What lenders check, in the order most of them check it
NerdWallet sums up the typical bar for a business loan as a personal score of 670 or more, at least $100,000 a year in revenue and one to two years in business [1]. Here is what each item really means.
- Personal credit score. Lenders check it to see how you handle debt. Bank and SBA lenders generally want good credit, a FICO score of 670 or higher [1].
- Business credit. Older companies have scores with bureaus such as Experian, Equifax and Dun & Bradstreet, some on a 1 to 100 scale [1].
- Revenue. Lenders want enough cash flow to cover the new payment. Minimums vary widely by lender [1].
- Time in business. Banks typically want two years. Online lenders usually want at least six months [1].
- Debt load. Lenders compare what you earn with what you already owe (see the next section).
- Industry. Some industries are treated as higher risk, and some are refused by many lenders (see below).
- Collateral and guarantees. Many lenders want an asset, a personal guarantee, or both [1].
Debt service coverage: the ratio behind "can you afford it?"
Many lenders compute a debt service coverage ratio, or DSCR. Divide your yearly operating income by your yearly debt payments, including the new loan [1].
A worked example
Yearly operating income: $150,000. Total yearly debt payments: $100,000. DSCR = $150,000 / $100,000 = 1.5 [1].
A 1.5 means you earn $1.50 for every $1.00 of debt payments. The higher the number, the more room a lender sees. Run your own before you apply, with the new payment included, so you know where you stand.
If the ratio comes out thin, a smaller amount or a longer term lowers the yearly payment and lifts the ratio. That is often the quickest way to clear this bar.
Documents to have ready, and the two a lender reads first
Banks ask for the most paperwork; online lenders often ask for less and may let you link accounts instead [1]. Gather these once and you are ready for either.
| Document | Bank or SBA | Online lender | Sales-based funder |
|---|---|---|---|
| Business and personal bank statements | Yes | Yes | Yes, usually the main one |
| Business and personal tax returns | Yes | Sometimes | Rarely |
| Profit and loss statement, balance sheet, cash flow statement | Yes | Sometimes | Rarely |
| Business plan and loan proposal | Often | Rarely | No |
| Resume showing management experience | Sometimes | No | No |
| Financial projections, if your history is short | Often | Rarely | No |
| ID, business licenses, EIN | Yes | Yes | Yes |
The list is drawn from NerdWallet's guide to lender requirements [1].
Lenders want to see that you will use the money well and can repay it. For bank and SBA loans, that is the job of two documents, and they are not the same thing [1].
- Business plan: your company's goals and how you will reach them. For a new business with little revenue to show, a thorough plan can stand in for the track record you do not have yet [1].
- Loan proposal: how much you want, what it pays for, and how you will repay it. NerdWallet calls it the document a lender scrutinizes most closely [1].
A strong proposal shows the new payment inside your cash flow, month by month, with your slowest month included. If the numbers only work in a good month, fix the amount or the term before you apply, not after a decline.
The SBA's own eligibility rules
SBA 7(a) loans add federal rules on top of the lender's. Per the SBA, an eligible business must [2]:
- Be an operating business, run for profit, and located in the U.S.
- Be small under SBA size standards and not in an ineligible type of business.
- Be unable to get the credit it wants on reasonable terms from non-government sources.
- Be creditworthy and show a reasonable ability to repay.
On collateral, the SBA does not require it for 7(a) Small loans of $50,000 or less. Above that, lenders follow their own collateral policies, but a loan is not to be declined solely for inadequate collateral [2]. NerdWallet adds that 7(a) loans over $50,000 typically come with a personal guarantee from every owner of 20% or more [1].
Your industry can raise or lower the bar
Lenders price risk by industry. Restaurants and beauty services are often treated as higher risk because revenue swings, and many lenders refuse adult entertainment, drug-related businesses, gambling and money service businesses entirely [1].
Higher risk does not mean no. In NerdWallet's 2026 loan study, general contractors, health services businesses and restaurants, cafes and bars received the largest share of approved loans [1]. A strong file in a "risky" industry still gets funded.
Why clearing a higher bar is worth real money
Requirements and price move together. Each bar you clear opens a cheaper kind of lender. The published ranges below show the gap on the same dollar of funding [7].
| If you meet | You can usually apply to | Published price range |
|---|---|---|
| 670+ score, 2 years, strong revenue | Banks | 6.37% to 10.98% average, early 2026 [7] |
| Good credit and SBA eligibility | SBA 7(a) lenders | Variable 10% to 13.5% [7] |
| 6+ months, fair credit, steady deposits | Online lenders | 14% to 99% APR [7] |
| Steady card sales, weak credit | Sales-based funders | Estimated 40% to 350% APR [7] |
On $50,000 over five years, NerdWallet shows that dropping from a 15% APR to 10% cuts the monthly payment by $127 and saves $7,629 in interest [7]. If you are a few months from clearing the next bar, that is a strong reason to wait if your need allows it.
If you fall short of one requirement
- Score too low: see the minimums in business loans with bad credit, and pull your reports to fix errors first.
- Too new: online lenders usually want six months [1]; SBA microloan lenders and nonprofit lenders often work with newer firms.
- Revenue too low: ask for a smaller amount, or look at invoice factoring if you bill business customers [1].
- Too much existing debt: pay down or consolidate before you add more, or the DSCR will block you anyway.
- Not sure which bar you miss: NerdWallet points to your local Small Business Development Center and SCORE for help preparing your next application [1].
Batch Capital, our funding team, can tell you which requirements your file meets and which products that leaves open, before any lender runs your credit.