Business loan requirements — explained

The most important criteria for business lenders typically include revenue, time in business, your credit score and industry type — but it can vary. The higher the loan amount or the lower the rates, the more requirements you’ll need to meet.

1. Personal credit score

The personal credit scores of you and any other owners or stakeholders of your business can play a big role in the funding you qualify for. Lenders want to see that you’re responsible with funds — largely because it translates directly to how well your business will be able to repay a loan.

But the minimum personal credit requirement for a business loan varies from lender to lender. In general, you’ll have more options with good credit — typically 670 or higher.

2. Financial and legal documents

Having the right paperwork ready will make the application process smoother and show your lender that you’re prepared. These are some of the most common documents lenders require:

3. Annual revenue

Lenders generally look for businesses that make at least $100,000 annually or have an income greater than 1.25 times normal operating expenses. In addition, the amount of debt you and your business carries may also play a role. If your personal or business debt-to-income ratio is too high, you may not be approved for a loan — even if your business otherwise meets annual revenue requirements.

4. Time in business

Startups and businesses that haven’t begun operations will find it harder to get a loan. Online lenders may accept businesses as young as one year old, but banks and other larger lenders will want to see at least two years in business before considering you for a loan.

5. Collateral

While not every loan is secured, many lenders require your business to have a deposit that covers 10% to 20% of the expense you want to pay for. You may also be required to sign a personal guarantee that holds you accountable if your business is unable to pay its debts.

6. Eligible industry

Most lenders set restrictions on the industries it will work with. For example, businesses involved in selling or producing “adult” content or cannabis may struggle to find funding. But it isn’t limited to just these two — check with the lender you’re interested in before applying.

How to qualify for an SBA coronavirus loan

The Small Business Administration (SBA) is offering two types of low-interest loans to businesses affected by the coronavirus outbreak:

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Name	Product	Filter Values	Loan amount	APR	Requirements
Fora Financial business loans Finder Rating: 4.1 / 5: ★★★★★			$5,000 – $500,000	Varies	6+ months in business, $12,000+ monthly revenue, no open bankruptcies	Get qualified for funding in minutes for up to $500,000 without affecting your credit score. Best for companies with at least six figures in annual revenue.	Go to site More Info	Compare	loading Fetching your data…
Lendio business loans Finder Rating: 4.75 / 5: ★★★★★			$500 – $5,000,000	Starting at 6%	Operate business in US or Canada, have a business bank account, 560+ personal credit score	Submit one simple application to potentially get offers from a network of over 300 legit business lenders.	Go to site More Info	Compare	loading Fetching your data…
National Funding business loans Finder Rating: 4.75 / 5: ★★★★★			$5,000 – $500,000	4% to 8%	Be in business at least one year and make at least $150,000 in annual sales. Other loan types have additional requirements.	Working capital loans and equipment financing, some high-risk industries may be eligible.	Go to site More Info	Compare	loading Fetching your data…
Fundbox lines of credit Finder Rating: 4.2 / 5: ★★★★★			$1,000 – $150,000	Not stated	6 + months in business, $100,000+ in annual revenue, 600+ credit score	Get flat rate, short-term financing based on the financial health of your business, not your credit score.	Go to site More Info	Compare	loading Fetching your data…
Bitty Advance business cash advances Finder Rating: 2.8 / 5: ★★★★★			$2,000 – $25,000	Not applicable	$5,000 monthly bank revenue, 6+ months in business, business bank account open 3+ months, 450+ credit score	With APRs in the triple digits, this is best saved as a last resort.	Go to site More Info	Compare	loading Fetching your data…

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Bottom line

Your credit score, revenue, time in business and industry are generally the most important requirements when applying for a business loan. But it can vary depending on the lender. Explore your options by checking out our guide to business financing before you get started.

Frequently asked questions

Answers to commonly asked questions about business loans and their requirements.

What type of loans are typically offered to small businesses?

The types of loans offered depends largely on the lender — some specialize in invoice financing or merchant cash advances or term loans, while others offer a variety of options. You can learn more about the different types of business loans available with our guide.

Will I need to provide collateral when applying for my business loan?

Some lenders require you to provide collateral when applying for a loan, while others don’t. Different lenders will have different loan collateral requirements. The financing amount and type of loan you apply for will often affect what’s required.

Can I apply for more than one business loan at a time?

Yes — but be careful. Many lenders offer convenient online applications, but may make a hard pull on your credit report when assessing the information you submit.

If you apply for multiple loans and a lender sees other recent pulls on your credit history, it could interpret this activity as a sign of desperation on your part. This could affect how that lender perceives your creditworthiness and potential for risk.