Will a Tax Lien Affect My SBA Loan Eligibility?

An SBA loan can really jumpstart your business, but will a tax lien affect my SBA loan eligibility? Learn about the process and the possible concerns along the way with this 2-part video series, or read the article.

Today I’m answering your question, “Will a tax lien affect my SBA loan eligibility?”

First of all, SBA is the acronym for Small Business Administration, a branch of the federal government. This branch of the government is mandated to create loans for businesses to assist and help them grow, expand and innovate new ideas.

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The SBA Loan Application Process

The SBA wants to loan money! However, they want to get paid back.

You should expect a lengthy investigation process. The SBA will take considerable time to review your application before they take any action.

The government will request great detail and they will check your credit scores and other records.

The SBA wants to lend money if you have reasonable credit. If you have paid off other installment loans, they will give you credit and determine you are creditworthy.

The SBA can check on your payments record, and they can easily check on property you have owned.

Will a Tax Lien On My Record Affect My SBA Loan Eligibility?

expired tax liensLet’s assume you have a good track record of back payments and payments of other bills have also been favorable.

Why do you have a tax lien on your property? Did you forget to pay it? Or is there a problem?

The SBA wants to lend you money. That’s their mission. They worry about whether you will pay them back.

It doesn’t look good if you are requesting money from one government agency, and you may not have paid another government agency. A red flag is waving in the face of the loan officer.

Will a Tax Lien Affect My SBA Loan Eligibility?

Paying the Tax Lien

In many instances, there is a good reason the tax lien is not paid. Expect that to be investigated. The good news is tax lien certificates are only 1% or 2% of the property value.

If you pay it, and there are no other blemishes or difficulties, your records will be in order. The loan officer will insist you pay off all tax lien certificates before they will fund a loan.

The problem for you is the SBA loan eligibility is evaluating your judgment and character as well as your ability to repay the loan.

rejected loan application

What is a Deal Breaker For My SBA Loan Eligibility?

Title records will show a tax lien that’s left unpaid.

If the loan officer sees that tax lien, you can be assured your application is not going to be processed further.

The unpaid tax lien certificate could be very costly. The fact that it is unpaid demonstrates poor management and uncreditworthy character.

Tax Liens and Tax Deeds

For the last 25 years, I’ve been investing in tax lien certificates and tax deeds properties. Prior to that, I was an investor in foreclosure real estate.

The tax lien certificate and tax defaulted property business opens the door to many bargains that are not available in other real estate. There are many reasons to be involved in tax lien certificates and tax deeds.

First of all, it’s steady, not boom bust. Secondly, it’s very predictable, and discounted properties have considerable upside.

tax defaulted property discounts

Will a Tax Lien Affect My SBA Loan Eligibility?


The margin between the auction purchase price could easily be 60%, 70%, or even 80% below the assessed value the tax collector has stated.

The mortgage loan is deleted, that is, removed, wiped out by the treasurer, and this opens up considerable equity in the property.

What appealed to me 30 years ago still remains to be true. The tax lien and tax deed business is little-known and highly profitable with only a few investors in each community.

Will a Tax Lien Affect My SBA Loan Eligibility?

Tax Deeds vs. Foreclosures

Most people watch late night TV and hear how rich they can be by purchasing foreclosure real estate which banks have repossessed.

Banks force properties to auctions every week. The difference is the banks start their bidding at what’s owed on the property. The tax collector starts their bidding at the back taxes.

If you’re interested in making big profits from real estate, I have a free gift for you, a 1-hour, streaming-video mini course that reveals the secrets of tax lien certificates and how to create massive cash flow from tax deeds.

foreclosure auctions

Will a Tax Lien Affect My SBA Loan Eligibility? Foreclosures

For example, if the property is valued at $200,000 and the mortgage is $170,000, the foreclosure auction will usually start at $170,000 because the bank wants to recover the loan.

That’s the whole objective. The foreclosure is to recover the collateral. The bank has all the risk.

Foreclosure is a lawsuit with the bank, as the plaintiff, trying to collect, and the mortgage holder, the property owner is the defendant refusing to pay.

The lawsuit involves attorneys and judges, and the judge will make the decision to evict the borrower and return the collateral to the bank.

Will a Tax Lien Affect My SBA Loan Eligibility?

Foreclosure Property

The bank has a major problem. No one is going to purchase that property at auction because a new property in the same market is probably selling for $200,000.

No one bids because the buyers do not want a used and abused home for $170,000, So the bank is in trouble.

Maybe there are auctions on 40-50-year-old houses in bread and butter neighborhoods, and the auctioneer is willing to take 50% of value.

You’ll see much of this on late night television. The foreclosure people talk about this all the time. The challenge is banks can’t stay in business taking losses.

Will a Tax Lien Affect My SBA Loan Eligibility?


Will a Tax Lien Affect My SBA Loan Eligibility?Late night TV shows are very entertaining, and many older homes suddenly look like mansions in 29 minutes when they’re repaired. Keep in mind, these are skilled contractors, not $7 per hour helpers.

Fixing a home is major. Knocking down walls to make big rooms is very expensive and risky. Fixing property requires skills. It’s not for amateurs, and it’s a good way to lose your assets.

Will a Tax Lien Affect My SBA Loan Eligibility? Fixer-upper Costs

Used and abused houses do not become breathtakingly beautiful mansions in 29 minutes. That all takes months of time and costs big dollars. 45 to 100-year-old houses require much more than paint and clean.

When it’s all said and done, you’ll owe Home Depot or Lowes some pretty big bills, and you will have spent many weekends cleaning, fixing and adjusting.

Will a Tax Lien Affect My SBA Loan Eligibility? Managing Costs

Business isn’t easy. Notice I’m not negative. There are people that have full-time staff that buy property from banks dozens at a time and have full time rehabilitation crews.

These companies use management skills to control labor costs and material costs. They know where every dime is being spent.

Contractors work at 110% to complete their jobs on time. There is no overtime. Then these properties are sold to low-income people who are happy to get inexpensive homes with inexpensive repairs.

Will a Tax Lien Affect My SBA Loan Eligibility?


We hope you enjoyed Ted’s lesson, “Will a tax lien affect my SBA loan eligibility?”

The Small Business Administration wants to lend you money, however, they will thoroughly scrutinize your application because they want to ensure that you’re willing and able to repay the loan.

A tax lien on your record will set off a red flag. After all, the SBA is a government agency, and it will raise eyebrows if you haven’t paid another government agency. This is something they will question and investigate.

The best course of action is to pay off the tax lien. Unpaid property taxes will show up on your title, and this could certainly cause an SBA loan officer to cease processing your application any further.

Fortunately, property taxes are only about 1% to 2% of the property’s assessed value. So if you can pay it, you should, or have a very good explanation ready for why you haven’t paid the tax lien.

If you’d like to know more about tax delinquent real estate investing, there’s no one more qualified to teach you than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing.

Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal one-on-one coaching.

Ted Thomas classLearn how to invest in real estate successfully. Get started today at no cost with Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax defaulted real estate.

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Ted Thomas

Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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