How to Qualify for a Business Loan
Discovering and requesting a loan for your small business can be a laborious task. However, with advanced knowledge of the typical requirements that lenders seek in a business loan application, you can expedite the process and steer clear of potential exasperation. Presented below are seven key factors that lenders commonly consider when determining your eligibility for a loan.
Personal and Business Credit Scores:
Securing a government-backed SBA loan or a traditional bank small-business loan often necessitates a strong personal credit score (typically 690 or higher) or an excellent business credit history.
However, online lenders tend to be more flexible with credit scores, focusing instead on your business's cash flow and track record. Some online lenders may require a minimum personal credit score of 500.
Personal credit scores reflect your ability to repay personal debts like credit cards, car loans, and mortgages. Small-business lenders conduct personal credit checks to assess your debt management skills.
FICO scores, commonly used in lending decisions, range from 300 to 850, with higher scores being more favorable. Building your personal credit can be achieved by disputing any inaccuracies in your report and consistently paying bills on time and in full.
Years in Business:
Business Industry and Size:
Collateral or Personal Guarantee:
Business and Financial Documentation:
Frequently Asked Questions:
- How can you qualify for a business loan?
- What do banks typically require for a small-business loan?
- What documents are usually necessary for a business loan?