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Business Loan Qualification Calculator

Lenders run about nine tests before they say yes, and your business plan only touches two of them. Answer a few questions about your business and your own finances to see which funding paths are realistically open to you — SBA loans, banks, CDFIs, credit cards, investors, crowdfunding and more — and the single thing standing in the way of each one.

Funding options you may qualify for

SBA 7(a)

Prime + 2.75–6.5% · 10–25 yr

Likely

You look good here. For every $1 of loan payments your business has $1.85 of cash, comfortably above the $1.10 lenders look for. The money you are putting in is where it needs to be, and your credit is in range. One thing that test leaves out is your own mortgage, car and card payments. Counted alongside the business, that $1.85 becomes $1.29, against the $1.25 a lender looking at the combined picture wants — and that fall is the most common reason a profitable business is turned down. What is left is the part nobody publishes: each lender adds its own rules on top, and those have varied more since SBA dropped its national credit score requirement in March 2026. Worth approaching two or three rather than reading one no as the answer.

Source: SBA Procedural Notice 5000-876777 — SBSS sunset, 1.10:1 DSCR · as of 2026-03-01
What is this?

A loan from an ordinary bank, with the US government guaranteeing most of it if you cannot pay. That guarantee is why a bank will lend to businesses it would otherwise turn down — and why the paperwork is heavier than a normal loan.

If you accept

Pros

  • It is the cheapest real money you are likely to get. A few points over Prime, paid back over 10 to 25 years, with no balloon payment waiting at the end.
  • The early-repayment penalty is smaller than its reputation. It only bites on loans of 15 years or more, only in the first three years, and only if you pay off more than a quarter of the balance in one year. A 10-year working capital loan has none at all.

Cons

  • You personally guarantee it. Anyone owning 20% or more of the business signs, and the guarantee is unlimited — if the business cannot pay, you do. Closing the company does not end that: the guarantee is a contract between you and the lender, and a business bankruptcy does not clear it.
  • Your home can end up as collateral. If the business assets do not cover the loan and you hold 25% or more equity in your house, they take a lien on it — which blocks a future home equity loan or refinance.
  • The fees are added to the loan, so you pay interest on them: 2% to 3.75% up front, then 0.55% every year you still owe money.[1]
  • Defaulting is worse here than with a bank. The debt goes to the US Treasury, which can take your tax refund outright, garnish up to 15% of your wages or Social Security, and block you from an FHA, VA or USDA mortgage until it is settled.[2]
  • You cannot sell the business without permission. Doing it without the lender and the SBA agreeing counts as a default.
  • They file a lien over your business assets, and it does not lift itself when you repay — someone has to file the release, and lenders routinely do not. A stale lien turns up years later, usually when you try to sell the business.[3]
Your next move · 5 steps
  1. Pull your own credit report and clear anything stale. SBA scrapped its national credit score requirement in March 2026, so each lender now decides for itself — which makes an old collection or a wrong entry the cheapest thing you can fix before you apply, and the thing most likely to be different from lender to lender.
  2. Build 24 months of month-by-month projections, plus years three to five annually. That is the format SBA asks for, and on a smaller loan a well-sourced forecast can carry the cash flow test on its own.Do this in LivePlan
  3. Write up what the money is for and who is running the business. Your experience is not background colour here — the lender is required to write a section about it, so give them something to work from.Do this in LivePlan
  4. Assemble the file before you apply: two years of returns, three to six months of business bank statements, a personal financial statement, and assumptions you can source.
  5. Find an SBA Preferred Lender in your state and ask what they add on top of the SBA rules — minimum time trading, minimum credit score, industries they will not touch. That conversation costs nothing and saves you the application.

CDFI / SBA Microloan

6–13% · up to $250K · service area applies

Likely

You are a strong fit here. These lenders weigh who you are, how good your plan is, and whether the business can actually make the payments more heavily than they weigh your credit score. Worth understanding what you are being offered, though: they lend to riskier borrowers because they are funded to absorb the losses, not because they can see something a bank cannot. The money is real, and so is the risk you take on.

What is this?

Community lenders: nonprofits funded specifically to lend where banks will not. Smaller amounts, a closer look at you rather than only your numbers, and usually free advice attached.

If you accept

Pros

  • It genuinely builds your credit, and there is research rather than marketing behind that. Borrowers who started below 600 gained around 47 points in their first year, and the share with any business credit score nearly doubled.[1]
  • The terms are fair — roughly 8 to 13% on small loans, collateral often waived below $20,000 — and these lenders tend to work with you if you hit trouble rather than straight to collections.

Cons

  • Borrowers do fall behind more often after taking one. In that same research, the share seriously behind on payments rose from 13% to 21% within two years. These lenders take bigger risks, and some of that risk lands on you.[2]
  • It cannot clear debt you already have. Microloans cannot be used to pay off existing borrowing or buy property, so this is not a way out of a cash advance.
  • Expect required coaching. Many of these lenders make it a condition of the money. It costs time rather than paperwork, but it is not optional — and for a first-time owner it is often the most valuable part of the deal.
  • Anything secured puts a lien on your business assets, which a later bank or SBA lender will want cleared before they will lend. Collateral is often waived below $20,000, so smaller loans may avoid this entirely — worth asking before you sign.[3]
  • You will almost certainly guarantee it personally, and that guarantee outlives the business — closing the company does not end it.
Your next move · 4 steps
  1. Find the CDFIs whose service area covers your address. Geography is a hard gate here, not a preference, and it is the first thing to check.
  2. Expect the plan to actually be read. CDFIs weight plan quality, character and hands-on industry experience above the credit score — the opposite of a bank.Do this in LivePlan
  3. Say yes to the coaching. It is mandatory at many intermediaries and it is time, not paperwork — budget for it rather than resenting it.
  4. If you are carrying a merchant cash advance, know before you apply that an SBA Microloan cannot refinance existing debt. It will not get you out of that.

Business credit cards

Fast · underwrites you, not the business

Possible

You would very likely be approved — but $110K is far more than a card will give you, so it covers part of this at best. Opening several to reach the number is how people end up carrying expensive revolving debt, and it is worth avoiding.

What is this?

A business card, approved on your personal credit within days. A revolving limit rather than a lump sum — free if you clear it every month, expensive if you do not.

If you accept

Pros

  • You can have it this week, and it is judged on your personal credit rather than the business. No revenue test, no minimum trading history — which makes it the one option here open to someone who has not started yet.
  • Used carefully it costs nothing. Clear the balance each month and you have borrowed money for free.

Cons

  • The consumer protections you are used to do not apply. On a business card the rate can be raised on money you have already borrowed, with no advance warning — that is legal here and not on a personal card. We are less sure of this one — it comes from the industry rather than a regulator.
  • You are on the hook personally. Nearly every business card requires your personal guarantee, so this is your debt whatever the name on it says — and closing the business does not end it.
  • It probably will not build your credit, but it can damage it. Most banks do not report your everyday business card use to your personal credit file — though they do report a missed payment. Capital One and Discover report both ways.
Your next move · 4 steps
  1. Apply while your personal credit is at its best. The business is barely looked at here — the score being pulled is yours.
  2. Check whether the issuer reports ordinary activity to the personal bureaus. If you want the spending to build personal credit, Capital One and Discover are the two that do; if you want it kept off your personal ratio, they are the two to avoid.
  3. Do not carry a balance if you can help it. Business cards sit outside the consumer credit protections you are used to, so the rate can be raised on money you have already borrowed, with no notice. That is a materially different risk from a fixed-rate loan.
  4. Treat this as a bridge, not a facility. If the number you need is above a typical starting limit, a card is the wrong instrument and stacking several is worse.
Funding options that aren’t a good fit for you (6)

Kiva

0% · up to $15K · social underwriting

Unlikely

Kiva stops at $15,000, which is less than you are after. Still worth considering as one piece of a larger plan rather than the whole thing — it is the cheapest money on this page.

What is this?

A loan crowdfunded from hundreds of individuals, at no interest. It starts with people who already know you agreeing to lend first, and only then opens to strangers.

If you accept

Pros

  • It is free to borrow. No interest, no collateral, no personal guarantee, no credit check — nothing else on this list comes close.

Cons

  • You pay in social capital instead of money. You have to ask 5 to 40 people you know to lend first, and the campaign is public — your need for money becomes visible to everyone you know.
  • It builds nothing. Neither your repayments nor a missed one are reported to anyone, so it will not make your next loan cheaper or easier.
  • It is small and starts quickly: $15,000 at most, with the first repayment due a month after the money lands.
Your next move · 4 steps
  1. Line up your private lenders before you start. You need 5 to 40 people from your own network to lend inside a 15-day window, and the number who actually convert is what Kiva calls an incredibly powerful predictor of repayment.
  2. Open a PayPal account if you do not have one. Disbursement goes there, and it is a hard requirement.
  3. Ask a Trustee to endorse you. Endorsements sit alongside lender conversion as the two things Kiva names as predictive.
  4. Write the profile properly — staff review prioritises by profile quality, business validation and how fast you respond.Do this in LivePlan

Conventional bank term loan

Best available pricing · 2+ yrs required

Unlikely

Banks want to see two years of trading, and unlike SBA that is a genuine institutional rule rather than one lender being cautious — you cannot shop your way around it. SBA and community lenders are the realistic routes until you get there.

What is this?

An ordinary loan from a bank, on the bank's own terms with no government guarantee behind it. The cheapest money available and the hardest to qualify for.

If you accept

Pros

  • The best rates you will be offered anywhere, and the relationship compounds — the bank that lends to you now is the one that lends you more later.

Cons

  • The conditions attached catch owners out. Most bank loans cap how much you can pay yourself out of your own company without asking permission first.
  • You can default without ever missing a payment. Breaking one of those conditions counts on its own. It is usually forgiven, but for a fee and a higher rate afterwards.
  • A line of credit is not guaranteed to stay. Some can be cancelled at any time, and others simply are not renewed at the end of the year — even with a perfect payment record.
  • You guarantee it personally, and the bank takes a lien over your business assets. The guarantee survives the company closing, and the lien has to be actively released when you repay — it does not expire quietly.[1]
Your next move · 4 steps
  1. Ask for the full list of conditions before you sign anything, not after. Bank loans routinely limit how much you can pay yourself out of your own company without permission — that one surprises owners more than the rate does.
  2. Work out what a cap on paying yourself would do to your own income, and test the cash coverage condition — usually $1.20 to $1.25 of cash for every $1 of payments — against your worst case rather than your expected one.Do this in LivePlan
  3. If you lease premises or equipment, add those payments into the same sum. A lease is as fixed an obligation as a loan, so lease-heavy businesses usually trip that condition first — and a big owner draw can trip it while you never miss a payment.Do this in LivePlan
  4. Ask whether the line is committed or on demand. A demand line can be called at any time, and an annually renewed one can simply not be renewed despite perfect payment history.

Online lender / cash advance

Fast · 40–350% effective APR

Unlikely

You are earlier than these lenders take. They mostly want 6 to 12 months of trading and $100–120K a year, and they judge you on how your bank account behaves — average balance, bounced payments, days in the red — rather than on your forecast. A business credit card, judged on your personal credit instead, is the honest alternative at this stage.

Source: OnDeck published loan qualifications · as of 2026-09
What is this?

Fast money from non-bank lenders, priced for the speed. Some are loans; others buy a share of your future sales, which behaves very differently and is where the real cost hides.

If you accept

Pros

  • It is fast, and almost anyone qualifies. That is the whole of the appeal, and on a genuine emergency it can be the right call.
  • The rules have tightened lately. Courts have shut down the worst collection tactics, the regulator banned one company's owner from the industry outright and fined another $9.8 million, and California now bans describing these charges as an interest rate.[1]

Cons

  • It is expensive — commonly 50% or more a year once everything is counted, with fees taken out before the money reaches you.[2]
  • Repayments come out daily or weekly, not monthly. A slow week still gets debited the same amount.[3]
  • Paying it off early saves you nothing. The cost is a fixed multiple rather than interest: borrow $50,000 at a 1.35 rate and you owe $67,500 whether it takes six months or eighteen.
  • Renewing costs far more than it appears to. When you refinance, the fee is charged all over again on the balance you were already paying for — so always compare against the new money you actually receive. We are less sure of this one — it comes from the industry rather than a regulator.
  • There is usually still an early payoff cost — around 75% of the remaining interest — unless you paid extra up front for the option to avoid it.[4]
  • You guarantee it personally and they take a lien over all your business assets — and the lien is the part that catches people. A bank or SBA lender generally will not lend behind one, so a $40,000 advance can block a $400,000 SBA loan until it is repaid and formally released. Release is not automatic: send a written demand, then check your Secretary of State record yourself.[5]
Your next move · 4 steps
  1. Get a decision from a small bank or a CDFI first. The Fed's survey puts small banks at 57% fully approved against 23% online — this lane is the most likely to say yes and the most expensive place to hear it.
  2. Compute the cost against net new money, never the face amount. On a renewal the old balance is paid off out of the new advance and the unearned factor is charged on it again.
  3. Get the reconciliation provision in writing, and if revenue drops, make the reconciliation request in writing too. Whether a funder honours it is the central question courts use to decide if an advance is really a loan.
  4. Plan for the lien release from day one. The claim they register over your business assets does not lift itself when you repay — somebody has to file the release, and lenders routinely forget. Send a written demand once it is paid, then check your state's public register yourself. A stale claim surfaces years later, usually when you try to sell.

Grants

A competition, not a threshold

Unlikely

Long odds for almost everyone, and that is honest rather than discouraging. There is no general-purpose government grant for starting or running an ordinary business. SBIR is for research and development, and selects 5.6–21.9% at the first stage. Rural business grants cannot be applied for by a business at all — only by councils, tribes and nonprofits. Corporate programmes award somewhere between 15 and 500 a year nationally, and one of the best known picks winners by anonymous draw. Worth checking your eligibility for; never worth building a plan around.

Source: SBIR/STTR program — award amounts and selection · as of 2026
What is this?

Money you never pay back, awarded by competition. Almost all of it is government or corporate funding aimed at something specific — research, rural development, particular groups of owners.

If you accept

Pros

  • It is free money in the real sense: nothing to repay, nothing to guarantee, no claim on your house or your business.

Cons

  • The strings last for years. You report on what you did with the money, and you can be made to give it back if you do not do what you said you would.
  • Ask your accountant about the tax treatment. Our research did not cover it, and we would rather tell you that than guess.
Your next move · 4 steps
  1. Screen eligibility before you write a word. USDA rural business grants cannot be applied for by a business at all — only public bodies, tribes and nonprofits — and that pattern repeats across federal programmes.
  2. Work out whether you are doing R&D. If you are, SBIR is a real programme with published selection rates. If you are not, there is no general-purpose federal grant for running an ordinary business.
  3. Never pay anyone who guarantees grant funding. The FTC permanently banned one operator from grant writing and business consulting for exactly that promise.
  4. Budget for the reporting. You will be accounting for what you did with the money for years afterwards, and you can be made to give it back if you do not do what you said you would.

Investors

Equity · you sell part of the company

Unlikely

Investors are buying a share of how big this could get, not betting that you can repay them — and at $82K of revenue this reads as a business to own rather than one to buy into. Nothing is wrong with the business. It is the wrong instrument for it.

What is this?

Selling a share of your business for cash. Nothing to repay, but you have a part-owner from then on, and they are betting the business grows enough that their share becomes worth far more.

If you accept

Pros

  • There is nothing to pay back. No monthly payment, no personal guarantee, no lien — if the business fails you do not personally owe the money, which is true of almost nothing else here.
  • The money usually arrives with people attached. Introductions, hiring help, someone experienced to call — worth something an interest rate never captures.

Cons

  • You are selling part of your company, permanently. A loan ends; part-ownership does not, and every future raise takes another slice.
  • Investors are buying a share of how big this gets, not betting you can repay. A steady, profitable local business can be an excellent business and still be the wrong thing to invest in — those are not the same judgement.
  • You give up more control than most people expect: a seat at the table on big decisions, a say in whether you borrow, and terms that pay investors back first if you sell. We are less sure of this one — it comes from the industry rather than a regulator.
Your next move · 4 steps
  1. Decide honestly whether you are venture-shaped before spending a month on this. Investors need a path to selling their stake for a multiple of what they paid. If your plan is to own a profitable business for twenty years, that is a good plan and the wrong instrument.
  2. Work the warm introduction. Cold outreach converts close to nothing — the filter is someone the investor already trusts saying your name.
  3. Build the forecast that supports the number you are asking for. An investor's first question is what the money buys and what it makes possible, and a forecast that cannot answer that ends the meeting.Do this in LivePlan
  4. Get the market section right. Size, competition and why you win are the parts investors read hardest, and the parts most plans handle worst.Do this in LivePlan

Crowdfunding

Rewards or Reg CF · network-first

Unlikely

Crowdfunding looks like reaching strangers and works like reaching your own contacts first — the platform's audience only shows up once a campaign already has momentum. 12 people is thin for a launch that has to move in its first two days, and on an all-or-nothing platform a slow start means you keep nothing.

What is this?

Raising small amounts from a lot of people at once: either pre-orders from future customers, or shares sold to ordinary investors. Both are public campaigns with a deadline.

If you accept

Pros

  • On the rewards side you are taking pre-orders, not borrowing. No interest, nothing to repay, nothing signed over — and a campaign that funds has proved people want the thing before you build it.
  • The investment kind lets ordinary people back you, not just wealthy ones, up to $5 million a year.[1]

Cons

  • It is a marketing campaign with a deadline, not an application. The real work is months of building an audience before you launch — and it happens in public, so a campaign that fails, fails where your customers can see it.
  • On most platforms it is all or nothing. Miss your target and you keep none of it.[2]
  • Taking investment this way is a legal process, not a web page. You file paperwork with the SEC, produce financial statements to a standard set by how much you raise, and keep reporting afterwards.[3]
Your next move · 5 steps
  1. Decide which of the two you actually mean, because they share a name and nothing else. One is pre-selling a product to customers. The other is selling shares in your company to ordinary investors, which is a regulated process with filings, financial statements and ongoing reporting.
  2. Build the list before you launch, not after. The early share of nearly every funded campaign comes from people who already know you — the platform's audience arrives only once you have momentum.
  3. Grow the list first. A campaign launched into a thin network usually stalls in the first 48 hours and never recovers, and on an all-or-nothing platform that means you keep nothing.
  4. Set the goal at what you must have, not what you would like. All-or-nothing funding punishes optimism precisely.Do this in LivePlan
  5. If you are selling shares rather than pre-selling a product, get your financial statements to the required standard before you file. The standard rises with the amount you raise, and it is the step that delays offerings most often.Do this in LivePlan

Thresholds are published SBA, lender and regulator figures. Lender overlays vary and are largely unpublished, so real outcomes will differ. This tool names the constraint to fix rather than a probability, and it is not financial advice.

Get funding with a business plan that will wow investors

How Lenders Actually Decide Whether to Approve a Business Loan

Most advice about getting a business loan focuses on the business plan. Lenders mostly do not. A plan matters, but it enters the decision in two specific places near the end — and it is almost never the thing that fails.

What actually happens is a sequence. A handful of yes-or-no gates fire before anyone reads anything. Then one cash-flow ratio carries the decision. Then a set of factors adjust the terms rather than the answer. Understanding the order is most of the value, because it tells you what to fix first.

1. The Gates: Things That Stop the Application Before It Starts

These are binary. No amount of financial strength moves them.

  • Restricted industries. Cannabis and CBD, firearms, adult, gambling, money services and crypto, multi-level marketing, debt collection, and lending or investment businesses are excluded outright from SBA programmes and most bank lending. A separate group — restaurants, trucking, construction, staffing — is not barred but is priced higher and scrutinised harder.
  • Citizenship. Since March 2026, SBA 7(a) requires 100% US citizen or national ownership. Permanent residents are no longer eligible. This is a recent change that catches a lot of people out, and it covers the Microloan programme too. CDFIs are the usual route for anyone affected — most accept ITIN holders.
  • Legal standing. Being under indictment, or on parole or probation, rules you out of SBA loans. Owing the federal government money you have not been paying, or having cost it money before, will also stop an application. Bankruptcy is worth separating out: it counts against your credit, but it does not make you ineligible.

2. Debt Service Coverage Ratio (DSCR): The Number That Decides It

If one number gets you approved or declined, it is this one. DSCR compares the cash your business generates to the loan payments you would owe.

  • SBA 7(a) Small Loans (up to $350,000) want $1.10 of cash for every $1 of payments.
  • Standard SBA 7(a) loans want $1.15.
  • Conventional bank loans typically want $1.25, which is the lowest most banks are comfortable lending at.

Below $1.00 you are not covering the payment at all, which is why this is the number that decides it. One recent change is worth knowing: since March 2026, SBA can approve smaller 7(a) loans on your projections rather than your trading history — so a properly built forecast can carry the decision on its own, as long as you can show where the assumptions came from.

3. Global Cash Flow: Why Your Mortgage Counts Against Your Business

This is the mechanic that surprises people most, and almost nobody explains it. For a small business loan, DSCR is not calculated on the business alone. Lenders fold in the personal finances of every owner holding 20% or more — and usually their spouse. Your mortgage or rent, car loans, student loans, credit card minimums and any alimony all land in the same fraction as the business's loan payment.

A business producing $150,000 a year in cash looks excellent — against a $40,000 annual loan payment it covers 3.75 times over. But if the owner carries $120,000 a year in personal debt payments, only $30,000 is actually available: a global DSCR of 0.75, and a decline. It runs the other way too, which is why paying down personal debt is sometimes the fastest route to a business loan.

4. Equity Injection: The Money You Have to Put In

For a startup or a change of ownership, SBA requires an equity injection of 10% of total project cost.

  • It has to be verified and seasoned. Bank statements covering a minimum of 30 days, wires, settlement statements. A gift letter or an IOU on its own is explicitly not enough.
  • Thin industry experience raises it. In practice a first-timer in an unfamiliar sector is asked for 20–30% rather than 10%. Experience and cash are formally interchangeable here.
  • Existing businesses often owe nothing. Working capital, equipment, and expansion in the same industry and geography generally carry no injection requirement at all.

5. Collateral: Will They Take My House?

There is a published answer to this, and it is more specific than most people expect.

  • Loans of $50,000 or less carry no SBA collateral requirement.
  • Above that, personal real estate is taken when the loan is undersecured and the property holds 25% or more equity of its fair market value. Below that threshold it is not required.
  • Inadequate collateral alone is not grounds for an SBA decline if repayment ability is demonstrated.

Tip: Collateral is a structuring problem. Cash flow is a decline problem.

6. Documentation: Not a Credit Test, But It Behaves Like One

The most common reasons an SBA loan falls apart late are not credit problems — they are paperwork problems. Money you put in that cannot be traced is the single biggest one. Being unable to produce two years of tax returns, three to six months of business bank statements, a summary of your personal finances and forecast assumptions you can back up does not usually get you declined. It gets you stalled, which costs you more time.

Tip: Assemble the file before you apply, not after a lender asks. It is the cheapest thing on this list to fix and the most common thing to stall on.

Which Funding Option Is Right for Your Business?

The same borrower gets different answers from different lenders, because each one weighs the inputs differently. Someone with no chance at a bank can be a strong CDFI candidate. Routing matters more than ranking.

SBA 7(a) Loans

The cheapest real money most small businesses will get: a few points above the going bank rate, repaid over 10 to 25 years, with no large final payment waiting at the end. SBA sets no minimum time in business and no minimum revenue — every “two years in business” rule you have read is one lender's own policy, not an SBA rule. In FY2025, roughly 29% of these loans went to startups and newer businesses. What you trade for it is paperwork, a personal guarantee from every owner with 20% or more, and fees added to the loan so you pay interest on them.

CDFIs and SBA Microloans

Community Development Financial Institutions are nonprofit lenders funded specifically to lend where banks will not. Rates run 8–13% on microloans, collateral is often waived below $20,000, and several have no minimum credit score at all. Geography is a hard gate — the lender must serve your address. Research tracking CDFI borrowers found those starting below a 600 credit score gained around 47 points in their first year.

Conventional Bank Loans and Lines of Credit

The best rates available and the hardest to qualify for: typically two or more years trading, a credit score of 670+, 20–35% down, and $1.25 of cash for every $1 of payments. The part borrowers do not see coming is the conditions attached. Most bank loans limit how much you can pay yourself out of your own company without asking first, and breaking one of those conditions counts as a default even if you have never missed a payment.

Business Credit Cards

Approved on your personal credit within days, with no revenue test and no minimum time in business — which makes this the one option genuinely open to a business that has not launched. Free if you clear the balance monthly. Worth knowing: the CARD Act protections you have on a personal card do not apply to business cards, so rates can be raised on balances you already carry.

Online Lenders and Merchant Cash Advances

Fast, and almost anyone qualifies — that is the entire appeal. Costs commonly run 50%+ a year once everything is counted, with daily or weekly debits rather than monthly. Federal Reserve data puts online lenders at 23% fully approved against 57% at a small bank, so the lane most likely to say yes is also the most expensive place to hear it.

Tip: If a bank or CDFI is open to you, get that answer first.

Kiva

A crowdfunded loan at 0% interest — no collateral, no personal guarantee, and no credit check, which they state plainly in their terms. Capped at $15,000. The test is social rather than financial: you have to get 5 to 40 people you already know to lend first, before strangers ever see your campaign. It needs 12 months of sales behind you, so it does not serve founders who have not started.

Investors

Selling a share of the company rather than borrowing. Nothing to repay and no personal guarantee, but you give up part of the business permanently and gain a part-owner with a say. Investors are buying a share of how big this could get, not betting that you can repay them — which means a steady, profitable local business can be an excellent business and still be entirely the wrong thing to raise investment for.

Crowdfunding

Two different things share the name. Rewards crowdfunding is pre-selling to customers — no interest, nothing to repay, and proof of demand before you build. Regulation Crowdfunding is selling securities to ordinary investors, up to $5 million a year, with SEC filings and financial statements. Both are public campaigns with a deadline, and both are won on an audience you build before you launch.

Grants

A loan is a threshold test — clear the bar and you are funded regardless of who else applied. A grant is a competition. You can be excellent and lose. Odds run one to two orders of magnitude worse than credit; SBIR Phase I selection runs 5.6–21.9% depending on the agency, and there is no general-purpose federal grant for starting or running an ordinary business.

Tip: Never pay anyone who guarantees grant funding. The FTC has permanently banned at least one operator from grant writing and business consulting for exactly that promise.

Frequently asked questions

What credit score do I need for a business loan?

It depends entirely on the lender. SBA itself sets no minimum, and since March 2026 it no longer requires a credit score at all for its smaller 7(a) loans. Each lender now sets its own bar instead: banks typically want 670 or above, most cluster between 640 and 680, community lenders publish floors as low as 575 and several have none at all, and online lenders go down to 500. Because there is no national cutoff any more, which lender you approach matters more than it used to — often more than the number itself.

Can I get a business loan for a startup with no revenue?

Sometimes, yes — and more often than the internet suggests. SBA sets no minimum time in business and no minimum revenue for 7(a) loans, and roughly 29% of them in FY2025 went to startups and newer businesses. What you need instead is 10% of the project cost in your own money, projections you can back up, relevant experience in the industry, and enough income between you and your household to cover the payment. Business credit cards and some community lenders are genuinely open to founders who have not started trading yet.

What is DSCR, and what DSCR do lenders want?

It is the comparison lenders make between the cash you have available and the loan payments you would owe, and it is usually the number that decides the answer. Smaller SBA 7(a) loans want $1.10 of cash for every $1 of payments, standard 7(a) loans want $1.15, and banks generally want $1.25. One thing that catches people out: for a small business it is worked out across your personal finances too, so your own debts count against the business.

Why does my personal debt affect my business loan application?

Because lenders calculate global cash flow, not business cash flow. The personal income and personal debt payments of every owner with 20% or more — and usually their spouse — go into the same ratio as the business. A profitable business can be declined because of the owner's mortgage and car loan, and paying down personal debt is sometimes the fastest way to become approvable.

How much do I need for a down payment on an SBA loan?

10% of what the whole project costs, if you are starting up or buying a business. It has to be your own money and it has to be traceable — at least 30 days of bank statements, and a gift letter or an IOU on its own will not do. If you are new to the industry, expect to be asked for 20–30% instead, because lenders treat experience and cash as interchangeable. An existing business borrowing for working capital, equipment, or expansion in the same line of work often needs to put in nothing at all.

Will the bank take my house as collateral for a business loan?

For SBA loans there is a published rule: personal real estate is taken when the loan is undersecured and the property holds 25% or more equity of its fair market value. Below that threshold it is not required. Loans of $50,000 or less carry no SBA collateral requirement. And a loan cannot be declined for inadequate collateral alone if repayment ability is demonstrated.

Can I get an SBA loan as a permanent resident or green card holder?

No. Since March 2026, SBA 7(a) requires 100% US citizen or national ownership, and the rule covers the Microloan programme as well. Permanent residents who would previously have qualified now need a different route — CDFIs are the usual answer, and most accept ITIN holders.

What is a CDFI, and how is it different from a bank?

A Community Development Financial Institution is a nonprofit lender funded to serve businesses banks turn down. They lend smaller amounts, weigh character and industry experience above credit scores, often waive collateral under $20,000, and usually include free advising. Rates run 8–13% on microloans. The catch is geography: each serves a defined area, and that is a hard requirement.

Do I need a business plan to get a business loan?

For a startup SBA loan, yes. For an established business, the plan matters less than the financials — but the projections inside it can be decisive. Since March 2026, SBA can approve 7(a) loans up to $350,000 on your projected cash flow rather than your trading history — which turns a forecast you can back up into the deciding document rather than a formality.

Is a merchant cash advance a good idea?

Rarely, and the reasons are worth understanding before you sign. The cost is a fixed multiple rather than an interest rate: borrow $50,000 at a rate of 1.35 and you owe $67,500 whether it takes six months or eighteen, so paying it off early saves you nothing. Repayments come out daily or weekly rather than monthly. And it registers a claim over all your business assets, which can block a much bigger SBA or bank loan until it is repaid and that claim is formally released.

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