Will my tax debt affect my chances of getting a business loan?
By Roni Lynn Deutch •
Opinions expressed by Entrepreneur contributors are their own.
I owe about $6,500 to the IRS and unfortunately cannot make big monthly payments. How will this interfere with my chances of getting an SBA loan to start my business?Congratulations on being proactive on your quest to start your business and my deepest sympathies for your IRS tax debt. I completely understand how fulfilling it can be to be your own boss. After almost 20 years of helping clients resolve tax debts, I also understand the horror of being in debt to the IRS.
Will your tax debt hurt your chances of getting an SBA loan? The answer to that is: maybe. The Small Business Administration does not lend money directly. All lending is done through a bank or other financial institution through the SBA program. Thus all lending requirements are determined by the individual lender.
Generally, the loan officer will review your credit report to determine your eligibility for a loan. The big question is: Has your tax debt shown up on your credit report? If you have a lien filed against you, it will stay on your credit report for seven years. The only way to know if your credit has been negatively impacted is to keep a close eye on your credit report.
My recommendation is to get this tax debt resolved as soon as possible. You may be eligible for a Streamlined Installment Agreement, which is faster and easier to establish and often results in much smaller monthly payments.
Once you are on the road to resolution, you can show an SBA lender that while this debt occurred, you are taking the steps necessary to satisfy the debt.
