What credit score do I need for a small business loan?

Requirements vary by lender and loan type. For traditional bank loans and SBA loans, a personal credit score of 680 or higher is commonly preferred. Some online lenders and alternative financing options may accept scores as low as 500–600, though rates and fees will likely be higher. Your business credit score also matters.

How long does it take to get a small business loan?

Timelines depend on the lender and loan type. Online lenders can approve and fund a loan in as little as 24 hours to a few days. Bank and SBA loans typically take several weeks to a few months due to more extensive underwriting. The speed also depends on how quickly you provide required documents.

Can I get a small business loan with bad credit?

Yes, it is possible, but options may be more limited. Lenders offering invoice financing, merchant cash advances, or secured loans with collateral may work with lower credit scores. Be prepared for higher interest rates and shorter repayment terms. Improving your credit score before applying can open up better offers.

How to Get a Small Business Loan

Reviewed by the LoanPolicies Editorial Team · Updated 2026-09-05

Learn how to get a small business loan. This guide explains SBA loans, credit score requirements, working capital options, and how to find the right funding for your business.

Getting a small business loan involves understanding your financing needs, preparing your financial documents, and choosing the right type of loan for your situation. A small business loan is a lump sum of capital provided by a lender to a business owner, typically repaid with interest over a set term. The process can vary by lender and loan type, but the core steps remain consistent for most borrowers. This guide offers general information to help you navigate the journey and make an informed decision.

What Is a Small Business Loan?

A small business loan is a financial product designed to provide working capital, fund expansion, purchase equipment, or cover operational expenses. Lenders evaluate your business's creditworthiness using factors such as credit score, annual revenue, time in business, and collateral. Common loan types include term loans, lines of credit, SBA loans, invoice financing, and equipment financing. Each serves a different purpose, and understanding the differences is key to selecting the right fit.

Types of Small Business Loans

Before you apply, it's helpful to know the main categories of business loans. The table below summarizes common options.

Loan Type	Best For	Typical Repayment Term
Term Loan	Large one-time purchases or projects	1–10 years
Line of Credit	Ongoing cash flow needs or emergencies	Revolving, up to 1–5 years
SBA Loan (7(a) or CDC/504)	Long-term growth, real estate, or equipment	5–25 years
Invoice Financing	Bridging gaps from unpaid invoices	30–90 days
Equipment Financing	Purchasing machinery or vehicles	Equal to equipment life

Each type has unique qualification requirements. For example, SBA loans often have lower rates but require more documentation and a strong credit profile. A line of credit gives you flexibility to draw funds only when needed, while a term loan provides a lump sum with fixed payments.

Key Factors That Affect Qualification

Lenders assess several aspects of your business to decide approval and terms. The most common include:

Credit Score – Both personal and business credit scores matter. A score above 680 is often preferred for conventional loans, but some options exist for lower scores.
Annual Revenue – Lenders want to see consistent revenue that can support loan payments. Minimums vary by lender, but $50,000–$100,000 is common.
Time in Business – Most lenders require at least 6–12 months of operation; some require 2+ years.
Collateral – Secured loans require assets like real estate, equipment, or inventory. Unsecured loans do not but may carry higher rates.
Debt-to-Income Ratio – Lenders evaluate your existing debt obligations relative to income.

Steps to Apply for a Small Business Loan

Follow these general steps to streamline your application process:

Determine how much working capital you need and what loan type fits your purpose.
Gather financial documents: tax returns, profit and loss statements, balance sheets, bank statements, and business licenses.
Check your personal and business credit reports for errors and improve your score if possible.
Research lenders that specialize in your loan type. Compare offers from multiple sources.
Submit a complete application with all required documents. Be prepared to explain how the funds will be used.
Review the loan agreement carefully, including interest rate, fees, repayment term, and any prepayment penalties.

Choosing the Right Loan for Your Business

There is no one-size-fits-all answer. A term loan works well for a major expansion, while a line of credit supports short-term cash flow gaps. If you have strong credit and need a lower rate, SBA loans are worth investigating, but they require patience due to longer processing times. Always compare the total cost of borrowing—not just the monthly payment—and consider your business's ability to repay comfortably. This information is general guidance; your specific situation may differ.

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