Borrowers with student debt can still qualify for a small-business loan

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Student loan debt can impact your credit score and debt-to-income ratio — two components lenders use to evaluate a borrower’s risk of defaulting.

“Many times, I would say half of our loans — more than that — have student debt,” says David Canet, managing director of the SBA Lending Group at ConnectOne Bank.

to show that you’ve put thought into your personal financial obligations, like student loan payments, in addition to business ones.“[Lenders are] not probably reacting much to all the news about debt cancellation and stuff like that, just because it’s so complicated,” says Carolyn Katz, a SCORE mentor who helps small-business owners apply for loans. “For them to figure out who might get which amounts of debt canceled at what point is probably above their pay grade.

Similarly, Canet says he considers the applicant’s effort, commitment and dedication on top of their finances. With any loan offer, Elliott says to “take the time to assess, ‘Can I afford to make this payment and do what I need to do with the money that’s being lent?’”“It is as important to be ready to apply as it is important to select the right product,” says Martinez.

 

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