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.

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.

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:

• Business and personal bank statements
• Business and personal tax returns
• Profit and loss statements and balance sheets
• Collateral documents
• Personal financial statement
• Government-issued ID and business registration
• Business plan and financial projections

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.

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.

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.

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.

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Name	Product	Filter Values	Loan amount	APR	Requirements
First Down Funding business loans			$4,000 – $300,000	5.49% to 22.79%	At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 580	Alternative financing up to $300K with highly competitive rates.	Check eligibility More Info		loading Fetching your data...
Lendio business loan marketplace			$500 – $5,000,000	Starting at 6%	Operate business in US or Canada, have a business bank account, 675+ personal credit score	Submit one simple application to potentially get offers from a network of over 75 legit business lenders.	Check eligibility More Info		loading Fetching your data...
Fundera			$2,500 – $5,000,000	7% to 30%	$300,000+ of annual revenue, 680+ personal credit score, in business for 3+ years	Get connected with short-term funding, SBA loans, lines of credit and more.	Check eligibility More Info		loading Fetching your data...
Kickpay e-commerce loans			$20,000 – $1,000,000	Not applicable	At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.	Get a loan for your e-commerce business based on your sales history.	Check eligibility More Info		loading Fetching your data...
Credibly Business Loans			$5,000 – $250,000		6+ months in business, $180K annual business revenue, 500+ credit $15K+ in monthly deposits	Funding to cover business expenses with daily or weekly repayments.	Check eligibility More Info		loading Fetching your data...
SmartBiz			$30,000 – $5,000,000	4.75% to 7.00%	650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years	Get funding for your small business with a government-backed loan and extended repayment terms.	Check eligibility More Info		loading Fetching your data...
LendingClub small business loans			$5,000 – $500,000	9.77% to 35.98%	12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better	With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.	Check eligibility More Info		loading Fetching your data...
Monevo Business Loans			$500 – $100,000	3.99% to 35.99%	Credit score of 500+, legal US resident and ages 18+.	Use this connection service to get paired with a loan you can use for business.	Check eligibility More Info		loading Fetching your data...

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How to get a business loan in 6 steps

Following these steps can help ensure you get approved for a good deal on a business loan when you apply.

Step 1: Determine what you need

Go into your comparison armed with specific details about the loan you want to borrow, including:

• What you need to fund. You’ll need to tell your lenders what the funds are for — even if you’re just covering general operating expenses.
• How much you need to borrow. Lenders prefer to see an exact loan amount on the application — it shows that you aren’t borrowing too much or too little for a project.
• The type of funding you need. Are you looking to fund a one-time expense, or do you need access to a line of credit? Knowing this can help you choose a lender.
• When you need the funding. If it’s an emergency, stay away from banks, credit unions and SBA loans — they can take weeks or even months to fund.

Step 2: Compare lenders

Use the information you gathered in the first step and look for a lender. Compare factors like interest rates, fees, loan terms and how often you need to make repayments. You might have to call the lender to get this information since many lenders don’t provide it online.

And check out customer reviews to look out for common business loan red flags.

Step 3: Prequalify

After you narrow down your choices, fill out a prequalification application with your top picks, if possible. This gives you a more personalized idea of what your business will get, though it’s not a guaranteed offer.

If you don’t have the option to prequalify, consider calling the lender and speaking to a representative — they can often give you a ballpark of rates and terms your business might qualify for.

Step 4: Fill out the application

Follow the lender’s instructions to fill out the application. Many allow you to get started online, but often you’ll need to speak with a representative before you can fully complete it. You may also be required to visit a branch or hold a business bank account with the lender — which can further limit your loan options.

Double-check your answers to make sure there are no inconsistencies. Mistakes are one of the top reasons loan applications get rejected.

Step 5: Submit your documents

After you submit your application, lenders typically ask you to submit documents to verify the information you provided. If you’re applying online, you can often upload PDFs of any verification documents. You also often have the option to fax or mail in copies of your documents if you can’t submit them in person.

Step 6: Review the terms and conditions

If approved, look over your loan documents and read the lender’s terms. These should detail your repayment schedule and the total amount your business will need to repay.

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

• 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.