To get a small business loan, you'll typically need at least six months to two years in business, a credit score of 600 or higher, and financial documents showing steady revenue — then you match your needs to the right loan type and apply directly with a bank, credit union, or online lender. The right loan depends heavily on what you need the money for and how established your business already is.

Quick Answer

• Most lenders want to see time in business, a minimum credit score, and consistent revenue before approving a loan.
• SBA loans (7(a), 504, Express, and Microloans) offer the lowest rates but the slowest approval; online lenders are faster but more expensive.
• Core paperwork includes a business plan, tax returns, bank statements, and a use-of-funds explanation.
• New businesses with limited history often qualify more easily for microloans or SBA Express than for a traditional 7(a) loan.

Main Types of Small Business Loans

• SBA 7(a) loans: the SBA's flagship program, usable for working capital, equipment, or refinancing, up to $5 million, with the government guaranteeing part of the loan to reduce lender risk.
• SBA 504 loans: designed for major fixed assets like real estate or heavy equipment, structured as a partnership between a bank and a Certified Development Company.
• SBA Express loans: a faster-turnaround version of the 7(a), with a lower maximum amount but approval decisions in days rather than weeks or months.
• SBA Microloans: smaller loans (up to $50,000) aimed at startups and very small businesses, often issued through nonprofit lenders.
• Term loans: a lump sum repaid over a fixed schedule, offered by both traditional banks and online lenders.
• Business lines of credit: a revolving credit limit you draw from as needed, useful for managing cash flow rather than funding a single large purchase.

What Lenders Look For

Requirements vary by lender and loan type, but most check the same core factors:

• Time in business: many banks want at least two years; online lenders and microloan providers will often work with six months to a year.
• Credit score: SBA and bank loans typically expect 650+ personal credit; online lenders may accept scores in the mid-500s at a higher interest rate.
• Revenue and cash flow: lenders want evidence the business generates enough consistent income to make payments.
• Collateral: larger loans, especially SBA 504s, often require the financed asset or other business assets as collateral.
• Personal guarantee: most small business loans require the owner to personally guarantee repayment, especially for businesses without an extensive credit history of their own.

How to Apply for a Small Business Loan

1. Decide exactly what the loan is for. Equipment, real estate, working capital, and expansion each point toward different loan types.
2. Check your credit and finances first. Pull your credit report and gather at least two years of financials (or as much as you have) before applying anywhere.
3. Compare lenders and loan types. Banks and SBA lenders offer the best rates; online lenders trade a higher cost for speed and looser requirements.
4. Prepare your documents. Typical requirements include a business plan, tax returns, bank statements, a profit and loss statement, and a clear use-of-funds explanation.
5. Apply and respond quickly to follow-up requests. Lenders often ask for additional documentation mid-review; slow responses are one of the most common causes of delay.

SBA Loans vs. Online Lenders

SBA and traditional bank loans generally offer lower interest rates and longer repayment terms, but the application and approval process can take weeks to months and demands more paperwork. Online lenders approve loans in days, with looser credit and revenue requirements, but charge meaningfully higher interest rates in exchange for that speed and flexibility. Many small businesses use online loans for short-term needs and reserve SBA or bank financing for larger, planned investments.

Frequently Asked Questions

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

Traditional banks and SBA lenders typically want 650 or higher. Online lenders are often more flexible, sometimes approving scores in the mid-500s, but usually at a higher interest rate.

Can a new business get an SBA loan?

Yes, though it's harder. SBA Microloans and SBA Express are generally more accessible to newer businesses than a standard 7(a) loan, which tends to favor businesses with an established financial track record.

How long does small business loan approval take?

SBA and bank loans can take several weeks to a few months. Online lenders often approve and fund within a few business days.

Do I need collateral for a small business loan?

It depends on the loan. Larger loans, particularly SBA 504 loans for real estate or equipment, usually require collateral. Smaller loans and lines of credit may not, though most still require a personal guarantee.