When you apply for an SBA loan one crucial aspect that lenders consider is your ETRAN score. This score specifically evaluates the likelihood of a borrower defaulting on an SBA guaranteed loan. So what is the ETRAN system. How does it affect your approval chances?
What is the ETRAN System?
The ETRAN system, which stands for Electronic Transfer Application Review System is a system used by the SBA to assess a borrowers creditworthiness and assign a score ranging from 0, to 100. A higher ETRAN score indicates a perceived risk of defaulting on the loan.
ETRAN utilizes 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. The key factors considered when calculating the score include personal/business credit scores, amount of owner equity invested, bankruptcy history, delinquencies and more.
The Significance of the ETRAN Score
For 7(a) and 504 SBA loans it is advisable to have an ETRAN score of 140 in order to increase approval chances. Borrowers with scores ranging from 120 to 139 may still be. Might have conditions or requirements imposed upon them. Applicants with scores, below 120 are unlikely to receive approval. Having a high ETRAN score indicates to lenders that you pose a risk of default. This boosts their confidence, in granting you business financing. That's why it's crucial to maintain a personal/business credit history provide equity and minimize instances of payment delays.
Make sure to check your ETRAN score on so that you have time to improve it if necessary. By taking some steps you can present yourself in the possible light. Additionally collaborating with a SBA lender can offer guidance in creating the most robust loan application.
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