How to Get a Business Loan in 2026: Requirements, Steps and What Lenders Check

To work out how to get a business loan, settle five things in order: how much you need and why, whether your credit and cash flow clear the lender’s floor, which loan type fits the purpose, which lenders serve businesses like yours, and the documents they will ask for. This guide covers all five, plus what a loan really costs, which products to avoid, and what to do if you are turned down.

What lenders check before they approve a business loan

Before you think about how to get a business loan, know what a lender is scoring. It is one question: will this business still generate enough cash in three years to make the payment? Five inputs answer it, and they are broadly the same across community banks, credit unions and online lenders. Some lenders publish their business loan requirements and some keep them internal, but the categories rarely change.

Time in business

Time in business is the first filter and usually a hard one. Bank of America’s unsecured term loan and credit line ask for two years, and its secured lines, equipment loans and commercial real estate loans need a “minimum 2 years in business under existing ownership.” Wells Fargo’s BusinessLine line of credit “requires time in business to be six months or more.” Under six months, most bank products are closed to you.

Revenue and cash flow

Revenue matters twice: there is a floor to get in the door, then a question of whether the money arrives steadily enough to service a fixed payment. Bank of America publishes $100,000 in annual revenue for unsecured products and $250,000 for secured ones. Underwriters read twelve months of bank statements for the shape of the money, and $200,000 across fifty even weeks reads better than the same sum in two frantic quarters.

Personal and business credit scores

For a small business, the credit score for a business loan is mostly your personal score, because the company’s repayment capacity is one or two people. Bank of America says “Personal credit above 700 FICO Score is typically required” for unsecured products, and Wells Fargo says “Typically, guarantors have a FICO Score of at least 680 at time of application” for BusinessLine. Your business also builds its own credit file once it has an EIN, a bank account and trade accounts in the company name.

Collateral and the personal guarantee

Collateral is a specific asset the lender can take if you stop paying. The SBA treats a 7(a) loan as “fully secured” when “the lender has taken security interests in all assets being acquired, refinanced, or improved with the 7(a) loan and available fixed assets of the applicant with a combined adjusted net book value up to the loan amount.” A personal guarantee is broader: it makes you liable whatever the company owns, so a default can reach your house. In the Federal Reserve Banks’ 2025 Small Business Credit Survey, 59% of firms with debt had used a personal guarantee to secure it, so expect to be asked for one.

Debt service coverage ratio, with the arithmetic

Debt service coverage ratio, or DSCR, is the calculation that sits behind most decisions. It divides the cash your business generates in a year by the loan payments it owes that year. Above 1.0 the income covers the payments; below 1.0 it does not, and no amount of enthusiasm in a business plan fixes that. The SBA’s own 7(a) requirement is that you “be creditworthy and demonstrate a reasonable ability to repay the loan,” and DSCR is how a lender scores that sentence.

Here is the arithmetic. A landscaping company clears $8,000 a month after costs and the owner’s pay, so $96,000 a year, and wants a loan whose payments come to $6,000 a month, or $72,000 a year. Divide $96,000 by $72,000 and the ratio is 1.33, leaving 33 cents of headroom per dollar of payment. Now change one number: at $5,500 a month it clears $66,000 against $72,000 of payments, a ratio of 0.92, and the file is declined however good the story. Run this on yourself first, and a common rule of thumb is that under about 1.15 you should ask for less.

The main types of business loan and who each one suits

There is no single product called a small business loan. There are ten or so, they solve different problems, and picking the wrong one is one of the common ways a good business gets declined. It is also the part of how to get a business loan that most guides skip. Match the loan to the purpose: long-lived assets take long-term debt, cash flow gaps take revolving credit, and a specific machine takes financing secured on that machine.

SBA 7(a) loans: the default first stop

The 7(a) is the SBA’s flagship and the closest thing to a general purpose small business loan. The maximum is $5 million, permitted uses include “Short- and long-term working capital”, “Refinancing current business debt” and “Changes of ownership (complete or partial)”, and maturities run to “Ten years or less” as standard or “25 years, including extensions” for real estate or equipment with a useful life beyond ten years. The SBA does not lend the money: you apply “directly through a local lender” and the SBA guarantees up to 85% of loans of $150,000 or less and up to 75% above that. That guarantee is why a bank approves a file it would otherwise decline, which makes SBA loan requirements worth reading even if you borrow commercially.

SBA 504 loans

An SBA 504 loan is for premises and heavy equipment, plus refinancing of qualified debt tied to them. The maximum is $5.5 million, “10-, 20- and 25-year maturity terms are available”, and it funds “the purchase, construction or renovation of existing buildings or land” plus “long-term machinery and equipment with a useful remaining life of a minimum of 10 years.” It cannot cover “working capital or inventory,” and it comes through Certified Development Companies working “in collaboration with a senior lender”.

SBA microloans

SBA microloans are the most realistic government-backed option for a young business: “loans of up to $50,000”, an average of “about $13,000”, a seven-year maximum term, and rates “Generally, between 8%-13%”. They fund working capital, inventory, supplies, furniture, machinery and equipment, and cannot be used “to pay existing debts or to purchase real estate.” Nonprofit intermediaries issue them, usually bundling in mentoring, and the SBA publishes the microlender list by state.

Bank term loans

A term loan is a lump sum on a fixed repayment schedule. At Bank of America the entry point is $25,000, and its terms run up to four years secured by business assets, or up to 10 years with a balloon payment and 15 fully amortizing for commercial real estate. The tradeoff is the strictest eligibility on this list.

Business lines of credit

A business line of credit revolves rather than amortizing: you draw what you need, pay interest on the drawn balance, and the limit refills as you repay. Wells Fargo’s unsecured BusinessLine offers “Credit lines from $10,000 to $150,000”, where the rate “will be between Prime + 1.75% and Prime + 9.75% depending on your personal and business credit evaluation”, and its secured Prime Line of Credit runs $100,000 to $3,000,000. A line suits a timing problem, not an asset you will own for five years.

Equipment financing

Equipment financing is secured on the thing you are buying, which usually makes the lender’s decision easier and your odds better. Bank of America’s equipment loans start at $25,000 with terms up to five years. Because the asset is the collateral, at many lenders the credit bar sits below an unsecured term loan of the same size, though revenue floors can be higher.

Invoice financing

Invoice financing advances money against invoices you have issued but not been paid for. It fixes one problem well: the work is done, the customer has 60 days, and payroll is Friday. The cost is a fee or discount on the invoice value, the advance clears when the customer pays, and it only works if you invoice other businesses.

Online lenders

Online lenders will often approve a file a bank declines, and in days rather than weeks. You pay for both. In the Federal Reserve Banks’ 2025 Small Business Credit Survey, 61% of applicants at online lenders reported a high interest rate as a challenge, against 28% at large banks and 30% at small banks, and 60% of those that borrowed from one reported higher-than-expected borrowing costs. Use one as a fallback, and convert the cost into an annual rate before comparing.

Business credit cards

A business credit card is usually the easiest credit to get and among the most expensive to carry. Its value early on is the record rather than the borrowing: it creates a credit file in the company’s name, which is what a bank looks for two years later.

CDFIs and community lenders

Community Development Financial Institutions are mission-driven lenders serving businesses that mainstream banks underserve, and some act as SBA microloan intermediaries. Their loans are typically smaller and their process slower and more hands-on, often including help with the numbers first. If two banks have declined you for thin history rather than bad conduct, a CDFI or a local credit union is the next door, and often the practical answer to how to get a business loan in year one.

Where small businesses actually get approved

One underrated part of how to get a business loan is choosing where to ask, because the odds move sharply by lender type. In the Federal Reserve Banks’ 2025 Small Business Credit Survey, which drew 6,525 responses from firms with 1 to 499 employees between 3 September and 14 November 2025, applicants at small banks were fully approved 57% of the time. Large banks, the most-applied-to source, came in at 43%.

Two more numbers are worth carrying into your planning. Sixty percent of firms applied for financing in the twelve months before the survey, so borrowing is ordinary rather than a sign of trouble. And “Forty-two percent of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none.” Partial approval is the second most likely outcome, so decide in advance which parts of your plan you would fund first. The practical read: start with a small bank or credit union where you already hold an account, keep a large bank in the running, and treat online lenders as the fallback.

The documents you need before you apply

The document pack is the least glamorous part of how to get a business loan and the one that decides your timeline. The SBA is candid that “The contents of the loan application vary depending on the size of the loan and the lender’s processing method” and that “Your lender will help you determine which documents you’ll need,” but the underlying list looks much the same from one lender to the next.

• A business plan. What the business does, who buys from it, what the loan is for, and what happens to revenue and costs after the money lands.
• Two to three years of business tax returns, filed rather than drafted. If the business is newer, bring what exists.
• Two to three years of personal tax returns for every significant owner, because the personal guarantee makes their finances part of the file.
• Twelve months of business bank statements, all accounts, no gaps.
• Profit and loss statement and balance sheet, year to date plus the last full year.
• A debt schedule: every loan, lease, card and advance with its balance, rate, monthly payment and maturity. Underwriting builds this anyway, so handing it over saves a week.
• Financial projections, monthly for year one and annual for years two and three, with the new payment already in them.
• Accounts receivable and payable aging, if you invoice.
• Legal documents: formation certificate, operating agreement or bylaws, licenses and permits, commercial lease, any franchise agreement.
• Your EIN. The IRS issues it free, and you can “Get your EIN straight from the IRS in minutes.”

Two habits make this pack a morning’s work rather than a two-week scramble, and both are worth starting long before you need to know how to get a business loan. Keep business and personal money apart, which our guide to the best business bank accounts in the USA covers. And invoice consistently, because your receivables ledger is much of what a lender reads: our guide on how to make an invoice and our free invoice generator get you a clean paper trail. No EIN yet? Start with how to get an EIN number.

How to get a business loan step by step

Here is how to get a business loan from first thought to funded, in the order that wastes the least time. Do the first three steps before you contact a single lender.

1. Fix the amount and the purpose. Write down the exact number and what it buys. “Around $150,000 for growth” gets declined; “$142,000 for a second van, a hire, and three months of the payroll that hire creates” gets underwritten. The purpose also picks the product, because the SBA and most banks restrict what each loan can pay for.
2. Check your own numbers first. Pull your personal credit report, calculate the coverage ratio above using the payment you expect, and confirm you clear the published floors for time in business and revenue. If any of the three fails, fix it or change product now rather than collecting a decline.
3. Pick the loan type that matches the purpose. Premises and long-life machinery point to a 504. General purposes point to a 7(a) or a bank term loan. A timing gap points to a line of credit. A specific machine points to equipment financing. Under $50,000 in a young business points to a microloan.
4. Shortlist lenders, and use SBA Lender Match. Start where you already hold accounts, because an existing relationship is the most common reason applicants pick a bank. Then run the SBA’s free Lender Match: you “Describe your needs” in as little as five minutes, and the SBA prepares “a summary of all the interested lenders two business days after you submit a Lender Match request.” Have your amount, use of funds, credit history, projections, collateral and industry experience to hand. The SBA is clear that “Registering and providing responses to the questionnaire is no guarantee that SBA-approved lenders will find you eligible for their programs,” so keep two or three lenders in play.
5. Assemble the document pack. Everything in the list above, in one folder, clearly named. This step separates a three-week decision from a three-month one.
6. Submit, and answer underwriting fast. Expect questions on any month where deposits dipped, on existing debt, and on gaps between projections and history. Answer within a day: files go stale in queues, and the ones that move are the ones whose owner replies.
7. Read the offer, then close. Compare on total cost rather than monthly payment, check the prepayment terms, and confirm what collateral is pledged and what the guarantee covers.

Timing is the last variable in how to get a business loan, and it varies by lender, but the shape is consistent. A business credit card or an online lender can fund in days. A bank line of credit usually takes one to three weeks, and Wells Fargo advertises faster processing for requests up to $50,000. A conventional term loan usually runs three to six weeks once your documents are in. An SBA 7(a) commonly runs one to three months, and a 504 usually takes longest because two lenders approve in parallel.

How to get a business loan when your business is new

The rules on how to get a business loan do not bend for a new business, and bank floors are written in months or years of trading. So do not argue with the floor. Ask for less, from lenders whose purpose is younger businesses, while building the file that unlocks bigger products later. Startup business loans are a real category, but the realistic ones are small.

Ask for less

The smallest workable number is your strongest application, because it is the number your cash flow can cover. A $30,000 request against $96,000 of annual income clears comfortably. A $250,000 request against the same income does not, and the decline goes on your record.

Go where the door is open

SBA microloans, CDFIs, credit unions and nonprofit lenders all serve businesses under two years old, the segment most big-bank products screen out. Bank of America’s cash-secured credit line takes six months in business and $50,000 in annualized revenue against a refundable $1,000 deposit, one of the few mainstream products a first-year business can get.

Expect to sign a personal guarantee

With no trading history and no business assets, your own credit and your own guarantee are the collateral. That is a real risk, and it deserves a decision made with your eyes open rather than discovered at closing.

Build business credit deliberately

Get an EIN, open a business bank account, put a card and a couple of trade accounts in the company’s name, and pay every one early. Two years of that history turns a declined application into an approved one, and it costs nothing but discipline.

Separate your finances now

Mixed personal and business money is a common reason a young file is unreadable, and an unreadable file is declined by default. Our guide to the best business bank accounts in the USA covers the options, and if you are still setting up, our guide on how to start a small business covers the order to do things in.

Rates and fees: what a business loan actually costs

Knowing how to get a business loan is half the job; knowing what it costs is the other half. Business loan interest rates are only part of the price, because guarantee fees, packaging fees and prepayment penalties can move the real cost by several percentage points, and a short term makes a cheap-looking rate expensive.

Read the APR, not the rate

An interest rate prices the borrowing. An APR folds in the fees, which is why it is the only number worth comparing across lenders: two offers at 9% are not the same loan if one carries a 3% origination fee. Watch the term too, because $100,000 at 12% over five years and the same at 12% over one year have wildly different payments. Put every offer through a business loan calculator on the same term before you decide.

SBA rate caps

The SBA publishes maximum rates lenders may charge on variable-rate 7(a) loans, tiered by size: “Base rate plus 6.5%” for loans of $50,000 or less, “Base rate plus 6.0%” from $50,001 to $250,000, “Base rate plus 4.5%” from $250,001 to $350,000, and “Base rate plus 3.0%” above $350,000. That cap is a real borrower protection and the main reason to prefer an SBA-guaranteed loan over an unregulated alternative of the same size.

The guarantee fee and the annual service fee

The SBA “publishes the amount of the Upfront Fee and the Lender’s Annual Service Fee each fiscal year for all loans approved during that year through an Information Notice.” Lenders are permitted to pass the upfront fee on to the borrower, so ask whether yours will and what the current figure is at your loan size. Exemptions are worth asking about: for the year running 1 October 2025 to 30 September 2026, “For 7(a) manufacturing loans of up to $950,000, the upfront fee will be 0%” and “For all 504 manufacturing loans, the upfront fee and annual service fee will each be 0%.” On 504 loans generally, fees total “approximately 3% of the debt”.

Prepayment penalties

Paying a loan off early can cost you. On 7(a) loans with a maturity of 15 years or longer, a penalty applies if you voluntarily prepay 25% or more of the outstanding balance within three years of first disbursement: “During the first year after disbursement, 5% of the amount of the prepayment”, 3% in the second year and 1% in the third. Commercial lenders set their own, and some products charge the full fee whenever you repay, which removes any benefit from paying early.

Red flags and the products to avoid

Part of learning how to get a business loan is spotting the offers that are not loans, because the protections you expect are not there. Two things to recognize on sight: the merchant cash advance and the confession of judgment.

Merchant cash advances

A merchant cash advance is not structured as a loan. It buys a slice of your future card takings at a discount, usually swept daily or weekly from your account. Because it is a purchase rather than a loan it sits outside much of the lending rulebook, and it is often quoted as a “factor rate” rather than an APR, which makes it look far cheaper than it is.

Confessions of judgment

This is the clause to refuse. The FTC’s case against RCG Advances, formerly Richmond Capital Group, described how the defendants “required businesses and their owners to sign confessions of judgment, which allow the defendants to immediately obtain an uncontested judgment in case of an alleged default.” In plain terms, you sign away your right to defend yourself in court before any dispute exists. That case ended with the company and its owner banned from the merchant cash advance and debt collection industries and “ordered to pay more than $2.7 million, which will be used to provide refunds to consumers harmed by their actions.”

Promises that contradict the contract

The same case is a checklist of what to distrust. The defendants “falsely claimed that their cash advances required ‘no personal guaranty of collateral from business owners'” while the contracts said otherwise, and made “marketing promises of ‘no upfront fees'” while deducting large undisclosed fees, so that “when businesses received their funding from the defendants, it was often thousands of dollars less than promised.” If a funder’s marketing and its paperwork disagree, the paperwork is what a court reads. Read every contract to the end, check the amount promised against the amount that will land, and have anything unusual reviewed by a lawyer first.

Alternatives to a business loan

Not every plan needs debt, so before you settle the question of how to get a business loan, price the alternatives. Grants, crowdfunding and money from people who know you all have a place, and one comes with a large caveat.

Grants, with the caveat first

Federal startup grants do not exist. USA.gov states plainly that “There are no federal grants for starting a business”, and the SBA says “SBA does not provide grants for starting and expanding a business.” SBA grants go “to nonprofits, Resource Partners, and educational organizations”, so anyone charging a fee for access to a federal startup grant is selling nothing. Real grants do exist at state, city, corporate and foundation level, and they are worth the time because the money is not repayable. Our directory of US small business grants tracks open programs, and we keep a separate list of small business grants for women.

Crowdfunding

Crowdfunding suits a business with a product people can pre-order and an audience that already exists. It fails quietly when there is no audience yet, because a campaign with no traffic raises nothing. Treat it as a way to prove demand, not as a substitute for a loan on a fixed timetable.

Friends, family, and a written agreement

Money from people who know you is the cheapest capital available and the easiest way to ruin a relationship. In the 2025 Small Business Credit Survey, a loan from family or friends was the second most common source of funding outside financing, after the owner’s own money. Whatever the amount, write it down: who lent what, whether it is a loan or equity, the interest rate, the repayment schedule, and what happens if the business cannot pay. It matters to a future lender too, because undocumented family money shows up as an unexplained deposit.

Your own money

Owner funds were the most common source of other funding in that survey. Your own cash avoids interest and dilution, but count it as capital with a cost, and keep enough personal runway that a slow quarter does not become a personal crisis.

What to do if your business loan application is denied

A decline tells you something specific about your file, and it does not end the process. You have a legal right to know why, the reasons are usually specific and fixable, and the most common one is not about you at all.

You are entitled to the specific reasons

Under the Equal Credit Opportunity Act, as implemented by Regulation B, a lender must tell you what it decided, and on adverse action it must either give you a statement of specific reasons or tell you that you can request one. The deadline depends on the size of the business: for one with gross revenues of $1 million or less in its preceding fiscal year the notice comes within 30 days of a completed application, and a business above that threshold gets it within a reasonable time. Those reasons must be “specific and indicate the principal reason(s)”; citing internal standards or a failed credit score is not enough. Below the $1 million line the lender may give the notice of its decision orally, and it may give the reasons orally too as long as it tells you how to get them in writing. Ask for writing anyway.

The reasons lenders actually give

In the 2025 Small Business Credit Survey, applicants not approved for at least some of the financing they sought named these reasons: lender requirements too strict (46%), too much debt already (37%), low credit score (30%), insufficient collateral (29%), weak sales (29%), and lenders not approving financing for businesses like theirs (29%). The top answer is about the lender’s box, not your business, which is why a decline at a large bank is worth re-testing elsewhere.

What to fix, in order

1. Re-test the same file at a different type of lender before changing anything, especially if the reason given was strict requirements. The full-approval gap between small and large banks is 14 percentage points.
2. Shrink the ask so the coverage ratio clears with room to spare, then reapply for the smaller amount.
3. Clear or consolidate existing debt if “too much debt already” was cited. Your debt schedule shows which payment to attack first.
4. Add collateral, including a cash-secured product, if insufficient collateral was the reason.
5. Work on the credit file if the score was the problem, running a microloan or secured card alongside rather than waiting idle.
6. Use a free adviser. SBA Resource Partners provide free or low-cost counseling, and a review before the file goes back in beats a blind resubmission.

Worked in this order, a decline becomes the first draft of the application that gets approved, which is how to get a business loan after a no.

Frequently asked questions

How do you qualify for a business loan?

Lenders weigh five things: how long you have traded, your revenue and cash flow, your personal and business credit, the collateral you can pledge, and whether your income covers the new payment. The SBA’s test is that you “be creditworthy and demonstrate a reasonable ability to repay the loan.” Published bank floors start at six months to two years in business.

What credit score do you need for a business loan?

It depends on the lender and the product. Bank of America says “Personal credit above 700 FICO Score is typically required” for its unsecured term loan and credit line, and Wells Fargo says BusinessLine guarantors typically have a FICO score of at least 680. SBA microloan intermediaries and CDFI lenders often work with lower scores, and secured products are easier than unsecured at the same score.

How much revenue do you need to get a business loan?

Bank of America publishes $100,000 in annual revenue for its unsecured business loan and credit line, and $250,000 for its secured products. Its cash-secured credit line drops to $50,000 in annualized revenue. What matters as much as the total is whether the money arrives steadily enough to cover a fixed monthly payment.

Can you get a business loan with no credit?

Rarely from a mainstream bank’s unsecured products, because with no credit file there is nothing to underwrite. The routes that work are an SBA microloan through a nonprofit intermediary, a CDFI or credit union that lends on the story as well as the score, a cash-secured product, or a secured business credit card. Each starts the file that makes your next application easier.

How long does it take to get approved for a business loan?

Typically, days for a business credit card or an online lender, one to three weeks for a bank line of credit, three to six weeks for a conventional term loan, and one to three months for an SBA 7(a). SBA 504 loans usually take longest because two lenders approve in parallel. SBA Lender Match sends a summary of interested lenders two business days after your request.

Can a new LLC get a loan?

Yes, though rarely a conventional bank term loan, because most bank products need six months to two years of trading under existing ownership. A brand-new LLC realistically qualifies for an SBA microloan of up to $50,000, a CDFI or credit union loan, equipment financing, or a business credit card. Expect to be asked for a personal guarantee.

How much of a down payment do you need for an SBA loan?

The SBA does not set one universal figure, and it varies by program and purpose. Expect the lender to ask you to contribute equity on an acquisition or a property purchase, with more required when the business is new or the collateral is weak. Ask for the exact figure early, because it changes how much loan you should request.

How do you get a loan to buy an existing business?

An SBA 7(a) loan is the usual instrument, since “Changes of ownership (complete or partial)” is a permitted use and the maximum is $5 million. The lender underwrites the target as much as you: expect to provide its last three years of accounts, a valuation, the purchase agreement, your own industry experience, and an equity contribution.

Sources

• U.S. Small Business Administration, Loans, 7(a) loans, 504 loans and Microloans.
• U.S. Small Business Administration, 7(a) loan program terms, conditions, and eligibility.
• U.S. Small Business Administration, Lender Match connects you to lenders.
• U.S. Small Business Administration, Grants, and SBA waives loan fees for small manufacturers in fiscal year 2026.
• Federal Reserve Banks, 2026 Report on Employer Firms: findings from the 2025 Small Business Credit Survey.
• Consumer Financial Protection Bureau, Regulation B, section 1002.9 Notifications.
• Federal Trade Commission, FTC action results in ban for Richmond Capital and owner from merchant cash advance and debt collection industries.
• Internal Revenue Service, Get an employer identification number.
• USA.gov, How to start and fund your own business.
• Wells Fargo, Small business loans and lines of credit.
• Bank of America, Small business loans and financing.