Business Loan Requirements: What You’ll Need To Qualify

Applying for a small business loan can seem daunting. In 2024, over 70 percent of discouraged borrowers that did not apply for funding believed they wouldn’t qualify based on business financials, and 25 percent thought lender requirements were too strict, according to the Fed’s 2025 Report on Employer Firms.

Although every lender sets its own requirements, understanding common requirements can expedite the application process, saving you time and potentially improving your chances of approval. To help you prepare your small business loan application, get familiar with common requirements for a business loan.

1. Annual revenue requirement

While revenue requirements vary by lenders, most will want to ensure you have appropriate cash flow — after other financial obligations — to handle a new loan. You are more likely to find lower annual revenue requirements with online lenders than with traditional lenders like banks. For reference, iBusiness Funding, an online lender, has only a $50,000 annual revenue requirement, while both Bank of America and Wells Fargo want to see at least $100,000 in annual revenue.

If you can’t meet annual or monthly revenue requirements with a bank or online lender, you may consider other alternative lending options such as invoice financing, invoice factoring or merchant cash advances (MCAs). Invoice financing and factoring use your unpaid customer invoices to secure a loan, while MCA companies actually purchase a portion of your future sales revenue in exchange for a lump sum of cash.

While these alternative options may be easier to qualify for with no minimum revenue requirements, they are often more expensive than traditional term loans.

2. Business plan

A business plan is essential to many business loan applications. Lenders will want to understand what your business does, how it makes its money and how it will continue to succeed. Most importantly, a lender will want to know what your plans are for financing.

You can work with a business advisor or a Small Business Development Center (SBDC) to shape your business plan. You should also include the resumes of each owner and how they will contribute to the business’s success.

Your business plan should include the following:

• Executive summary
• Company description
• Market analysis
• Organization and management information
• Service or product line descriptions
• Marketing and sales information
• Funding request
• Financial projections

However, only some lenders require a business plan. Smaller lenders and nontraditional lenders may only need to see proof that you have sufficient revenue and cash flow to handle the loan, no matter how your business plans on using it.

3. Credit score requirement

Most small business lenders check your personal credit score when you apply for a business loan. In 2024, low credit risk borrowers were almost twice as likely as medium to high credit risk borrowers to be approved for financing at banks and finance companies, according to data from the Federal Reserve.

Banks and credit unions usually require personal credit scores of 670 or higher for business loans — for reference, Bank of America requires a 700 minimum personal credit score and Wells Fargo’s requirement is 680. Online lenders, on the other hand, offer more flexible criteria, providing options for bad credit business loans. Fora Financial, for example, offers business loans to borrowers with credit scores as low as 570.

If you’re requesting a particularly large amount, or you’ve been in business for a long time, your business score may matter. Similar to a personal credit score, your business credit score expresses your business’s creditworthiness. Business credit reports may include information on the number of employees, account information, past payment history and amounts owed. The better your business credit score, the more likely your business is to receive a loan and, potentially, at a better interest rate.

4. Personal financial history

Each owner’s personal finances play a role in their ability to qualify for a small-business loan, especially if you’re launching a startup. Business lenders often ask to see your personal bank statements and tax returns to ensure you can responsibly manage a small business loan. They also may require a personal guarantee, which makes you and your co-owners (if you have any) personally responsible for paying back any borrowed funds if your business cannot pay.

If you have poor credit, you may not be able to secure a competitive rate on a business loan. Similarly, if you have previously taken on other debt and failed to repay it, it may be more difficult to secure funding. Many lenders won’t approve your loan if you’ve had a bankruptcy in the last few years. In these cases, having a history of recent, on-time payments for a loan will serve as an asset when the lender reviews your application.

5 . Time in business requirement

Many lenders require businesses to have been in operation for at least two years before approving a standard business loan. Less than half of businesses under five years old were approved for financing in 2024, according to the Fed’s 2025 Report on Employer Firms.

There are some exceptions to the rule. Lenders specializing in startup loans often have more lenient business loan requirements, only asking for six months in business. And some specific loan types, like equipment loans, may have no minimum time in business requirements.

6 . Industry requirement

A lender may also consider your business’s industry when evaluating your loan application. Businesses in profitable and stable industries are more likely to appeal to lenders.

Conversely, many lenders have a list of industries they won’t work with, which you can typically find on their website. Gambling, adult entertainment or services and cannabis are frequently ineligible for traditional financing.

7 . Loan proposal

For traditional term loans and Small Business Administration loans, a proposal is key. A loan proposal is similar to a business plan and may be included in one. It outlines:

• Why you need the funding.
• How you will use the loan.
• How you will pay back your loan.
• How it will benefit your business.

It isn’t a requirement for every type of loan — and not every lender will want to see one. But you should still have one prepared when you are ready to apply.

8 . List of other debts and obligations

You will need to list your business’s debts and other financial obligations. This includes other loans you may have, business credit cards, regular bills and payroll numbers. A lender will want to confirm you have enough cash flow to manage a new loan payment.

Even if your business is profitable, it doesn’t mean you can handle more debt. A lender will consider your debt-to-asset ratio when you apply. This tells lenders how much of your revenue is paid towards your current debts. The higher the figure, the harder it may be to qualify for a small business loan.

9. Business documentation

In addition to these eight categories, other documents you may be asked to submit when you apply for a business loan include:

The bottom line

Every lender has its own business loan requirements. Most commonly, a lender will evaluate your business’s annual revenue and finances, time in operation and your personal credit history; however, specific requirements can vary based on loan and lender type. To expedite your application process and increase your chances of approval, it’s a good idea to prepare the information you will likely be asked to submit ahead of time. Then you can compare lenders to find one that meets your business’s needs.

Frequently asked questions

• Is it hard to get a loan for a small business?
  

  The degree of difficulty in getting approved for a small business loan will depend on your business’s credentials and the lender’s process. Many banks have stringent requirements for credit score, time in business and annual revenue. You can find online lenders that relax requirements, allowing the smallest of businesses with little revenue or low credit to qualify.

• What credit score do I need to get a small business loan?
  

  While specific requirements vary by lender, some online lenders may offer loans with credit score requirements  as low as 550. The higher your credit score, the more likely you are to get an approval and potentially better interest rates.

• How much can I realistically get for a small business loan?
  

  The amount you qualify for depends heavily on your current revenue, as well as other financial factors. The lender will use your current accounts receivable and accounts payable to determine how much your business can reasonably handle. To set the loan amount, lenders often want to see a debt-to-income ratio of 36 percent or less, which means that your debt only amounts to 36 percent of your revenue. Lenders may also look at your debt service coverage ratio (DSCR).