EIDL loans are important loans that are given to certain groups in designated and declared disaster areas. They are meant to help heal the economy of places where there has been high amounts of economic injury and help businesses and groups get back on their feet.
To get approved for an EIDL loan you must have a credit score of 570 or above to be considered eligible. With a credit score of 570, you can receive up to $500,000. With a credit score of 625, you can receive larger loans.
Although this is the basic answer to the question, there are other aspects about EIDL loans, requirements, credit information, and more that can be learned by reading on!
Minimum Credit Score For An EIDL Loan
As stated earlier, the minimum credit score that is accepted from applicants applying for an EIDL loan is 570. If you are approved with a credit score of 570, you can receive up to $500,000 in loan aid.
If your credit score is 625 or higher, you have a much greater chance of getting your application accepted and receiving a larger sum of money as your EIDL loan.
While a credit score of 570 is the minimum you can have when applying for an EIDL loan, the SBA (small business administration) often wants to see higher credit scores than 570. On average, the best credit score to have when applying for an SBA EIDL loan is 620 to 650.
Of course, the SBA would love to see scores higher than 650 as well, but the average is between 620 to 650.
It is important to note, however, that you can be approved for an SBA EIDL loan if you have a credit score on the lower end of the spectrum. 570 is a credit score that has and will continue to be approved for loans by the SBA.
Many other contributing factors help determine if your application for the EIDL loan is accepted by the SBA or not. The EIDL loan process is designed to make sure that small businesses and other groups can get the help that they need during economic crises.
If you do not qualify for the SBA EIDL loan because of your credit or for any other reason, you can also apply for the EIDL emergency grant, which is a much smaller sum of money but does not have to be repaid.
There are also several types of businesses that are not eligible to apply for EIDL loans. Businesses that are not able to apply for EIDL loans are groups engaged in illicit or illegal activities, multi sales distributions, investments, lending, loan packaging, gambling, and business is where the owner is on parole.
Businesses that are eligible for EIDL loans are Small independent businesses, many non-profit or private organizations, small agricultural groups or co-ops, and the other independent businesses located within a designated disaster area that have experienced a negative economic impact(s) from the disaster affects the ability to function.
The goal of these loans is to put small businesses back onto their feet and to help encourage economic growth after disasters as well as boost local economies.
What Are EIDL Loans?
EIDL loans are a type of loan given out by the Small Business Association (SBA) to help prevent economic crisis in places of disaster where the disaster has had negative impacts on local businesses.
EIDL loans are expected to be paid back to the SBA. EIDL loans are based on credit score as well as several other determining factors that are questioned in the application process. You may have an excellent credit score while applying for an EIDL learn, but if you are ineligible in other aspects of the application, you may not be accepted.
What Are The Requirements For An EIDL Loan?
The first requirement for an EIDL loan is that you must be a business that is recognized by the small business administration as a non-farm or a "private sector" business. ( Small-size agricultural cooperatives are recognized by the SBA.)
Secondly, the organization or business must have suffered serious economic injury as a result of the disaster in the local area. It is important to note that the SBA does not include physical damage as part of economic injury. Economic injury only refers to the business and financial aspects of the organization, not the physical building or location.
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EIDL Loan Terms
EIDL loans have specific terms that are important to know before you jump into them. Please refer to the table below to see information about EIDL loans.
|Maximum Loan Length
|Loan Intrest Rate
|4% or lower (cannot surpass 4% interest rate)
|$2,000,000 (two million USD)
|Varies and dependent on loan
|Varies and dependent on loan
|Maximum Loan Length
|Varies and dependent on loan
When it comes to applying for an EIDL loan, you need to know your credit score. However, it is not always your personal credit score that the Small Business Association is looking for. Just like you have a personal credit score and credit report based on your spending and credit payments, your business has a credit score and credit report.
The factors that affect your business's credit report and credit score are the amount of debt your business is in, how long your business has been in debt, (if it has debt,) if debts are consistently paid on time, and other questions of that nature.
The way that your business's credit report and credit score are calculated depends on the business credit bureau that you use for your business. The three biggest credit bureaus for businesses are Dun & Bradstreet, Experian, and Equifax. Each has its unique way of calculating credit scores.
You can get in touch with your credit bureau to find out how your business has credit score is calculated.
Businesses Without a Business Credit Bureau
However, the kicker is that many small businesses do not have a credit history that is solely for their business and separate from the business owner's credit score. In that case, when applying for small business financing, the majority of lenders will look at your personal credit score to decide if you are eligible for a loan and what your rates will be.
This means that you should be paying attention to your personal credit score if you do not have a business credit bureau for your business.
Of course, the higher your credit score oh, the higher the loan and receive can be. You will receive better offers with a higher score, and lower offers with a standard or subpar credit score.
several other factors can disqualify your EIDL loan from approval besides having a low credit score. In the next section, we will briefly look at some of the issues that can disqualify you.
Below we have reasons why an EIDL would be denied as well as reasons certain businesses do not qualify to receive loan aid.
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Why Would EIDL Be Denied?
Your business can be disqualified for the following reasons:
- More than 500 employees
- Owners who own less than 20%of the business
- Owners who are not United States citizens, non-citizen nationals, or qualified aliens
If the Small Business Association believes that you have not met any of these factors, they have the right to disqualify your application from the process. The factors above as well as poor credit and the factors in the following section, are all reasons why your application for an EIDL loan can be rejected.
However, just because you were rejected from a loan does not mean that you cannot apply for a grant.
What Can Disqualify You From EIDL Loan?
The Small Business Association also has the right to disqualify your application if your business is activity is not eligible or does not align with the SBA requirements. Certain businesses are not eligible for any Small Business Association lines. These businesses include the following types:
- Payday lenders
- Casinos and other gambling businesses
- Adult entertainment
- Insurance companies
- Real estate development companies
- Check-cashing businesses
- Any business engaging in activity illegal under local, state, or federal law
If you are the owner of a business in one of these departments, you can be disqualified.
Overall, your business's credit score is just one factor of many when you are applying for an EIDL loan. While it may not be the single determining factor if you get the loan or not, it is important to take care of your credit score so that you stand a better chance of being approved for a loan.
Whether your business has a business credit bureau credit score or is reliant on your credit score, is still your livelihood in your hands. Your credit score and the other eligibility factors determine your business' acceptance by the SBA.
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Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.