An inquiry will appear only on the credit report accessed for the transaction and usually that’s one credit report from either Equifax, Experian or TransUnion.Applications for loans fall under the hard inquiry category, though some creditors do use soft credit pulls in the context of business credit applications. You see all inquiries on your reports, but lenders won’t see soft inquiries. An inquiry may be a “soft” inquiry which doesn’t impact your credit scores, or a “hard” inquiry which may.It does not state whether you were approved or denied for credit. An inquiry simply indicates that someone has checked your credit.Here’s a quick refresher on inquiries and how they impact your credit: If a lender checks credit for a PPP loan application, the lender’s name will be associated with the inquiry, not the SBA. Keep in mind that if the credit check appears on your credit reports from the SBA, it will be for an EIDL as those loans come directly from the SBA. But in that case, the lender could use a “soft” credit check which we discuss below. An increasing number of lenders are providing these loans to non-customers and will need to try to prevent fraud. It’s also possible they could check credit to verify an applicant’s identity. Generally lenders are allowed to add their own requirements to SBA loans as long as they don’t discriminate on a prohibited basis. However, several people in the Nav CARES Act Facebook Hub have reported their credit has been checked for PPP loans, or that they were denied for PPP based on credit. It does not appear most lenders are checking credit for these loans. However, when you think about the fact that PPP is designed primarily to be a loan that will be completely forgiven, it makes sense that good credit isn’t required.
In fact, 7(a) loans for $350,000 or less normally require the application to be prescreened using the FICO SBSS credit score, which can take into account both personal and business credit. That’s somewhat surprising because these loans technically fall under the SBA 7(a) loan program, which typically does require acceptable credit. There does not appear to be any credit check required for PPP loans. Note that even if you are turned down for an EIDL due to credit concerns, you can still keep any advance/grant of up to $10,000 you received. Credit checks are traditionally a way to spot borrowers who are more likely to default, and that’s true of disaster loans as well. The answer is fairly straightforward: if an SBA loan isn’t repaid, taxpayers are ultimately on the hook. One source of confusion seems to be why credit is checked for these loans, especially in a nationwide disaster like that caused by coronavirus.
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Nav brings your personal and business credit together in one FREE account so you can monitor your full credit picture. Business credit checks go through Dun & Bradstreet. The inquiry appears as “US SM BUS ADMIN ODA” on the credit report. Personal credit checks for these loans go through Experian, so it’s a good idea to review your Experian credit report. If you are applying for one of these loans it’s a good idea to review your credit reports so that you can prepare an explanation for any past credit problems to provide to your SBA case manager.
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There will be a personal credit check for all applicants, plus a business credit check for all applicants except sole proprietors for loan amounts above $200,000. EIDL Credit ChecksĪs we explained in our article, FAQs about EIDLs, acceptable credit is a requirement for these disaster loans. Here we explain what to expect from a credit check for these suddenly very popular loans. *You get free access to your business credit reports and scores when you sign up for a free Nav account. Stay up to date on when inquiries happen on your personal and business credit.
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