There are a lot of different small business loan requirements, depending on the lender and type of financing. Some lenders are more stringent than others, but most will request financial statements, tax returns, bank statements, a business plan and more. Having these documents ready in advance will help expedite the process. Some lenders will also ask for a personal guarantee, which means that you will personally agree to pay back the loan if the business fails. This can be a risky move because it puts your personal credit score at stake, and it can lead to foreclosure of your assets.
Lenders will usually require a minimum amount of annual revenue and a solid credit score, which typically starts at around 690. A strong cash flow is another requirement, and the ability to meet your loan payments will be a big indicator of your ability to manage the debt.
You can seek a traditional business loan from a local bank, credit union or online lender. The loan terms and rates can vary significantly by lender. However, conventional loans may have stricter criteria and longer approval periods than online lenders. Some types of financing, like those backed by the SBA, have easier requirements for first-time entrepreneurs and offer competitive interest rates. Often, it’s best to consult your local Small Business Development Center (SBDC) for tips on how to strengthen your application and the resources to review loan offerings from multiple lenders. small business loan requirements