The SBA 7(a) loan is one of the best financing options for small businesses, offering long terms, low interest rates, and high approval odds compared to conventional bank loans.
However, not all 7(a) loans are the same.
Credit Based SBA
This more streamlined SBA loan option prioritizes personal credit over business cash flow.
01
Easier to Qualify If your business doesn’t show strong profits on tax returns, this program focuses more on your personal credit score than cash flow.
02
Faster Approval Because there’s no need for detailed cash flow analysis, lenders can process Credit Based SBA loans faster than traditional 7(a) loans.
03
Perfect for Growth-Focused Businesses Many businesses reinvest profits into growth, which can show little to no net income on tax returns. Credit Based SBA understands that profitability on paper doesn’t always reflect a healthy business.
04
More Flexible Underwriting Traditional 7(a) loans require debt service coverage ratios, profitability, and financial projections to prove repayment ability. Credit Based SBA simplifies the process by basing approval on your creditworthiness and revenue consistency.
Traditional 7(a)
This type of loan requires a full cash flow analysis, meaning the lender will closely examine your business’s profitability, debt coverage ratio, and financial statements.
01
Larger Loan Amounts Traditional 7(a) loans go up to $5 million, whereas Credit Based typically maxes out around $300K - $350K.
02
Lower Interest Rate Because traditional 7(a) loans are fully underwritten with cash flow analysis, they come with a slightly lower interest rate (WSJ Prime + 2.75%).
03
Better for Highly Profitable Businesses If your business consistently shows strong profitability on tax returns, you could qualify for better terms with a traditional 7(a).
Irving Fund is not a bank or an authorized SBA vendor. We partner with a number of banks to facilitate SBA financing for our clients. Irving Fund does not perform a hard credit pull at any point in our process, for SBA LOANS a hard pull may be required at the time of funding. You will be notified in advance of this taking place. Rates shown vary based on product, credit determination, state law/minimum loan amounts and lender criteria. Not all applicants will qualify for financing, all loans are subject to credit review and lender approval. We provide business financing through a network of third-party banks and funding providers.
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