To get a small business loan, you generally need a personal credit score of at least 640, at least six months to two years of operating history, proof of revenue, and a stack of financial and legal documents. The exact bar depends on whether you’re borrowing from a traditional bank, an online lender, or through an SBA-backed program, but every lender evaluates the same core areas: your creditworthiness, your business’s financial health, and your ability to repay.
Credit Score Thresholds by Lender Type
Your personal credit score is the single fastest way lenders sort applicants. A score of 750 or higher opens the door to the most competitive options: traditional bank term loans, bank lines of credit, and SBA loans, all of which carry lower interest rates and longer repayment windows. A score in the 700 range puts nearly every loan product on the table, though you may not qualify for the largest amounts or best rates.
If your score falls between 640 and 700, you can still qualify, but your options narrow. SBA loans and traditional bank term loans generally require a minimum around 680. At the lower end of this range, lenders will expect strength in other areas, like several years in business or strong annual revenue, to offset the credit risk. Medium-term loans and equipment financing from online or alternative lenders become the more realistic path here.
Below 640, most bank loans are off the table. Online lenders that specialize in borrowers with lower credit may still work with you, but expect higher interest rates and shorter repayment terms. Some revenue-based lenders focus more on your monthly cash flow than your credit score, which can be an option if your business is generating steady income despite a thin or damaged credit history.
How Long Your Business Has Been Operating
Lenders use time in business as a proxy for stability. Most prefer to lend to companies with at least six months to two years of operating history. Conventional business loans from banks typically require a minimum of two years. Online and alternative lenders are more flexible, often working with businesses that have six months to a year of operations under their belt.
If your business is brand new, you’re not completely shut out. Startup business loans exist for companies with as little as zero to six months of history, though these tend to come with higher rates, smaller loan amounts, and stricter requirements in other areas. SBA microloans and certain community development lenders also work with newer businesses, particularly if you have a solid business plan and relevant industry experience.
Revenue and Financial Health
Lenders want to see that your business generates enough income to cover the loan payments on top of your existing expenses. There’s no single universal revenue minimum since it varies by lender and loan size, but the principle is straightforward: the more you’re borrowing, the more revenue you need to show.
Beyond raw revenue, lenders look at profitability and cash flow consistency. A business that brings in $500,000 a year but spends $495,000 is a riskier bet than one earning $200,000 with healthy margins. You’ll typically need to demonstrate steady or growing revenue over at least the past year, and lenders will scrutinize whether your cash flow can handle the monthly payment without straining operations.
Documents You’ll Need to Provide
The paperwork for a business loan application is substantial. Plan to gather documents from three categories: financial records, tax filings, and legal formation documents.
Financial records include up to one year of business bank account statements, your most recent balance sheet, income statement, and cash flow statement. Lenders also commonly ask for a list of current accounts receivable (money owed to you by customers), a schedule of existing business debts, and projected financial statements showing how you expect the business to perform going forward.
Tax filings typically means both personal and business tax returns from the most recent three years. If your business hasn’t been around that long, provide whatever years you have. Lenders use tax returns to verify the income figures you’re reporting and to check for red flags like declining revenue or large discrepancies between reported income and bank deposits.
Legal and formation documents vary by business structure but generally include your articles of incorporation or organization, your Employer Identification Number (EIN), any business licenses or permits you hold, and your operating agreement if you’re structured as an LLC. If you operate a franchise, you’ll need your franchise agreement. Businesses that lease commercial space should have a copy of the lease ready, along with any significant contracts between the company and third parties.
Collateral and Personal Guarantees
Many business loans, particularly larger ones from banks, require collateral. This is an asset the lender can seize if you default. The most commonly accepted forms of collateral are real estate, business equipment, and inventory. The value of your collateral typically needs to cover a significant portion of the loan amount, though the exact ratio depends on the lender and the asset type. Real estate, for example, holds its value more reliably than inventory, so lenders give it more weight.
Even when a loan is technically unsecured (meaning no specific asset is pledged), most lenders still require a personal guarantee. This is your promise to repay the debt from your own personal assets if the business can’t. It means your personal savings, home equity, and other assets are on the line. Some alternative lenders offer revenue-based loans with no personal guarantee, but those are typically reserved for businesses that meet specific annual revenue thresholds and have been operating for a set period of time.
SBA Loan Requirements
SBA loans deserve a separate mention because they’re among the most affordable small business loans available, but they come with their own eligibility rules set by the U.S. Small Business Administration. The SBA doesn’t lend money directly. Instead, it guarantees a portion of the loan made by a participating bank or lender, which reduces the lender’s risk and allows for lower rates and longer terms.
To qualify for an SBA 7(a) loan, the most common type, your business must be a for-profit company operating in the United States, qualify as “small” under SBA size standards (which vary by industry based on revenue or employee count), and not fall into a category of ineligible businesses. You also need to demonstrate creditworthiness and a reasonable ability to repay the loan.
One requirement unique to SBA loans is the “credit elsewhere” test. You must show that you can’t get the same financing on reasonable terms from other non-government sources. In practice, this means SBA loans are designed for borrowers who don’t quite meet the bar for a conventional bank loan on their own but are still creditworthy enough to handle the debt. Most lenders look for a personal credit score of at least 680 for SBA loans, along with strong financials in other areas.
What Strengthens Your Application
Meeting the minimum requirements gets your foot in the door, but several factors can push your application toward approval and better terms. A detailed business plan that explains how you’ll use the funds and how the loan will generate returns shows lenders you’ve thought beyond the immediate need. This is especially important for newer businesses or larger loan requests.
Putting up more collateral than the minimum, having existing deposits or a relationship with the lending bank, and demonstrating consistent revenue growth all work in your favor. If you’ve previously borrowed and repaid business debt on time, that track record carries real weight. Keeping your business and personal finances cleanly separated, with distinct bank accounts and organized bookkeeping, signals to lenders that you manage money carefully.
The timeline from application to funding varies widely. Online lenders can approve and fund loans in as little as a few days. SBA loans typically take several weeks to a few months due to the additional government paperwork. Traditional bank loans fall somewhere in between. Start gathering your documents before you apply so the process doesn’t stall while you’re hunting for a three-year-old tax return.