Getting a business loan requires a combination of strong personal credit, solid business financials, legal documentation proving your company is legitimate, and in most cases, some form of collateral or personal guarantee. The exact requirements vary by lender type, but the core ingredients are consistent whether you’re applying at a bank, credit union, or online lender. Here’s what you’ll need to prepare.
Credit Scores That Lenders Look For
Your personal credit score is the first thing most lenders check, even when you’re borrowing for a business. A score of 700 or above puts nearly every business loan option on the table, including traditional bank loans, SBA loans, and business lines of credit. If your score is 750 or higher, you’ll qualify for the most competitive rates and terms available.
Scores between 640 and 700 are considered good but not excellent. You can still qualify for many loan products in this range, though you may face higher interest rates or need to show stronger business revenue to compensate. SBA loans and traditional term loans generally require a minimum score around 680.
Below 640, your options narrow significantly. Most bank loans are off the table. Online lenders may still work with you, but they’ll want to see very strong business credentials like several years of operating history or substantial annual revenue. Some online lenders will go as low as 500 or 550, though the cost of borrowing rises sharply at those levels.
Some lenders also pull your business credit score if your company has one. Building a business credit profile through trade accounts and business credit cards can strengthen your application, but personal credit remains the primary factor for most small business lending decisions.
Financial Documents You’ll Need
Lenders want to see a clear picture of how money flows through your business. At minimum, expect to provide up to one year of business bank account statements and personal and business tax returns from the most recent three years. These documents show both your revenue trends and whether you’ve been reporting income consistently.
Bank loans and SBA loans typically require more detailed financials. Be prepared to submit income statements (also called profit and loss statements), cash flow statements, your most recent balance sheet, and projected balance sheets looking forward. Financial projections matter because lenders want to know not just where your business stands today, but whether you can sustain loan payments over the coming months and years.
If your business is newer and doesn’t have three years of tax returns, some lenders will accept fewer years of documentation, though they may require stronger performance in the data you do have. Online lenders often streamline this process and may only ask for recent bank statements and a few months of revenue data.
Legal and Formation Documents
You’ll need to prove your business exists as a legal entity and has the proper authorization to operate. The standard list includes:
- Articles of incorporation or organization (the document filed with your state when you formed your LLC, corporation, or other entity)
- Employer Identification Number (EIN) from the IRS, which functions like a Social Security number for your business
- Operating agreement if you have an LLC, or bylaws if you’re a corporation
- Business licenses and permits required for your industry or location
- Franchise agreement if you’re operating a franchise
Some lenders also ask for a copy of your commercial lease if your business operates from a rented space. Any contracts between your company and major clients, vendors, or partners may be requested as well, particularly if those contracts represent a significant portion of your revenue.
The Business Plan
Traditional bank loans and SBA loans almost always require a business plan. Online lenders are less likely to ask for one, but having a clear plan strengthens any application. The plan should cover what your business does, who your customers are, how you generate revenue, and your growth strategy.
The section lenders care most about is the use of proceeds: a specific explanation of exactly how you’ll spend the borrowed funds. “Working capital” is too vague. Instead, break it down into concrete categories like hiring two employees, purchasing equipment, expanding inventory, or covering lease costs during a buildout. Lenders want confidence that the money will generate enough additional revenue or savings to cover the loan payments.
Collateral and Personal Guarantees
Most business loans are secured, meaning you pledge specific assets the lender can seize if you stop making payments. Common forms of collateral include commercial real estate, business equipment, inventory, and accounts receivable. Offering collateral typically results in lower interest rates because the lender’s risk is reduced.
Even when a loan is technically “unsecured” (no collateral required), lenders frequently require a personal guarantee. This is a legal commitment that makes you personally responsible for the debt if your business can’t pay. It means the lender can pursue your personal assets, including savings accounts and property, to recover the balance. For most small business owners, especially those with fewer than a few years of operating history, a personal guarantee is standard.
Some alternative lenders offer revenue-based loans with no personal guarantee, but these are typically reserved for businesses that meet specific annual revenue thresholds and have been operating for a set number of years. The trade-off is usually a higher cost of borrowing.
SBA Loan Requirements
SBA loans deserve special attention because they offer some of the best rates and longest repayment terms available to small businesses, but they come with stricter eligibility rules. To qualify for an SBA 7(a) loan, your business must be an operating, for-profit company located in the United States. It must meet the SBA’s size standards for your industry, which are based on either annual revenue or number of employees depending on your business type.
There’s also a key requirement that catches some applicants off guard: you must demonstrate that you couldn’t obtain credit on reasonable terms from other non-government sources. In practice, this means the SBA loan program is designed for businesses that don’t fully qualify for conventional bank financing on their own. Your lender handles this determination as part of the application process.
Certain business types are ineligible for SBA loans regardless of their financials. The SBA maintains a list of restricted industries, so it’s worth checking before you invest time in the application.
How Long the Process Takes
Timeline varies dramatically by lender type. Online lenders can approve and fund loans in as little as one to three business days, partly because they require less documentation. Traditional bank loans typically take two to four weeks. SBA loans are the slowest, often running 30 to 90 days from application to funding, because both the lender and the SBA need to review and approve the deal.
The fastest way to speed up any application is to have your documents organized before you start. Gather your tax returns, bank statements, financial statements, and legal documents in advance. Missing a single document can add days or weeks to the process while you track it down and the lender re-queues your application for review.
Revenue and Time in Business
Beyond credit scores and paperwork, lenders evaluate two practical measures of stability: how much revenue your business generates and how long it’s been operating. Most traditional lenders prefer at least two years of operating history. Online lenders may accept one year or even less, though newer businesses pay higher rates to compensate for the added risk.
Revenue requirements vary widely. Some online lenders set minimums as low as $50,000 to $100,000 in annual revenue, while banks and SBA lenders generally expect more. What matters most isn’t a single threshold but whether your revenue comfortably supports the loan payments you’re requesting. Lenders calculate this using a metric called the debt service coverage ratio: your net operating income divided by your total debt payments. A ratio of 1.25 or higher, meaning your income is 25% more than your debt obligations, is a common benchmark.