Business Loan Requirements: What You Need to Qualify

The five things nearly every funder checks

Credit, time in business, revenue, cash flow and existing obligations. Different products weigh them differently.

Whatever the product, a funder is trying to answer one question: will this business repay? They look at evidence in five areas.

1. Personal credit: owner payment history and score.
2. Time in business: how long the business has been operating.
3. Revenue: monthly deposits and their consistency.
4. Cash flow: what is left after expenses to support new payments.
5. Existing debt: current payments that already draw on cash flow.

Banks and SBA lenders look at all five more strictly and add documentation and collateral. Faster products rely heavily on bank activity and revenue. Our funding fit guide helps match you to the right structure.

Credit score expectations

Higher scores open lower-cost options. Some products consider scores in the 500s when revenue and cash flow are strong. ROI Funder considers 500+ FICO.

Banks and SBA lenders generally prefer stronger scores. Alternative products place more weight on revenue and bank activity, so they can consider lower scores. A 500+ FICO can be considered at ROI Funder, though the offer you see depends on the whole file.

Owners with lower scores usually see higher costs and shorter terms. To improve your position, pay down card balances, fix reporting errors, avoid new hard inquiries before applying and keep accounts current. Our credit requirements for a business loan guide covers each level in more depth.

Applying with ROI Funder uses a soft credit pull, which does not affect your credit score.

Time in business and revenue minimums

Many alternative funders want at least 6 months in business and steady monthly revenue. Banks and SBA lenders often want two years or more.

Time in business is measured from when the business began operating or earning revenue, which you can show with a formation document, tax filing or bank history.

Revenue minimums protect against overextension. If monthly deposits are $20,000, a payment of $2,000 is a tenth of revenue. If deposits are $8,000, the same payment is a quarter. Funders therefore set minimums and may limit the amount to a fraction of annual or monthly revenue.

Seasonal businesses should explain their pattern. Show slow and busy months so a reviewer does not misread a slow stretch. See how much of revenue can go to loan payments for a sanity check.

Documents to gather

Expect to provide an application, ID, and recent business bank statements. Larger or lower-cost loans add tax returns, financial statements, debt schedules and collateral details.

Document lists vary by product:

• Fast working capital and revenue-based financing: application plus three months of business bank statements. At ROI Funder, that is a complete file.
• Term loans and lines of credit: may add a voided check, driver's license and basic business details.
• Equipment financing: an equipment quote or invoice.
• Bank and SBA loans: business and personal tax returns, profit and loss statement, balance sheet, debt schedule, business plan and sometimes projections.

Keep PDFs of statements, formation documents and tax returns in one folder. See the full small business loan application checklist.

Collateral, guarantees and liens

Some products require collateral or a personal guarantee. Others rely on revenue. Check which applies before you apply.

Secured loans pledge assets such as equipment, real estate or inventory. SBA loans often require collateral for larger amounts and a personal guarantee from owners with significant ownership. Revenue-based products typically rely on future receipts and may file a UCC lien.

Ask what a lien would cover and how it affects other financing. Read our explanation of collateral and the personal guarantee so you can compare what each offer asks of you.

Industry restrictions and common reasons for decline

Some industries are restricted or priced higher. Common declines involve thin revenue, heavy existing debt, negative balances and incomplete files.

Many funders restrict certain industries. Long-haul trucking and residential remodeling or new residential construction are examples that many funders in the market limit. We cannot promise funding in any restricted industry.

Frequent reasons for decline:

• Revenue below the product minimum.
• Many negative-balance days or returned items in bank statements.
• Multiple existing advances that already absorb cash flow.
• Missing or unreadable documents.
• Recent bankruptcy, tax liens or unresolved judgments.

If you have been declined, see second look funding to understand what might change the outcome.

A readiness checklist before you apply

Check your three months of statements, remove surprises, confirm your numbers and decide the amount and purpose in advance.

1. Download three months of complete business bank statements, all pages.
2. Confirm business name, address and ownership details match across documents.
3. Know your amount and what it will produce. Do the payback math first.
4. List current loan and advance payments.
5. Review your credit report for errors.

ROI Funder serves all 50 states and works with a network of funders, matching each file to those that fit it. The application takes a few minutes, uses a soft credit pull and carries no obligation to accept an offer. On approved, complete files, money can reach your account the same business day. Start with the loan-ready checklist or go straight to the application.