Before applying for financing, most business owners want to know one thing: do I actually qualify? While every lender has its own criteria, the vast majority of small business loans in the United States are evaluated using a similar set of core requirements. Knowing them in advance can save you weeks of back-and-forth — and help you apply to the lenders where you’re most likely to get approved.
1. Time in Business
Most traditional banks and SBA lenders require a business to have been operating for at least 2 years. Online lenders are typically more flexible, with many accepting businesses that have been operating for just 6 to 12 months. If your business is brand new, look into startup-specific financing such as SBA microloans or business credit cards rather than a traditional term loan.
2. Annual Revenue
Lenders want proof your business generates enough revenue to comfortably repay the loan. Typical minimums range from $50,000 to $250,000 in annual revenue for online lenders, and often higher for traditional banks. You’ll usually need to show this through bank statements, tax returns, or accounting software reports (QuickBooks, Xero).
3. Personal and Business Credit Score
This is one of the most important factors:
- Traditional banks and SBA loans: typically require a personal FICO score of 680 or higher.
- Online lenders: often accept scores as low as 600–630, though usually with higher interest rates.
- Business credit score: tracked separately through agencies like Dun & Bradstreet (PAYDEX score), Experian Business, and Equifax Business. A strong business credit profile can improve your terms even if your personal score isn’t perfect.
4. Required Documentation
Regardless of lender type, be prepared to provide:
- EIN (Employer Identification Number) and business formation documents (LLC, S-Corp, etc.)
- Business tax returns (usually the last 2–3 years)
- Personal tax returns of the business owner(s)
- Bank statements (typically the last 3–12 months)
- Profit and loss statement and balance sheet
- Business plan, especially for larger loan amounts or newer businesses
5. Collateral or Personal Guarantee
Many small business loans require either collateral (equipment, real estate, accounts receivable) or a personal guarantee, meaning the business owner agrees to be personally responsible for the debt if the business can’t repay it. SBA loans, for example, almost always require a personal guarantee from anyone owning 20% or more of the business.
6. Debt-to-Income and Existing Obligations
Lenders will also review your business’s existing debt load relative to income, often calculated as a Debt Service Coverage Ratio (DSCR). A DSCR below 1.0 (meaning your income doesn’t fully cover your debt payments) will make approval difficult with most traditional lenders.
Requirements by Lender Type: Quick Comparison
| Requirement | Traditional Bank | SBA Loan | Online Lender |
|---|---|---|---|
| Time in business | 2+ years | 2+ years (some exceptions) | 6–12 months |
| Personal credit score | 680+ | 650–680+ | 600+ |
| Annual revenue | $150,000+ | $100,000+ | $50,000+ |
| Approval speed | 2–8 weeks | 4–12 weeks | 24 hours–1 week |
| Collateral | Often required | Almost always | Sometimes |
What If You Don’t Meet the Requirements?
If your business is too new, your credit score isn’t quite there yet, or you don’t have collateral to offer, you still have options:
- SBA microloans, aimed at startups and small businesses with limited credit history.
- Business credit cards, useful for smaller, ongoing financing needs.
- Revenue-based financing, where repayment scales with your sales instead of a fixed monthly payment — see our guide on [revenue-based and participating loans for small businesses].
- Improving your business credit profile first, by registering with Dun & Bradstreet and building a payment history with vendors before applying for larger financing.
Frequently Asked Questions
What’s the minimum credit score for a small business loan? It depends on the lender. Traditional banks generally require 680+, while some online lenders will work with scores as low as 600.
Can I get a business loan with bad personal credit? It’s harder, but not impossible. Online lenders and merchant cash advances tend to weigh revenue and cash flow more heavily than credit score, though you’ll likely pay a higher rate.
Do I need collateral for every small business loan? No. Many online lenders and some SBA products offer unsecured or lightly secured options, though a personal guarantee is still common even without collateral.
Conclusion
Meeting a lender’s requirements isn’t just about ticking boxes — it’s about presenting your business as a low-risk, reliable borrower. Before applying, gather your documentation, check both your personal and business credit scores, and consider which type of lender best matches your current profile. For a full breakdown of the loan process itself, see our guide on [what is a small business loan and how does it work].