your card has a $5,000 limit, aim to keep the balance under $500 at any point in the billing cycle. This is because credit utilization resets monthly. A high balance—even if paid off later—can spike your usage rate temporarily and drag your score down.

What if you don’t have an active credit card?

Without recent revolving credit, you may be missing a huge portion of your score potential. If you’re consistently at a 0–7% balance-to-limit ratio, credit models may read that as inactive usage, not responsible credit behavior.

Additionally, it may be one of the best tools available for building a strong credit history, which is essential for achieving your business goals, such as securing financing.

3. Become an authorized user on someone's good account

Impacts: Length of Credit History (15%) + Credit Mix (10%)

Piggybacking on a well-managed, older account can give your score a boost, especially if your credit profile is thin or new. Have someone you know, such as a spouse or a family member, add you as an authorized user of their credit card. You’d have to ask the person to do this, and if they agree, they would add you, receive the credit card in your name linked to their account, and pass it off to you.

Some things to keep in mind: Just as you will benefit from the person’s good habits, that person can take a credit hit if you abuse the authorization you’ve been given, so treat it with respect (remember, they're still on the line for all charges). And don’t get yourself authorized on too many accounts. Credit agencies will flag that as you artificially raising your score.

Tip: Make sure the account has low balance and a long positive payment history. And it goes without saying, only piggyback with someone you trust, and who trusts you.

4. Dispute any errors on your credit report

Impacts: All score factors (depending on nature of errors)

According to the Fair Credit Reporting Act, your credit agency is required to show you your credit report at least once a year at no charge. Take full advantage of that right.

You may have credit dings you don’t know about or that don’t belong on your credit report. You have the right to challenge them and request they be removed.

Tip: Go through your credit report each year— and be thorough. Even a few inconsistencies can add up quickly and could be the difference between a red flag and a green light for funding.

5. Use existing accounts strategically

Impacts: Credit Mix (10%), Credit Utilization (30%), Credit History (15%)

Using dormant lines (like a personal line of credit or store card) can show active, responsible credit behavior—without opening new accounts.

Your credit history is an average of all your open and active credit accounts. A good credit history with credit—any credit—can positively impact your score. If you have a line of credit that you've not used, consider paying expected expenses with it and then paying back the line of credit with the money you already put aside in your checking account to pay those bills.

Do: Make small, recurring charges on your older cards to keep them active

‍Don’t: Open a new card just to get a discount or points. It lowers the average age of your accounts and causes a hard inquiry.

6. Limit hard credit inquiries

Impacts: New Credit (10%)

Applying for multiple credit cards or loans in a short period can lower your score—especially if you’re already rebuilding.

If you're thinking about applying for a new card and maintaining a low balance, proceed with caution: you won't want to apply for a lot of new credit at the same time. The reason for this has to do with “credit inquiries” or "credit checks" (also called a "credit pull"), which is the term used when a lender, broker, partner, or vendor checks your credit score.

A “hard inquiry” is what you want to avoid when trying to rebuild credit because each one negatively impacts your credit score. The less credit you apply for, the fewer hard inquiries your credit score will show.

Tip: Be strategic. Rate shop within 14–45 days if applying for loans (FICO treats this as one inquiry). Otherwise, space out applications and avoid “just browsing” preapprovals that trigger hard pulls.

7. Avoid spending behavior that signals risk

Impacts: Lender perception and soft underwriting

Some lenders use algorithms that analyze changes in your spending behavior. Large purchases (weddings, legal fees), sudden drop in payments, or maxing out credit cards can be red flags even if you pay on time.

Tip: Keep consistent, modest usage. Avoid signalling financial instability when you’re rebuilding credit.

Key Takeaways: How to Improve Your Credit Score

Focus on what matters most. Your payment history and credit utilization make up 65% of your credit score—prioritize on-time payments and keeping balances low.
Start where you are. The lower your starting score, the more dramatic gains you may see early on. But everyone benefits from consistent credit-building habits over time.
Think in timelines, not overnight fixes. Small, strategic moves over 3, 6, and 12 months can lead to meaningful credit improvements—especially if you keep building on what’s working.
Stay consistent. Credit improvement is a marathon, not a sprint. Monitor your progress, avoid setbacks, and stay focused on long-term financial health.

How QuickBooks Capital helps small businesses manage cash flow and prepare for growth

July 31, 2025

3 min read

Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services. For more information about Intuit Payments' money transmission licenses, please visit https://www.intuit.com/legal/licenses/payment-licenses/

Running a business means constantly juggling priorities, and cash flow is always at the center of the equation. Whether it’s making payroll, covering vendor invoices, or seizing a new growth opportunity, your ability to see what’s coming (and act quickly) makes all the difference.

That’s where QuickBooks comes in. With the suite of QuickBooks Money tools, business owners can accept payments, pay bills, and access capital all in one place. This gives small business owners a real-time view of money in and money out. You can track every transaction, automate key workflows, and spot cash flow trends before they become problems.

But even with the clearest picture, some moments call for more than just good visibility. If you find your forecast unexpectedly short, or are presented with an opportunity for additional growth that requires unforeseen expense, QuickBooks Capital can help. With QuickBooks Capital, you have fast, flexible access to funding options, right from the platform you already use to run your business.¹

Tracking what matters: Money in, money out, and what’s next

Managing cash flow isn’t just about tracking dollars. At its core, it comes down to three components:

Money coming in (revenue, payments received)
Money going out (expenses, bills, payroll)
Timing (when those inflows and outflows hit your accounts)

It’s not enough to know how much money you made last month. You need to know if your upcoming bills will outpace your receivables. That’s where many small businesses get stuck: juggling different systems, manual spreadsheets, and late payment surprises.

The QuickBooks Money portfolio simplifies this. It brings together tools to support processing money coming in, money going out, and funding opportunities to help you fill gaps and fund growth with flexible financing.

By centralizing the tools that drive cash in and cash out, QuickBooks gives you a living, breathing picture of your cash position and helps you automate cash flow forecasts, so you have financial clarity, and you can plan for what’s ahead.

QuickBooks Capital: Funding that fits your flow

Traditional business loans take time—often weeks—and demand piles of paperwork: income statements, balance sheets, cash flow projections, bank records, and more. And even after all of that, approval isn’t guaranteed.

QuickBooks Capital flips that model. Because your financial data already lives in QuickBooks, your business performance speaks for itself. There’s no need to dig up documents or guess what a lender might want to see.

Apply directly through QuickBooks. No need to visit another portal and start from scratch with paperwork.
Get a decision in as little as 30 seconds, instead of waiting 30 days.
Access a Term Loan or Line of Credit, and get quick funding when you need it.
Repay on predictable, fixed terms, with no origination fees.
Receive funds in 1-2 business days², so you can move quickly and confidently.

Whether you’re bridging a short-term cash flow dip or making a bold move to grow, QuickBooks Capital enables you to make fast, confident decisions without slowing down your business.

Plan ahead with confidence

When your finances live in QuickBooks, you don’t just see where you’ve been. You can spot what’s coming. With built-in forecasting tools and real-time insights into cash flow, you can identify slowdowns before they impact your business, and act fast to stay ahead.

QuickBooks Capital makes it easy to turn foresight into action. Use your funding to:

Smooth over slow months without skipping a beat
Purchase inventory ahead of demand, so you’re always stocked and ready
Hire or scale at the right moment, not just when cash allows

Your financial data isn’t just for reporting, it’s a launchpad for your next move—whether that’s staying steady or stepping into something bigger.

The bottom line

Cash flow clarity is powerful—but when you combine that with fast, flexible capital access, your business has the tools it needs to succeed. With QuickBooks Capital, you can move quickly, invest wisely, and grow on your terms, without jumping through hoops.

Explore QuickBooks Capital and get the confidence and capital you need to take your next step.

¹QuickBooks Term Loan and QuickBooks Line of Credit loans are issued by WebBank.

²Funding times may vary depending on third-party processing times.

Advertising Disclosure: Lendio may provide compensation to the entity who referred you for financing products and services listed on our site. This compensation may impact how and where certain products and services are offered to you. We may not list all financing products and services available to you. The information provided by Lendio is intended for general informational purposes only and should not be construed as professional tax advice. Lendio is not a tax preparer, law firm, accountant, or financial advisor. Lendio makes no guarantees as to the completeness, accuracy, or reliability of the information provided. We strongly recommend that you consult with a qualified tax professional before making any decisions. Reliance on any information provided by Lendio is solely at your own risk, and Lendio is not liable for any damages that may result from the use or reliance on the information provided.

3 layers of financial preparedness for small businesses

July 30, 2025

4 min read

Presented by QuickBooks Capital

This article is presented in partnership with QuickBooks Capital, helping small businesses access flexible financing when it’s needed most.

‍

Every business has its version of a rainy day. An unexpected expense, a delayed customer payment, or a slow sales month that throws you off your rhythm.

These moments don’t always spell disaster, but they can create serious cash flow strain—especially if you’re unprepared. That’s why building a business safety net is one of the smartest financial moves you can make.

Whether it’s a small emergency fund, access to flexible capital, or a combination of both, having backup resources on hand can help you weather the storm and keep your business moving forward.

1. Build a basic emergency fund.

Your first layer of protection is straightforward: an emergency savings account dedicated to your business.

Many business owners skip this step because their margins are thin. But that’s exactly why it matters. By treating savings like a recurring expense—just like rent or payroll—you can gradually build a cushion that helps you stay afloat when things don’t go as planned.

A good rule of thumb? Aim to set aside three to six months’ worth of operating expenses. That might sound ambitious, but you don’t need to get there overnight. Start small and build consistently.

Your emergency fund can cover:

Unexpected equipment repairs
Delays in customer payments
Temporary dips in sales
Even growth opportunities—like a chance to buy discounted inventory or expand your space

If you’re using QuickBooks Online, you can monitor income, expenses, and trends to help determine how much to save each month. Then, you can set a recurring transfer to automate your contributions.

2. Secure a business line of credit

Think of a business line of credit as your second layer of defense—funding that’s there when you need it, and invisible when you don’t.

Unlike a traditional term loan, a line of credit (LOC) gives you access to a set amount of capital that you can draw from at any time, and you only pay interest on what you use.

It’s ideal for:

Covering delayed receivables
Managing unexpected costs like repairs or supply chain delays
Taking advantage of time-sensitive growth opportunities

3. Have a plan for when you don’t have a cushion.

Not every business has the luxury of a fully stocked emergency fund or a pre-approved line of credit. That doesn’t mean you’re out of options—it just means you need a plan.

If an unexpected expense hits and you don’t have cash on hand, here’s what to do:

Assess the urgency: Is it something that needs to be handled today, or can it wait 30 days while you adjust?
Revisit your cash flow forecast: Look for slow-paying invoices, unnecessary spending, or opportunities to shift resources.

Explore financing options: You may still qualify for a line of credit or a term loan based on your business performance—even if you haven’t saved up.

Having a plan—even if it includes financing—is better than being caught off guard. Smart business owners know that preparation doesn’t mean perfection. It means thinking ahead.

Be prepared, not panicked.

Rainy days in business are inevitable—but stress doesn’t have to be.

By building a financial safety net with three simple layers—emergency savings, access to flexible credit, and a clear plan for when funds run low—you give your business the resilience to face challenges and pursue opportunities without hesitation.

Whether you’re just getting started or ready to strengthen your current financial strategy, the best time to prepare is now.

Want to add flexibility to your safety net? Term loans and lines of credit are offered through QuickBooks Capital to their customers using the data they already input. These solutions can be quicker and easier to apply for than a financing option from a standalone funder.

QuickBooks Term Loan and QuickBooks Line of Credit loans are issued by WebBank.

¹Subject to eligibility. QuickBooks Online subscription required.

SBA grant guide: Funding opportunities for small businesses

July 23, 2025

5 min read

If you’re a small business owner looking for funding that you don’t have to repay later, you might be wondering whether SBA grants are the answer. While most entrepreneurs are familiar with SBA loans, not everyone knows that the U.S. Small Business Administration also offers grants to small businesses. Yet although SBA grants represent an attractive source of business funding, these federal grant opportunities are often difficult to access due to competition and strict eligibility requirements.

This guide breaks down how SBA grants work, who qualifies, and the top funding programs currently available. You’ll also find guidance on how to apply, additional funding options if you don’t qualify, and answers to some of the most frequently asked questions about federal small business grants.

What is an SBA Grant?

An SBA grant is a type of federal funding that’s available through the U.S. Small Business Administration. Unlike SBA loans—which lenders issue and businesses must pay back over time with interest—you don’t have to repay SBA grant funds. However, SBA grants are less flexible than loans and are only available to eligible organizations that must use the funds for specific projects which align with the SBA’s mission.

In general, SBA grants don’t fund general business expenses or startups. The typical purpose of these grants is to support organizations and programs that help small businesses thrive—such as educational institutions, nonprofits, community organizations, and scientific research and development efforts.

Who is eligible for SBA grants?

SBA grants aren’t available to most individual business owners. Eligible grant applicants usually include:

Nonprofit organizations
Universities and colleges
SBA resource partners (like SCORE and Small Business Development Centers)
Community-based organizations supporting underserved business owners
Small businesses conducting qualified scientific or technical R&D

Of course, each grant features its own eligibility rules. To qualify, your organization must meet specific requirements that may include the community your business serves, your mission, the proposed project, etc.

Types of SBA Grants

Although the SBA doesn’t offer grants for general business operations, the federal agency does offer support through a variety of specialized grant programs to promote innovation, manufacturing, and entrepreneurship for eligible small businesses and organizations throughout the United States. Below are some of the key SBA grant opportunities available at this time.

1. Manufacturing grants

Empower to Grow (E2G) Manufacturing in America Grant

As part of the new (as of April 2025) Made in America Manufacturing Initiative, this new grant provides funding support for small manufacturing businesses and nonprofit organizations. Eligible recipients can receive up to $1.1 million for technical assistance and workforce development in key industries like steel, timber, aluminum, and energy.

2. Research and development grants

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs

These highly competitive federal grant programs fund small businesses in technology and scientific research and development (R&D)—provided those companies show strong potential for commercialization. They’re ideal for startups and tech firms that are developing innovative products and services. The SBA distributes these grants, alongside 11 federal agencies, and invests around $4 billion per year.

3. Grants for community organizations supporting small business

The SBA offers grant funding to mission-driven organizations so they can provide education, training, and other resources to small business owners, especially underserved groups. Below are some examples of SBA grants for community organizations.

Organizations supporting veteran-owned businesses

Boots to Business (B2B): Boots to Business is a free entrepreneurial training program for active duty service members, veterans, and military spouses. The program empowers eligible participants with skills and resources to start and manage successful businesses.
Service-Disabled Veteran Entrepreneurship Training Program (SDVETP): Veterans who are injured in the line of duty have access to several SBA resources to support startups and existing businesses. The SDVETP program features training programs for entrepreneurs through Oklahoma State University, St. Joseph’s University, Warrior Rising, and the Veteran Entrepreneurial Training & Resource Network.
Veterans Business Outreach Centers (VBOC): The VBOC offers no-cost entrepreneurial development services to eligible service members, veterans, military spouses, and family members who want to start or grow a small business. There are 31 locations nationwide that provide free business development services to eligible participants.
Veteran Federal Procurement Entrepreneur Training Program (VFPETP): This training program teaches eligible veterans how to secure and manage federal job contracts. Since 2010, graduates of the program have received over $41 billion dollars in federal prime contract awards.
Women Veteran Entrepreneurship Training Program (WVETP): Women veterans and service members have access to targeted entrepreneurship training programs through institutions like Syracuse University, Utah Veteran Business Resource Center, and ONABEN.

4. Grants for organizations supporting innovation

Federal and State Technology (FAST) Program: The FAST Program provides funding to groups that support small businesses in the scientific and technological R&D space that are applying for federal innovation grants (like SBIR and STTR). FAST grants may help with proposal preparation, team development, and the eventual commercialization of new technology.

5. SBA resource partner grants

The following grants fund SBA-backed organizations that support entrepreneurs.

SCORE: SCORE is a non-profit organization that receives funding from the SBA and offers free mentoring and business education to small businesses. Current recipients of the SBA SCORE Award can apply for this grant opportunity. For-profit businesses are ineligible.
Small Business Development Centers (SBDCs): Specific funding is available for SBDCs in Northeast California and Pennsylvania to help fill critical vacancies in those areas.
Portable Assistance Program: Funding is available for regions facing economic hardship due to a business or government facility closing or downsizing. The goal of this grant is to encourage small business success through technical assistance supporting job creation, employee retention, access to capital, etc.

6. Program for Investors in Microentrepreneurs (PRIME)

The PRIME program is a competitive federal grant for eligible low-income nonprofit organizations and microenterprises (typically with fewer than five employees). PRIME grant recipients are often microenterprise development organizations (MDOs) and similar organizations that use the funds to provide training and technical support to other small businesses—including low-income entrepreneurs who lack access to conventional loans, equity, and other banking services.

How to apply for an SBA grant

Applying for an SBA grant takes time and planning. If you believe your small business or nonprofit organization may be eligible for an SBA grant, here’s a step-by-step guide to help you start the process.

Search for grants. Visit SBA.gov and Grants.gov to look for active opportunities that seem like a good fit for your business or organization.
Review eligibility criteria. Make sure your organization qualifies before you spend time filling out an SBA grant application.
Register your organization. Typically you need to register your business with the federal government (SAM.gov) to apply for federal grants.
Complete the grant application. Applications often require a detailed project proposal, business plan, budget, and supporting documentation. Follow the instructions and be sure to submit a complete application without skipping any steps.
Meet the application deadline. Submit your grant application before the deadline since late or incomplete applications are typically disqualified.

SBA grants are highly competitive. So, it may be wise to consult with grant writing experts or review previously funded proposals for additional insight if possible.

Additional resources for small business funding

If your business isn’t eligible for an SBA grant, or if you’re looking for faster, more flexible funding, there are alternative options to explore. Below are several additional business funding resources to consider.

Non-grant SBA funding opportunities

SBA Microloans: Borrow up to $50,000 for working capital, inventory, equipment, and other eligible business expenses.
SBA 7(a) Loans: Receive up to $5 million for real estate, working capital, furniture, and business supplies.
SBA 504 Loans: Borrow up to $5 million for fixed assets like land and buildings. (Up to $5.5 million is available for eligible energy projects.)

Other business funding opportunities

Minority small business grants: Minority entrepreneurs, who often face additional barriers, can apply for grant opportunities for startups and existing businesses.
Women-owned business grants: Small business grants for women offer funding to help start or grow women-owned businesses—companies that often receive far less access to capital compared to male-owned enterprises.
Online business loans: These flexible funding solutions provide capital for startups and established businesses to support a wide variety of business financing needs.

Final thoughts

SBA grants offer key support for nonprofits, educators, researchers, and community partners who help America’s small businesses succeed. These federal grant programs can be a powerful tool for driving innovation and expanding entrepreneurship throughout the country.

If your business doesn’t qualify for this type of funding, don’t be discouraged. There are many other funding paths to explore. You can research other business grants or financing options to help launch or expand your business. The right capital at the right time can make all the difference in growing your business sustainably both now and in the years to come.

Are Business Loans Tax Deductible? Small Business Financing for Tax Season

March 12, 2025

6 min read

Understanding how small business financing impacts tax strategy and preparation is essential for business owners and financial managers seeking to optimize their tax strategy and improve financial planning. Business loans play a critical role in supporting small businesses by providing the necessary capital, but the associated tax implications can be complex.

Some of that complexity comes from different loan product types that a small business may obtain, and whether interest or payments can be deducted from taxes. In this article, we'll cover common business loan types and their tax implications, the criteria for claiming interest tax deductions, business loan payment deductions, and common mistakes to avoid when filing your taxes.

Are business loans taxable?

Business loans are not considered taxable income, because they represent borrowed funds that the business is obligated to repay. When a business receives a loan, the principal of the loan does not count as income for tax purposes, since the amount received isn't earned -- it's borrowed.

However, while the principal is not taxable, the interest paid on the loan might be eligible for tax deductions. Small businesses often deduct interest paid on a loan as a business expense, as long as criteria are met, which we will cover in section 2. By deducting interest payments, businesses can reduce their taxable income, lowering the tax burden.

What types of business financing are considered taxable?

There are situations where business financing becomes taxable income. For example, if a lender forgives or cancels a loan, the amount forgiven could be considered taxable income for the business. A recent example is Paycheck Protection Program (PPP) loans issued during the COVID-19 pandemic.

Many businesses applied for and received loan forgiveness for their PPP loans, becoming eligible to exclude the amount forgiven from taxable income. However, the IRS found recurrent instances where PPP loans were improperly forgiven, because the applicant did not meet the criteria for forgiveness through misrepresentation or omission. Businesses that were found to have improperly forgiven PPP loans were instructed to include the amount forgiven in their income and pay any additional income tax assessed.

Another situation where financing might be considered taxable is if it is used for non-business purposes. In this case, any interest paid on the loan would not be tax deductible and could be subject to taxes. These situations underscore why it is important for businesses to carefully consider tax implications when seeking financing, and ensure they are using funds appropriately, and in line with requirements set by lenders or government programs.

When in doubt, a professional tax filing service can be a big help. Lendio is proud to partner with Taxfyle, a real-time tax filing app that helps small businesses file taxes with the help of a dedicated CPA or EA professional.

Common business loan types and their taxability

Small businesses can find a wealth of loan types to increase their working capital and invest in growing their business. That's why it's essential to understand how each can impact your taxes and overall financial strategy. Below are some common types of small business financing, and considerations for their tax implications.

Business Term Loan

Business term loans are a lump-sum financing payment for small businesses that usually come with a fixed interest rate and repayment schedule over an agreed term. The interest paid on these loans is usually deductible as a business expense, reducing taxable income.

Business Line of Credit

Business lines of credit provide flexible access to capital. Small businesses can borrow as needed, up to a negotiated limit, and interest is paid only on what amount is used. The interest on the amount withdrawn is often deductible, provided it is used for legitimate business purposes.

Equipment Financing

Equipment financing is tied specifically to purchasing or leasing equipment, and the tax implications are two-fold. Both interest paid on the financing and depreciation of the asset may offer tax deductions to the business.

Revenue-Based Financing (BCA/ MCA)

Revenue-based financing, or cash advance, is a more unique form of financing, in that repayment is linked to future sales. Because of this model, these are not technically loans, and the associated fees may not qualify for interest deductions on taxes.

SBA Loans

Small Business Administration (SBA) loans provide favorable terms and low interest rates to borrowers, and these interest payments are generally deductible.

Deducting business loan interest: what's eligible?

An interest tax deduction is a valuable tool for small businesses looking to reduce taxable income. To claim these deductions, it is essential to first understand the criteria set by the IRS.

Conditions for interest payment deductibility

Small businesses can generally deduct some or all of the interest paid or accrued during a tax year on loans. However, you can only deduct the interest if you meet the following criteria:

You are legally liable for the debt
Both you and the lender intend the debt to be repaid
You and the lender have a true debtor-creditor relationship

If you have received business financing and are using it for business-related expenses or purposes, this is fairly straightforward. There are some exceptions where deductibility is concerned to be aware of.

Exceptions to interest deductibility

Gross Receipts over $29 million

The IRS provides a small business exemption for businesses with average annual gross receipts of $29 million or less over the past three years. If a business has more than $29 million in gross receipts, they may be limited on how many interest deductions they can claim. Form 8990 will help you determine if you must limit your business interest expense deductions and whether your business qualifies to elect out.

Part-Business, Part-Personal Loans

In some cases, a loan may be for both business and personal reasons. A common example is a car loan. If you use the car for business purposes and personal purposes, you can only deduct the interest on the percentage of business use for the car, not on the entire interest of the loan for the year.

Tracking and documenting business financing for taxes

Accurate tracking and documentation of business financing is important for small businesses to maintain, in order to optimize tax deductions and ensure compliance with the IRS. Record-keeping involves maintaining detailed accounts of all loan-related transactions, including:

Original loan agreement
Interest payment records
Correspondence with lenders
Repayment schedules
Use of borrowed funds

By keeping these records organized and frequently updated, small businesses work toward managing business taxes well, and substantiate any deduction claims when filing their taxes. It also allows financial planning to maximize the potential for interest and payment deductions, as well as mitigate risks.

Expert tips for optimizing tax efficiency

Tax efficiency should be a goal of small businesses, especially during seasons when margins can be tight. Here are some tips to help you navigate some common financing-related tax mistakes that can affect your financial statements, and make tax season a real headache.

Common Mistakes to Avoid

1. Misclassifying Expenses

A common mistake small businesses make when filing their taxes is mislabelling expenses, or categorizing them incorrectly. This can cause inaccurate financial records, and potentially disallow tax deductions that could reduce tax burden. The most common misclassification is classifying a personal expense as a business expense. Doing this can cause issues and potential penalties during an IRS audit.

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Tip: Keep careful records with clear classification of expenses using accounting software or a dedicated financial professional. This will make reducing tax errors easier, and also give you more accurate insights into your operational costs and overall financial health.

2. Not reconciling loan interest correctly

As a practice, small businesses should keep careful records of each interest payment associated with a loan. When records aren’t properly updated or kept, discrepancies may appear on financial statements and in your tax filing, resulting in missing out on eligible deductions or even overpayment. Mismatched records may also be flagged during an IRS audit.

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Tip: Regularly update and review your financial records, particularly where loan interest payments are concerned. This provides clear visibility both for your business, and the IRS.

3. Reporting loan forgiveness incorrectly

If your business receives loan forgiveness, it is important to assess whether it needs to be reported as taxable income. Failing to do this can lead to serious tax implications, including penalties and interest owed. The PPP loan example above is a cautionary tale. Most cases of debt forgiveness or cancellation require you to include the cancelled amount in income, with some exceptions like bankruptcy or insolvency. IRS Publication 4681 offers guidance on canceled debts and exceptions.

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Tip: Maintain accurate financial records and any correspondence or documents provided by the lender forgiving or cancelling the debt. Consult with a tax professional to determine if your forgiven loan should be reported as taxable income, and ensure compliance with IRS regulations.

Should you work with a tax professional?

Navigating business loan tax implications can be daunting for even the most experienced business owner. A tax professional can be an invaluable resource in optimizing your financial strategies, while ensuring you remain in compliance with IRS regulations.

But keeping a dedicated finance professional on the payroll can be a tough order for small businesses. That’s why services like Taxfyle, Lendio’s trusted partner, can help small business owners immensely navigate tax filing, especially where business financing comes into play.

Taxfyle connects you to a licensed CPA or EA who will prepare and file your business tax return for you, looking for maximum eligible deductions, qualifying credits and filing with accuracy.

If you’re concerned about the state of your books, Taxfyle’s cleanup bookkeeping will organize your records, fix errors, and get your finances tax-ready before it’s time to file.

Want to learn more about Taxfyle? Visit www.taxfyle.com for more information. Lendio customers can get a discount on business tax filing services. Click here to get your code for 10% off!

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Disclaimer:The information provided is for general informational purposes only and should not be construed as financial, tax, or legal advice. Lendio is not a financial institution, lender, or tax advisory firm, and we do not provide tax preparation or professional financial guidance.Our products may help individuals and businesses access financing solutions that can assist with tax-related obligations; however, it is the responsibility of each individual or business to consult with a qualified tax professional or financial advisor to assess their specific tax liabilities and financial needs.Lendio makes no representations, warranties, or guarantees regarding eligibility for financing, tax benefits, or compliance with any tax laws. Loan approvals and terms are subject to lender qualifications, underwriting, and applicable laws. Always seek independent advice before making financial or tax-related decisions.California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans are made through Lendio Partners, LLC, a wholly-owned subsidiary of Lendio, Inc. and a licensed finance lender/broker, California Finance Lenders License No. 60DBO-44694.

Can you get a business loan to pay taxes?

March 12, 2025

4 min read

You might be worried your small business may face a huge tax bill, or perhaps you’ve received one already. Either way, if you feel you’re unable to pay your tax bill in full, there are options available to help you manage your tax debt and avoid high-interest penalties. Whether you explore an IRS payment plan, or seek a business loan to cover your tax debt, we’ll discuss your options in this article.

The tax dilemma for small business owners

Approaching tax debt can cause a dilemma for small business finances. On one hand, business owners want to keep their tax bill payments as low as possible to maximize profits, maintain cash flow, and keep growing their business. On the other hand, SMBs also need to ensure they pay off their tax debt quickly to avoid potential penalties from the IRS.

Tax payment options for small businesses

There are a few options to keep in mind when deciding how to pay your tax debt to the IRS. You can opt for an Installment Payment Agreement (IPA) with the IRS. Another option is an Offer in Compromise (OIC) with the IRS, if your business qualifies for the program. A third option is seeking a business loan to cover your tax debt.

IRS payment plan

Most business taxpayers can obtain a long-term payment plan (or installment agreement) from the IRS, as long as they have a total balance less than $25,000 in combined tax, penalties and interest from the current and preceding tax year. With a payment plan, business owners can make monthly payments for up to 24 months on their tax debt.

Even if you have a payment plan, The IRS assesses interest every day that your payment is overdue. The 2025 rate for underpayment is 7 percent. Since interest compounds daily on IRS payment plans, you could pay much more than you originally owed.

Pros and cons of an IRS payment plan

Pros of an IRS payment plan	Cons of an IRS payment plan
Choose your monthly payment amount	Interest and penalties continue to accumulate
72-84 months to repay your balance	You must pay enrollment fees
Smaller penalties assessed	Does not stop the IRS from filing a federal tax lien on your assets

Offer in compromise

An offer in compromise is a program offered by the IRS to allow eligible individuals to settle their tax debt for less than the full amount owed. An offer in compromise is most often used when businesses cannot pay their full tax debt, or paying the full debt creates financial hardship.

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Eligibility requirements for an offer in compromise include:

You’ve filed all required tax returns and made all required estimated payments.
You aren’t in an open bankruptcy proceeding.
You have a valid extension for a current year return, if you’re applying for the current year.
You are an employer and made tax deposits for the current and past 2 quarters.

An offer in compromise application is more likely to be approved when small business owners offer the most the IRS can expect to collect within a reasonable period of time.

Obtaining a business loan for tax payment

A business loan can be a good choice for small business owners facing significant tax payments. While IRS payment plans have pre-set terms, business loans can offer greater flexibility in terms of a repayment schedule. For industries with irregular income streams, a business loan could also allow owners to align the repayment schedule with their cash flow cycles.

When is a business loan better than an IRS payment plan for paying tax debt?

For business owners with strong credit scores, a business loan might offer more favorable terms, such as lower interest rates compared to IRS underpayment penalties and interest rates. Many business loans can also provide immediate access to capital with a lump-sum payment, allowing businesses to take care of their tax obligations promptly, and potentially use additional funds for working capital and other business needs.

Best business loans to pay taxes

When business owners face the burden of paying taxes, assessing the best business loans for the task and their business profile is important. Factors to consider when borrowing are favorable interest rates and flexible repayment schedules, so that businesses can pay off their liability without straining cash flow.

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The length of the application process and approval process with each lender may be especially important too, especially with tax deadlines looming. Before applying for a loan, assess your financing needs, your businesses’ financial health, and IRS requirements for your repayment to determine the right loan option for you.

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Here are some loan options and financing structures that can help you tackle IRS debt repayment while freeing up working capital for your business. The terms and repayment options vary for each type of loan or financing.

Financing Type	How It Works	Time to Funds*
Business Term Loan	Receive a lump sum of financing to be repaid over a set term on a predictable payment schedule.	As soon as 24 hours
Business Line of Credit	Receive a line of credit with a set credit limit, and only pay interest on the amount of funds you use.	1-2 business days
Invoice Factoring	Sell your outstanding invoices to a third-party company in exchange for funds up front.	As soon as 24 hours