The 6 universal requirements
Almost every business term loan, regardless of lender type, requires these six baseline qualifications:
- Registered US business with EIN
- Active business bank account in the legal entity's name with 90+ days of history
- Personal FICO 600+ (some specialty lenders accept 540+ with compensating factors)
- Time in business: 12+ months for alt lenders, 24+ for banks and SBA
- Monthly revenue $15,000+ for alt lenders, $200K+ annual for banks/SBA
- Personal guarantee from each owner with 20%+ stake
Eligibility by lender type
Lender Type
Min FICO
Min Revenue
Min TIB
Key Underwriting Focus
Specialty Lender
540
$10K/mo
6 mo
Bank statements, revenue trend, willingness to take on collateral or higher down
Alternative Online Lender
600
$15K/mo
12 mo
Personal credit, revenue consistency, debt-service ratio
Credit Union
660
$25K/mo
18 mo
Member relationship, tax returns, conservative DSCR
Traditional Bank
680
$200K/yr
24 mo
Tax returns, P&L, balance sheet, collateral, deposit relationship
SBA 7(a)
680
$200K/yr
24 mo
Character, capacity, capital, collateral, conditions (5 Cs), full doc package
Documents you'll actually need
Standard package (most files under $250K)
- One-page broker application
- Last 3-6 months of business bank statements (PDFs from online banking)
- Last 1-2 years of business tax returns
- Personal financial statement
- Valid government-issued photo ID for each owner with 20%+ stake
- Voided business check
- Articles of incorporation or LLC formation documents
Larger or longer files ($250K+, SBA, bank loans)
- Everything in standard package, plus:
- Year-to-date profit & loss statement
- Balance sheet (interim, current quarter)
- Schedule of existing business debt (lender, balance, monthly payment, collateral)
- Use-of-funds plan (1-3 pages explaining the spend)
- 1-2 years personal tax returns for each guarantor
- Proof of business insurance and any required industry insurance
- SBA loans: business plan summary, SBA Form 1919, SBA Form 413
What disqualifies most applications
Hard stops across most lenders
- Active bankruptcy (Chapter 7 or 11) disqualifies almost every lender.
- Open tax liens without a payment plan disqualify SBA and banks; some alt lenders accept with documented IRS plan.
- Recent business defaults within 12 months disqualify most new term loans.
- NSF or overdraft activity above 5 per month signals cash flow problems.
- Active stacking (multiple unpaid MCAs) usually requires consolidation first.
- Pre-revenue or under 6 months in business outside the term loan market.
- Cash-only businesses with no bank deposit trail underwriters need to see revenue in the account.
- Restricted industries cannabis, adult, debt collection, payday lending.
What compensates for weak signals
If you fall short on one factor, others can offset. Common compensating combinations:
- Low FICO + high revenue: 600 FICO with $50K+/mo clean revenue often beats 680 FICO with $20K/mo erratic revenue.
- Newer business + strong personal credit: 12 months in business with 720+ FICO and strong tax returns can qualify when 12 months + 620 FICO won't.
- Weak revenue trend + collateral: Pledging business savings, equipment, or real estate can offset a recent revenue dip.
- Recent default + 12 months clean since: One year of clean history post-default starts to read normally to many lenders.
Pre-application checklist
Before applying, address these 60-day prep items:
- Pull your own credit report and dispute any errors (free at AnnualCreditReport.com)
- Pay credit card utilization below 30% of limit
- Avoid NSFs for 60-90 days
- Run all business revenue through the business bank account (no personal account deposits)
- Get business tax returns filed and e-filed (not just prepared by CPA)
- Pay any small unpaid items: tax liens, judgments, utility past-dues
- Bring any past-due accounts current
The 60-day prep window often saves 5-10 percent APR points on the eventual loan. On $100K over 5 years, that's $5,000-$10,000 in interest savings.
Frequently asked questions
What are the requirements for a business term loan?
6 universal: registered US business + EIN, business bank account, 600+ FICO (banks 680+), 12+ months in business (banks 24+), $15K+ monthly revenue (banks $200K+ annual), personal guarantee.
What is the minimum revenue for a business term loan?
Alt lenders: $15-25K/mo. Banks: $200K+ annual. SBA: ~$200K+ annual. Specialty: $10K/mo. Best rates open at $50K+/mo.
What credit score is required for a business term loan?
Banks: 680+. SBA: 680+. Credit unions: 660+. Alt lenders: 600+. Specialty: 540-599 with compensating factors. Under 540, look at MCA instead.
How long do I need to be in business to qualify for a business term loan?
12+ months for alt lenders. 24+ months for banks and SBA. Specialty lenders go to 6 months for very strong revenue files. Pre-revenue or under 6 months = equity, microloans, or revenue share.
What documents do I need for a business term loan?
Standard: app, bank statements 3-6 mo, tax returns 1-2 yr, personal financial statement, ID, voided check, formation docs. Over $250K: add YTD P&L, balance sheet, debt schedule, use-of-funds. SBA: add business plan + SBA forms.
What disqualifies a business term loan application?
Hard stops: active bankruptcy, open tax liens (no payment plan), recent defaults <12 months, 5+ NSFs/mo, active MCA stacking, pre-revenue, restricted industries (cannabis, adult, debt collection).