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Business loan requirements generally come down to a few core things: your credit score, how long you've been in business, how much revenue you're bringing in, and whether you can provide the right paperwork.
With that in mind, the specifics change a lot depending on whether you're walking into a bank, applying for an SBA loan, or working with an online lender.
Requirements Look Different Depending on Who You're Borrowing From
This is the part that confuses some folks. You'll read that you need a 700 credit score and two years of tax returns, and then someone else will tell you they got approved with a 550 and three months of bank statements. Both can be true because different lenders have completely different standards.
Banks offer lower rates, which means they're pickier. They want more documentation, higher credit scores, and a longer track record. They can afford to be selective because their money is cheaper.
Online and alternative lenders charge more, but they're also more flexible. They're willing to take on borrowers that banks would pass on, and they make up for that risk with higher rates and shorter terms. Neither approach is better or worse on its own. It just depends on where your business stands right now.
Credit Score: The First Thing Every Lender Checks
Your personal credit score is usually the starting point. Before a lender looks at anything else, they want to know how you've handled debt in the past.
| Lender Type | Minimum Credit Score | Typical Range |
|---|---|---|
|
Traditional banks |
680+ |
700 to 800+ |
|
SBA loans |
650+ |
680 to 750+ |
|
Online lenders |
500 to 600 |
550 to 700 |
|
Merchant cash advances |
500+ |
500 to 650 |
If you've been building your business credit separately, that helps too, especially with banks and SBA lenders who look at both.
A score under 680 doesn't shut the door at all. BusinessCapital.com works with scores as low as 500, putting more emphasis on how your business is actually performing today rather than what happened with your personal credit years ago.
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How Long You've Been in Business
Lenders want proof that your business isn't just an idea on paper. The longer you've been operating, the more comfortable they feel.
Banks and SBA lenders typically want two years minimum. Online lenders are often fine with six months to a year. If you're brand new, under six months, it gets tough. Some SBA microloans and community development lenders will consider newer businesses, but most mainstream options want to see at least a few quarters of real activity.
Keep in mind, though: if you've only been open for eight months but you're pulling in solid revenue every month, that can offset the short history. Lenders care about risk, and consistent income reduces risk even if the business is young.
Revenue and Cash Flow
This is where a lot of applications fall apart. You might have great credit and five years in business, but if your monthly revenue doesn't comfortably cover the loan payments on top of everything else you owe, lenders are going to hesitate.
Most online lenders look for at least $10,000 to $15,000 in monthly revenue. Banks and SBA lenders dig deeper into profitability and overall financial health.
One number lenders pay close attention to is your debt service coverage ratio, or DSCR. It's simple math. Take your annual operating income and divide it by your total annual debt payments. Most lenders want to see at least 1.25, meaning your income is 25% higher than what you owe.
Let's say you're bringing in $20,000 a month and your debt obligations are $8,000. That's a DSCR of 2.5, and lenders will like that number. But if your revenue is $20,000 and you're already paying $18,000 toward existing debts, your ratio drops to 1.11. That's going to be a problem for most lenders.
Consistency counts too. A business earning $15,000 every single month looks way more reliable than one bouncing between $5,000 and $40,000, even if the average comes out higher.
The Paperwork You'll Need
Nobody loves this part, but getting your documents together before you apply saves a ton of back and forth. What you'll need depends on the lender:
| Document | Banks/SBA | Online Lenders |
|---|---|---|
|
Business and personal tax returns (2 to 3 years) |
Required |
Sometimes |
|
Bank statements (3 to 12 months) |
Required |
Required |
|
Profit and loss statements |
Required |
Sometimes |
|
Balance sheet |
Required |
Rarely |
|
Business plan |
Often required |
Rarely |
|
Business licenses and registrations |
Required |
Required |
|
Personal financial statement |
Required |
Rarely |
If you're going after a short-term loan or a merchant cash advance, the documentation is usually pretty light. Some lenders just need a few months of bank statements and a quick application.
For bigger amounts, like long-term loans or SBA products, expect more paperwork and a longer timeline. Getting organized early makes a real difference. If you're not sure what the timeline looks like, this breakdown of how long the process takes is worth a read.
Collateral and Personal Guarantees
Some loans require you to put up an asset like equipment, real estate, or inventory that the lender can claim if you stop paying. Others don't.
Unsecured business loans skip the collateral requirement, but most lenders will still ask for a personal guarantee or place a general lien on your business assets. A personal guarantee means if the business can't pay, you're on the hook personally.
SBA loans almost always require both collateral (when available) and a personal guarantee from anyone with 20% or more ownership. It's one of the tradeoffs for getting access to lower rates and longer repayment terms.
Your Industry Plays a Role
This one surprises folks. Two businesses with identical financials can get different responses from the same lender just because they're in different industries.
Restaurants, construction, and retail tend to get more scrutiny because those sectors have higher failure rates and tighter margins. That doesn't mean you can't get funded. It just means some lenders aren't set up to evaluate your business properly.
That's where industry-focused lenders come in. Whether you're running a restaurant, a trucking operation, or a construction company, there are lenders who actually understand how your cash flow works and won't hold your industry against you.
What You Can Do to Improve Your Odds
According to a Lendio survey of more than 1,000 small business owners, 68% said access to financing is the most important factor in growing their business, yet only 32% reported being very satisfied or satisfied with the loan offers they received. And 23% of applicants walked away with no offer at all.
Those numbers aren't great, but a lot of denials come down to things you can fix before you ever submit an application. Pull your credit reports and dispute any errors. Pay down existing debt where you can. The same Fed survey found that 41% of denied applicants were turned down at least partly because they carried too much existing debt.
Get your documents in order ahead of time, and be honest about how much you actually need. Asking for more than your revenue can realistically support is one of the quickest ways to get denied.
FAQ
What credit score do I need for a business loan?
It depends on the lender. Banks generally want 680 or higher. SBA lenders look for at least 650. Online lenders may go as low as 500, though a lower score usually means higher rates and shorter terms.
Can I get a business loan with less than a year in business?
You can, but your options shrink. Most online lenders want six months minimum. Banks and SBA lenders usually require two years. Strong monthly revenue can help offset a shorter operating history with some lenders.
What documents do I need to apply for a business loan?
At the very least, bank statements (three to six months) and your business license. Banks and SBA lenders will also want tax returns, profit and loss statements, a balance sheet, and sometimes a business plan. Online lenders typically keep the paperwork lighter.
Do all business loans require collateral?
No. Unsecured loans and merchant cash advances don't require you to pledge specific assets. But even with those products, lenders often want a personal guarantee or a blanket lien on your business assets as a safety net.
How much revenue do I need to qualify?
Most online lenders set their floor around $10,000 to $15,000 per month. Banks don't always publish a hard minimum, but they'll look closely at whether your cash flow can handle the payments alongside everything else your business already owes.
About The Author
Henry Pershin
Henry Pershin is the Founder and CEO of BusinessCapital.com, a nationally recognized business financing organization that has secured over $5 billion in funding for thousands of businesses across the country. With more than 20 years of experience in business finance, Henry has built a company that puts speed, transparency, and real results at the center of everything it does.
At the core of Henry’s leadership is a belief that small businesses are the backbone of the economy. He leads with trust, accountability, and a long-term mindset, building relationships that continue to grow as his clients do.
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