It can be challenging to qualify for a Small Business Administration (SBA) loan if you have outstanding tax liens or judgments, as most traditional SBA lenders won’t approve applications with these on record. However, there are rare cases where an SBA lender may accept your loan application despite having tax issues in the past. It is important to note that you will likely pay more for the loan than someone without a history of unpaid taxes.
Please read our article about SBA Loan Status Disbursed Current. Additionally, learn more about Bankruptcy Clear SBA Loans!
Can You Get an SBA Loan If You Owe Taxes?
Usually, you can not get an SBA loan if you owe taxes from traditional lenders. However, some SBA lenders will provide you with an SBA loan with a clause to pay first tax with that money and then spend money for your business.
Let us see a practical example:
Here are the steps you can follow to get an SBA Loan with a tax lien or judgment through the Hybridge SBA Loan Program at National Business Capital:
- Contact National Business Capital: The first step is to contact National Business Capital to determine if you qualify for the Hybridge SBA Loan Program. You can contact them via phone, email, or online application form.
- Submit Required Information: Once contacted, you’ll need to provide the necessary information and documentation, including your credit history, business financial statements, and any details about the tax lien or judgment. National Business Capital will use this information to assess your eligibility and determine the loan amount for which you qualify.
- Work with a Hybridge Specialist: If you qualify for the Hybridge SBA Loan Program, you’ll be assigned a Hybridge specialist to guide you. They’ll help you complete the necessary forms and paperwork and answer any questions.
- Use Loan Proceeds to Pay Off Tax Lien/Judgement: Once your loan is approved, you can use the funds to pay off your tax lien and judgment. This will help you resolve outstanding tax issues and improve your financial standing.
- Make Loan Payments: After the tax lien and judgment are paid off, you’ll need to make monthly loan payments according to the terms of your loan agreement. Making these payments on time is essential to maintaining good credit standing.
- Continue to Grow Your Business: With your tax issues resolved, you can focus on growing your business and achieving your goals. National Business Capital provides ongoing support and resources to help you succeed.
The best way to resolve this issue is to pay any outstanding tax debts in full before applying for a business loan. Doing so shows that you are financially responsible and willing to take responsibility for any debt incurred in the past. It also shows potential lenders that you are serious about managing your business and its finances responsibly in the future.
If you do not have the funds available to settle your tax debt, options may still be available depending on the amount and length of time it has been outstanding. In some cases, taxpayers may be able to negotiate a payment plan or penalty abatement with the government agency responsible for collecting their taxes. Additionally, if the debt is ancient, it might be possible to forgive it under certain circumstances; however, this isn’t always guaranteed and could require extensive paperwork and negotiation with the relevant agency involved.
No matter what option you pursue when dealing with tax debt, it would help if you prepared before an attempt to get approved for an SBA loan. Ensure all necessary documents are easily accessible when meeting with potential lenders, and thoroughly explain anything related to your tax debt to give them a complete understanding of the situation before deciding whether they can provide financing. These make it easier for both sides to devise an arrangement that works well for everyone involved – including yourself!
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com