Which Business Loans Can You Actually Qualify For?
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Which loan you can get depends on your business, how much you need, and your own finances, and each loan type has its own rules. Lenders mostly want to know one thing: will your business bring in enough cash to cover the payments? They measure it with debt service coverage, which is the cash you have available divided by the loan payments you would owe. SBA lenders typically want at least 1.10, and banks usually want 1.25 or higher. LivePlan's free Business Loan Qualification Calculator shows which options are likely, possible, or unlikely for you before you apply.
What types of business funding are there?
Loans and other funding sources differ a lot in who qualifies and what they cost. LivePlan's loan calculator covers these main categories:
- SBA 7(a) loans: government-backed term loans through approved lenders
- Microloans: CDFI and SBA microloans for smaller amounts
- Bank loans: conventional bank term loans
- Online and fast funding: online lenders and cash advances
- Alternative and small-scale: Kiva, grants, business credit cards, and crowdfunding
- Outside capital: friends and family, angels, and venture capital
It is easy to waste weeks on a loan you were never going to get. It is just as easy to say yes to the first offer in your inbox because it was the one that said yes. Matching your business to the right option first avoids both.
How does the Business Loan Qualification Calculator work?
The free calculator asks a few questions about your business, how much money you need, and a little about your own finances. It then shows which funding options are likely, possible, or unlikely to fit.
For each option you get a plain explanation, the pros and cons, typical rates and terms, and what to do next. It is free, and your data isn't saved.
What is debt service coverage, and what ratio do lenders want?
Every lender is really asking one question: will your business bring in enough cash to cover the loan payments?
Many answer it with debt service coverage: the cash your business has available, divided by the loan payments you would owe. If you would have $125,000 a year to cover $100,000 in payments, your coverage is 1.25.
- SBA lenders: typically want at least 1.10
- Banks: usually want 1.25 or higher
The calculator checks your numbers against thresholds lenders publish, so you find out where you stand before a loan officer tells you. For a deeper look at working out a safe loan size, see how to make smart borrowing decisions.
How do you prove you can repay the loan in your plan?
The calculator tells you where you stand today. A lender also wants to see where you are going, and an SBA-backed loan requires a business plan.
LivePlan's Debt Service Coverage Table goes into your business plan and shows whether your operating earnings cover your loan payments, month by month, based on your actual forecast. It is built from your linked financials, so it updates when you change a revenue number, add a hire, or adjust the loan amount.
That lets you answer the two questions every lender asks:
- Can you afford this loan?
- Are you asking for the right amount?
Before you apply, it also helps to know what lenders look for on your balance sheet and what they expect in a business plan.
Frequently asked questions
It depends on your business, the amount you need, and your personal finances. LivePlan's free Business Loan Qualification Calculator asks a few questions and shows which options are likely, possible, or unlikely to fit.
It is the cash your business has available divided by the loan payments you would owe. With $125,000 available and $100,000 in payments, coverage is 1.25.
SBA lenders typically want at least 1.10. Banks usually want 1.25 or higher.
Yes. An SBA-backed loan requires a business plan, and lenders want to see where your business is headed as well as where it stands.
No. The tool is free and doesn't save your data.
Sabrina Parsons
Sabrina has served as CEO of Palo Alto Software since 2007. She and her husband, Noah, founded a UK software distribution company in 2001 that was acquired by Palo Alto Software in 2002. Sabrina is a successful Internet expert, having served as Director of Online Marketing at Commtouch, Senior Producer at Epinions, and founder of her own Web consulting company, Lighting Out.
