What credit score do I need for a business loan?

Requirements vary by lender. Banks typically require 680+. Online lenders work with scores from 600+. Alternative lenders may work with scores as low as 500. Merchant cash advances often have no minimum credit score requirement.

How long do I need to be in business to get a loan?

Banks and SBA lenders generally require 2+ years in business. Online lenders often accept 1+ year. Alternative lenders work with businesses as young as 6 months. Some MCA providers fund businesses 3-4 months old.

What minimum revenue is required for a business loan?

Banks typically require $250K+ annual revenue. Online lenders often start at $100K-$150K annually. Alternative lenders and MCA providers may work with $60K or less annually if monthly cash flow is consistent.

Do I need collateral to qualify for a business loan?

Not always. Many alternative loan products including MCAs and working capital loans do not require specific collateral. Banks often require collateral for larger amounts.

Does my industry affect loan qualification?

Yes. Some industries are classified as higher-risk by lenders, including restaurants, bars, construction, and retail. Higher-risk industry classification can affect approval odds and interest rates, but alternative lenders typically serve all legal industries.

Business Loan Requirements: What Lenders Look For

Every lender has different requirements, which is why knowing the thresholds before you apply saves time and protects your credit score from unnecessary hard pulls. Here is a breakdown of what each lender type expects and how to position yourself effectively.

Personal Credit Score Requirements

Credit score is the first filter most lenders apply:

SBA loans: 680+ (some lenders require 700+)
Bank term loans: 680-720+
Online lenders: 600-650+
Alternative lenders: 500+ (some work with lower)
Merchant cash advances: No minimum (revenue-based approval)

Time in Business

Lenders want to see a track record:

SBA and banks: 2+ years minimum
Online lenders: 1-2 years
Alternative lenders: 6 months minimum
Some MCA providers: 3-4 months with sufficient revenue

Annual Revenue Requirements

Revenue minimums vary significantly:

Banks: Typically $250K+ annual revenue
Online lenders: $100K-$150K annual revenue
Alternative lenders: $60K-$100K annual revenue
MCA providers: $5K-$10K monthly revenue (some go lower)

Debt Service Coverage Ratio

Most bank and SBA lenders require a minimum DSCR of 1.25. This means your net operating income must be at least 1.25 times your annual debt service obligations. Alternative lenders focus more on gross revenue and bank statement cash flow than formal DSCR calculations.

Collateral Requirements

SBA loans require collateral when available, but lack of collateral does not automatically disqualify you. Bank loans often require collateral for amounts above $50K. Alternative lenders typically do not require specific collateral, relying instead on UCC liens and personal guarantees.

Industry Restrictions

Some lenders restrict or avoid certain industries considered high-risk:

Adult entertainment
Cannabis (federally illegal, limiting bank options)
Firearms dealers (some restrictions)
Gambling

Most other industries including restaurants, construction, transportation, and retail are served by at least alternative lenders even when banks are cautious.

How to Meet Requirements You Currently Fall Short Of

If you do not yet meet traditional lender requirements, you have options. Build business credit, increase documented revenue, reduce existing debt, and improve your personal credit score. In the meantime, alternative lenders provide access to capital while you build toward better terms.

Not sure what you qualify for? Apply here and our team will review your situation and match you to the right product.