Every business needs financial resources in order to operate, grow, invest in futures, and so on. With LendingTree’s network of business loan lenders we can help you get the money you need, and give you the power to choose your best terms and lowest rates. Find out what business loan requirements you need to meet in order to qualify.
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Applying for financing for your small business may seem daunting. But understanding small business loan requirements, which may include strong personal credit, collateral and extended time in business, could ease the process and increase your chances of getting approved for funding. Continue reading to learn more about what would be expected of you when applying for a business loan.
Online business lenders typically fund loans faster than banks because they usually review fewer documents from applicants. Most prioritize credit score, annual revenue, time in business and profitability. Instead of requesting the reports above, they may ask for bank statements or access to your bank account or accounting software.
However, speed comes at a price — online lenders may have more lenient requirements, but they often charge higher rates and issue smaller loans.
Banks are typically stricter and require many of the documents discussed above. But if you’re approved for a bank loan, you could receive a larger amount with a lower, competitive rate.
The U.S. Small Business Administration partners with lenders to guarantee loans made to small businesses. The SBA doesn’t directly loan money, but instead insures a portion of the loan amount to reduce risk for the lender.
If you are turned down for a conventional loan, you may qualify for an SBA loan, though you can only be considered for an SBA loan if you demonstrate that you have exhausted your options for obtaining other possible sources of financing. You must also meet the following criteria:
SBA loans typically have low rates and fees and favorable repayment terms, though the application requirements differ slightly from those of standard business loans. Here are the additional requirements you could expect when seeking an SBA loan:
The SBA could take a few weeks to review your documents and compile a loan offer. During the underwriting process, you may be asked to submit more information to further illustrate your circumstances.
Category | Amount | Interest | Repayment | Time to Funding |
---|---|---|---|---|
SBA Loans | $25K-$5M | < 10% | 7+ years | 7-75 days |
Short Term Loans | $5K-$5M | > 5% | 3+ months | 1-7 days |
Term Loans | $1K-$5M | > 5% | 1+ years | 1-21 days |
Business Line of Credit | $2K-$500K | > 1.5% | 1+ years | 1-30 days |
Working Capital Loans | $5K-$500K | > 10% | 3+ months | 1-3 days |
Equipment Financing | $1K-$5M | > 5% | 1+ years | 1-14 days |
Receivable Financing | 85% of AR | > 9% | 1+ months | 1-7 days |
Depending on the lender you choose, it may take a few days or a few weeks to be approved for financing. Being well-prepared could help you access funds faster when it’s time to apply. Here are a few tips to follow:
Be sure to shop around and compare lenders before settling on a loan for your small business. Look for a lender with minimum requirements that your business meets, as well as rates and terms you can handle.