Business line of credit requirements: what lenders check

SBA lines want a full year of operating history. Almost every application for a line of credit turns on the same three numbers: your personal credit score, how long the business has been open, and how much it brings in each year. NerdWallet's general floor is a score of 600 or higher, six months or more in business, and $50,000 or more in annual revenue [1].

Those are minimums, not targets. Among the lines NerdWallet lists, published minimum scores run from 600 to 700, time in business from 3 to 12 months, and revenue from $30,000 to $120,000 a year [1]. A lender that asks for 3 months in business may still want a 600 score; one that asks for a 680 score may want 12 months open.

If you sit right at a minimum, expect a smaller limit and a higher price than the ad shows. If you clear the minimums by a wide margin, you have room to compare.

Where you apply matters as much as your numbers. Online lenders publish the lowest bars. NerdWallet says you may qualify with some of them at a score of 600, while a bank or credit union line typically needs a score close to 700 or higher [1]. Its table of minimums by product puts lines of credit at 600+ and bank loans at 680 to 700+ [5].

The SBA does not publish a minimum credit score for its lines. For SBA Express, lenders may use a business credit scoring model, but such a model cannot rely solely on consumer credit scores [4]. In practice your lender's own policy sets the bar.

Online lines often decide from a short form and your bank data. Bank and SBA lines ask for a fuller file. Gather these before you start, so an underwriter is not waiting on you:

1. Recent business bank statements, usually the last few months.
2. Business and personal tax returns.
3. A profit and loss statement and a balance sheet [6].
4. For an SBA Working Capital Pilot line: accounts receivable and accounts payable agings and inventory reports [3].
5. Your formation documents and a list of every owner and their share.

If your books are a few months behind, catch them up first. A lender reading a stale profit and loss statement assumes the worst about the months it cannot see.

An unsecured line has no specific asset pledged against it, but that does not mean nothing backs it. NerdWallet says a lender will likely require a personal guarantee or a Uniform Commercial Code (UCC) lien to cover its risk [2]. A personal guarantee makes you personally responsible if the business cannot pay. A blanket lien can cover all of the business's assets [2].

A secured line asks for something specific. One bank line NerdWallet lists for startups sets your limit by a cash deposit, with a minimum deposit of $1,000 [1]. That can be a way in if your score or history is thin.

SBA Express lines are more forgiving on collateral at the small end: lenders are not required to take collateral on loans up to $50,000, and a larger loan is not to be declined solely for inadequate collateral [3].

Meeting the minimums gets you a line. Beating them gets you a cheaper one. Published business line of credit APRs run from 10% to 99%, and NerdWallet says the stronger your credentials, the lower the rate you will see, with banks usually cheaper than online lenders [1].

The same $10,000 draw costs about ten times more at the top of the range than at the bottom. Origination, draw and maintenance fees can raise the real cost further, so ask for every fee in writing before you sign [1].

That gap is why it can pay to wait a few months if you are just under a bank's bar. Six more months of deposits or a corrected credit report error can move you from the expensive end of the range toward the cheap end.

The core requirements are the same in every state, but not every online line is offered everywhere. NerdWallet notes that one lender on its list does not lend in New Jersey, along with nine other states [1]. Before you fill out a long form, check that the lender serves NJ businesses.

SBA lines follow federal rules, so an SBA Express or Working Capital Pilot line has the same terms in Newark as in Camden. The SBA's New Jersey District Office, at 2 Gateway Center in Newark, serves all 21 counties and can point you to participating lenders [7].

Falling short on one number is common, and each gap has its own fix. Match the fix to the gap rather than applying everywhere at once, since each formal application can mean a hard credit check.

If you are not sure which gap matters most, the qualify estimator shows which products your numbers fit. Business Funders lists ranges from published sources; your own offer depends on your file.