When you apply for an SBA loan one crucial aspect that SBA lenders consider is your SBSS Score which is commonly referred to as the ETRAN score. This score specifically evaluates the likelihood of a borrower defaulting on an SBA guaranteed loan. So what is the ETRAN system. How is the SBSS Score calculated. How does my ETRAN/SBSS score affect your approval chances?
What is the ETRAN System?
The ETRAN system is the SBA’s loan submission and management system used by Lenders to assess a small business borrower's creditworthiness and receive a SBSS score ranging from 0, to 300. A lower score indicates a perceived risk of defaulting on the loan.
SBSS scores utilize a model to compare attributes of borrowers with past SBA loans and their payment histories. This enables the system to gauge default risk by benchmarking borrowers against others.Â
The FICO SBSS is a type of credit score that is a blend of business and personal credit.
The key factors considered when calculating the score include the following:
- Personal/business credit score
- Assets and Liabilities of a business
- Time in business
- Any liens and judgements against the business
Only lenders who are FICO customers can access this business credit report. The scoring model used in SBSS draws on information from Experian, Dun & Bradstreet, and Equifax.
The Significance of the ETRAN Score
For 7(a) and 504 SBA loans it is advisable to have an ETRAN (SBSS) score higher than 140 in order to increase approval chances. Borrowers with scores below 139 will not be approvable for an SBA 7(a) loan. The higher your ETRAN (SBSS) score is, indicates to lenders a higher unlikelihood that your business will pose a risk of default. This boosts their confidence in granting your business financing. The lower your ETRAN score, the higher likelihood of an SBA lender declining your business for an SBA loan.
Make sure to check your ETRAN score so that you have time to improve it if necessary. By taking some steps you can present yourself in the possible light. Additionally, by collaborating with FastwaySBA, we can offer guidance in creating the most robust loan application.
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How Can I Improve My ETRAN Score?
The quickest and easiest way to increase your ETRAN score is to increase the personal FICO score for each business owner of 20% or more of the business. The quickest way to accomplish this is to pay down balances of personal revolving credit lines, such as credit cards. Also, by satisfying reasons for any key derogatory marks, such as collections.
Business/Personal Tax Liabilities should be satisfied to garner a more favorable ETRAN score.Â
Different Banks Require Different Minimum ETRAN Scores
The SBA issues an ETRAN score for small businesses, but banks have their own minimum allowable ETRAN score. For example one bank may have a required minimum ETRAN (SBSS) of 150, while another may have a 170 minimum.
Do I need to officially apply for an SBA loan to receive an ETRAN Score?
To see your SBSS Score you do not need to officially place an application with the SBA. By working with FastWaySBA, your ETRAN (SBSS) Score is verified prior to initial underwriting. This ensures time-efficiency and sets expectations on the loan process.
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