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Applying for a small business loan can be a time-consuming and stressful process.

Many business owners want to know their chances of getting approved (or that they even stand a chance) before investing their time into searching and applying for loans.

So, what are your chances? Lending is never black or white, so it’s very hard for a business owner to find a concrete answer; the best way to know is to apply.

But, there are definitely some benchmarks that small business owners should be aware of that will give them a better idea of what lenders are looking at, and what their chances are of securing a loan.

View our Business Funding Guide today!

The 4 most important parts of the loan application:

Every lender is different, and puts emphasis on some criteria that others might not. But, there are a few factors that most lenders will consider important:

1. Your personal credit score

As the owner of the business, lenders assume you’ll be making the loan payments, so they want to know more about your history handling past debt.

2. Your annual revenue

Lenders want to know you have enough cash coming in to handle loan payments. Revenue is also very important in determining loan size. Most of the time you can only qualify for amounts around 15 percent or less of your total annual revenue.

3. Your time in business

The longer your business has been around, the better for your loan chances. Lenders feel more secure when you’ve stood the test of time. Your loan options will really start opening up after you’ve been in business for at least two years.

4. Your average bank balance

Lenders want to know how you manage your cash, and that you have some cushion on hand in case your business has an unexpected emergency. Almost every lender will ask for at least a few months of business bank statements to verify this amount, so make sure you bank account looks solid before applying.

Benchmarks to keep in mind:

As we said, there are very few things that are definitive in online lending, but many lenders do have “minimum requirements” for an application to be considered. Sometimes these minimums can be hard to find, so you can use this cheat sheet to decide which type of loan product your business should focus on.

SBA loans

SBA loans are very much like traditional bank loans, except a portion of them is guaranteed by the SBA, which makes it easier for riskier borrowers to qualify.

  • Time in business should equal 2+ years
  • Annual revenue of $50,000+
  • Personal credit score of 640+
  • Must be 3+ years out from a bankruptcy
  • Cannot have a loan out with another lender

Medium-term loans

Medium-term loans are traditional term loans found online that tend to be two to five years in length.

  • Time in business should equal 1+ years
  • Annual revenue of $150,000+ (one lender will consider $25,000+)
  • Personal credit score of 600+
  • Must be 2+ years out from a bankruptcy
  • If you have a loan out with another lender, you may be able to work with some medium-term lenders but not all
  • Medium-term loans are a great product for refinancing debt

Short-term loans

Short-term loans are loans three to 18 months in length, that have daily or weekly payments.

  • Time in business should equal 6+ months
  • Annual revenue of $65,000+
  • Personal credit score of 500+
  • Must be 1+ years out from a bankruptcy
  • If you have a loan out with another lender, you may be able to work with some short-term lenders but not all

Accounts receivable financing

Accounts receivable financing allows small business owners to use unpaid receivables as collateral for a cash advance.

  • Time in business should equal 6+ months
  • Annual revenue of $50,000+
  • Personal credit score of 500+
  • Must have outstanding B2B accounts receivables
  • It’s okay if you have a loan out with another lender

Startup loans

Startup loans are for young businesses with little financial history who are looking for traditional debt financing.

    • Personal credit score of 700+
    • 3+ years out from a personal bankruptcy
    • Cannot have a loan out with another lender

These are just five of the many products that can be found online. If you don’t meet these requirements, there are other products you could potentially qualify for, like a merchant cash advance, but know that those products tend to have very, very high APRs.

To reiterate, the best way to know if you will qualify is to apply. But, it’s good practice to speak with any lender you are considering before starting an application to ensure you meet their minimum requirements.

Need help finding a loan? Check out the Bplans Loan Finder. 

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Meredith Wood
Meredith Wood

Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more.