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The Most Common Qualifications Required for a Small Business Loan

Written by Banks Editorial Team

Updated December 18, 2023​

5 min. read​

Knowing about the common qualifications for a small business loan can help you get ready as a business owner when the time comes to apply for a business loan. As a small business owner, you know how important cash flow is to the health of your business. You need working capital to meet daily expenses, create new product lines, and expand your business. Unfortunately, there almost always comes a time when you need a loan to do these things.

Banks and lending institutions require potential borrowers to meet certain qualifications. So before you spend hours filling out credit applications, you need to explore the qualifications to see if your company will qualify.

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What is an SBA loan?

The Small Business Administration is a government agency designed to help small companies grow and thrive. An SBA loan is a loan guaranteed by the SBA but funded and underwritten by a traditional bank or other lender types. The SBA loan programs are different depending on what you plan to use the funds for, and SBA loan requirements may be easier to meet than other types of small business loans, like a working capital loan.

Some loans you can get through an SBA partner for your small business include SBA microloans, SBA express loans, or the paycheck protection program, which was specially launched to help small businesses affected by the covid-19 pandemic.

Most Common Small Business Loan Qualifications

At some point, almost all small businesses need a loan, a business line of credit, or business credit cards to cover expenses or business debts. Of course, the lender wants to know that you’ll pay the funds back, so there are qualifications and eligibility requirements to get approved for a loan. The criteria may differ from traditional bank loans from a more traditional lender for alternative small business financing from an online lender. Let’s review the most common small business loan requirements you will have to meet before submitting your business loan applications:

Credit Scores

Your personal credit scores are a reflection of the way that you’ve repaid loans and managed credit cards in the past. Most lenders want to see a credit score of 680 or higher and good credit history. A lender is more willing to loan you money with an SBA loan because a government agency guarantees it. You will also have to take into consideration business credit scores. The minimum credit scores required will vary from lender to lender, and it may also affect the interest rate of your loan.

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Business Plan

You might need to provide the lender and the SBA with a business plan. This outlines your goals now and in the future. It also specifics steps you need to take to meet these goals.


If you have a below-average credit score, you might be asked for collateral. This is an item of real value that you forfeit to the lender if you don’t repay the loan, so they can recoup their losses by selling it.

Business Revenue

Before lending you money, a lender needs to see that you’re making money. So you might need to provide your bank records and list of business assets along with invoices of sales and your account receivables records.

Business Cash Flow

It isn’t enough to make sales. You need to have a healthy cash flow to pay your operating expenses. So even when you’re applying for a loan due to cash flow problems, the lenders need to see that you normally have a healthy cash flow.

Business Bank Statements

One way to show cash flow and revenue is by presenting your business bank statements and business tax returns. Most lenders will want at least six months’ worth of bank statements to ensure you can repay the loan.

Years in Business

Most loans, including an SBA loan, want you to have at least two years in business. If you don’t, you might be able to get a loan on your personal credit or by showing a history of starting and running other successful small businesses.

Business Owner Resume

The banks and lenders need to know that you can run a small business and repay the funds. So your resume as a business owner should show a history of management or even other small businesses that you’ve started and done work.

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How to Qualify for a Small Business Loan

If you think that you meet most or all the qualifications for a small business loan, it’s time to start the process of finding a lender and securing the loan. There are steps that you need to take to get a loan. Consider these:

Research Your Options

There are many lenders out there, so you need to know your options. It’s a good idea to use online marketplace lenders. They help you save time with research. Simply fill out one simple form and discover your options from multiple lenders in their network. You’re under no obligation, and this first step doesn’t have an impact on your credit score. You don’t want to settle on the first lender to loan you money without scoping out your options. You may find better terms with another financial institution.

Pick a Lender and a Loan

When you have several offers in hand, you need to pick and lender and loan. There are things to consider, such as the interest rate, length of the loan, and payment methods.

Consider online lender ROK Financial, which offers several different loan types, and instead of requiring a minimum credit score like other lenders, they will analyze your gross sales or how long you have been in business to calculate your loan amount and terms. Get started by submitting your contact details on this form to pair you with a business lending advisor to help you review loan options with no obligation.

Submit an Application

Now, it’s time to apply to the lender you want to use for the best loan for your situation. But, again, if you used an online marketplace lender, you already have loan offers that you’re prequalified for. While prequalification doesn’t guarantee loan approval, it gives you a better chance of approval when you apply with the lender.

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Get Your Funds

After your approval and signing all the paperwork, it’s time to get the funds placed into your account. Depending on the type of loan, you might receive all the funds at once or in installments. After that, you will have to start repaying your loan according to your agreed repayment terms.

FAQs About Business Loans Qualifications

Before securing a small business loan, you have questions about qualifications. Here’s a look at a few of the most asked questions.

Who can apply for a small business loan?

It depends on the lender. First, however, it needs to be a small company, which is typically measured by the number of employees and/or the yearly revenue of the business. In some cases, the lender looks at how much money the company has made over a three or five-year period to determine if it’s a small business.

Is it hard to get a small business loan?

It isn’t hard to get a small business loan. However, some qualifications need to be met. If you don’t qualify, there are some alternative lending routes that you can explore.

How can you get a first-time business loan?

When you’re ready to get your first-time business loan, you need to gather up all your required paperwork. Next, research lenders and find your perfect fit. An online marketplace lender allows you to apply to multiple lenders with a single application. Finally, find your lender and close your loan.

What businesses are eligible for SBA loans?

Businesses that have been open for more than two years have a credit score of 620. You also need to have yearly revenue of $100,000.

What credit score is needed for a small business loan?

Most lenders want you to have a credit score of 680 or better to loan you money. There are lenders for businesses with bad credit.

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