Qualification Guide

How to Qualify for a Business Loan

Understanding what lenders look for—and how to improve your chances of approval.

Quick Qualification Checklist

✓ Credit Score

Personal credit 600+ (650+ preferred)

✓ Time in Business

6-12 months minimum (2+ years preferred)

✓ Monthly Revenue

$10,000+ consistent monthly revenue

✓ No Active Bankruptcy

Clear of recent bankruptcies or judgments

These are general minimums. Specific requirements vary by loan type and lender.

1. Credit Score Requirements

Your personal credit score is often the first thing lenders check. It indicates how reliably you repay debts.

700+:

Excellent. Qualifies for all loan types, best rates, and highest amounts.

650-699:

Good. Qualifies for most programs with competitive rates.

600-649:

Fair. Options available but rates will be higher. May need collateral or down payment.

Below 600:

Limited options. Asset-based loans (equipment, real estate) or co-signer may be required.

Pro Tip: If your credit is below 650, focus on improving it before applying. Pay down revolving debt, dispute errors, and make on-time payments for 3-6 months.

2. Time in Business

Lenders want to see that your business is stable and has survived the early high-risk period.

  • Startup (0-6 months): Very limited options. Consider SBA microloans, equipment financing, or business credit cards.
  • 6-12 months: Lines of credit and small term loans available with strong credit (680+) and revenue.
  • 1-2 years: Most conventional loan types available. SBA loans require 2+ years typically.
  • 2+ years: Full access to all programs, best rates, and larger amounts.
Pro Tip: If you're under 1 year, focus on building a strong financial track record. Keep clean books, maintain positive cash flow, and consider smaller amounts initially.

3. Revenue & Cash Flow

Lenders need to see you can afford loan payments. They look at both revenue and profitability.

Minimum Revenue Thresholds:

  • • Lines of Credit: $10k-$20k/month
  • • Term Loans: $20k-$30k/month
  • • SBA Loans: $50k+/month (annual $250k+)
  • • Real Estate/Equipment: Varies by asset value

What Lenders Analyze:

  • • Consistency: Revenue should be stable or growing, not wildly fluctuating
  • • Profitability: Positive net income or at least break-even
  • • Debt Service Coverage: Can you cover existing debts plus new loan payment?
Pro Tip: If revenue is inconsistent, be prepared to explain seasonality or growth patterns. Show 12 months of bank statements to demonstrate overall health.

4. Documentation You'll Need

Having documentation ready speeds up the process and shows lenders you're organized.

Basic (All Loans):

  • ✓ Driver's license or ID
  • ✓ 3-6 months business bank statements
  • ✓ Voided business check
  • ✓ Business formation docs (EIN, articles)

For Larger Loans (>$100k):

  • ✓ 1-2 years business tax returns
  • ✓ Profit & loss statement
  • ✓ Balance sheet
  • ✓ Personal tax returns
  • ✓ Personal financial statement
Pro Tip: Keep financial documents organized in a digital folder so you can submit quickly when opportunities arise. This can make the difference between getting funding or losing out to competitors.

5. Common Disqualifiers (And How to Fix Them)

Active Bankruptcy

Must be discharged for at least 1-2 years. Focus on rebuilding credit during this time.

Tax Liens or Judgments

Pay them off or set up payment plans. Lenders may approve with evidence of repayment.

Negative Bank Balance

Avoid NSF fees and maintain positive balance for 3+ months before applying.

Inconsistent Revenue

Provide context and show overall growth trend. Consider waiting 2-3 months to stabilize.

High Debt-to-Income Ratio

Pay down existing debts or increase revenue before taking on more debt.

Industry-Specific Considerations

Some industries are considered higher risk and may face stricter requirements or need specialized lenders.

Lower Risk (Easier Approval):

  • • Professional services (law, accounting)
  • • Healthcare (dental, medical)
  • • B2B services
  • • Established franchises

Higher Risk (More Documentation):

  • • Restaurants & hospitality
  • • Construction
  • • Retail (non-essential)
  • • Cannabis (requires specialty lenders)

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