To qualify for a business loan, most lenders require a minimum personal credit score (500 for many alternative products, around 650 for SBA loans), 4 months to 2 years in business, steady monthly revenue in your bank statements, and enough cash flow to cover the new payment. Some loan types also require collateral.
Those are the headline requirements. What trips most applicants up is the fine print under each one, so this guide goes requirement by requirement.
What are the minimum requirements for a business loan?
Sagamore's lending partners start with three baseline minimums for most working capital and equipment products:
| Requirement | Minimum |
|---|---|
| Time in business | 4+ months |
| Monthly bank deposits | $5,000+ |
| Personal credit score | 500+ |
Longer-term and lower-cost products raise the bar. Here is how the requirements change across the products Sagamore brokers:
| Product | Credit score | Time in business | Other key requirement |
|---|---|---|---|
| Line of credit | 500+ | 4+ months | $5,000+ monthly deposits |
| Term loan | 500+ | 4+ months | $5,000+ monthly deposits |
| Bridge loan | 500+ | 4+ months | A documented repayment event |
| Equipment financing | 500+ | 4+ months | Equipment with a clear market value |
| Factoring | 500+ | 4+ months | Invoices to creditworthy business or government customers |
| Commercial mortgage | 600+ | 2 years preferred | 10% to 25% down payment |
| SBA loans | 650+ | 2 years typical | SBA eligibility and size standards |
Meeting a minimum makes you eligible to be considered. The offer itself, including amount, term, and cost, depends on how far above the minimums you land.
How much revenue do you need to qualify?
For revenue-based products, the floor is $5,000 a month in deposits, but lenders read your statements for more than the average. They look at:
- Consistency: steady deposits month to month beat one big month and three thin ones.
- What counts: lenders generally exclude transfers between your own accounts, loan proceeds, and refunds. Only real revenue counts.
- Ending balances: an account that regularly drops near zero signals tight cash flow.
- Overdrafts and returned items: frequent NSFs are one of the most common reasons for a decline at this tier.
A quick self-check with hypothetical numbers: a cleaning company shows deposits of $14,000, $11,500, $16,200, and $12,300 over four months. The average is $54,000 ÷ 4 = $13,500, comfortably above the minimum. If $3,000 of the $16,200 month was a transfer from the owner's personal account, the true average drops to $51,000 ÷ 4 = $12,750. Run the math the way a lender will, not the way your dashboard shows it.
What credit score do you need for a business loan?
The minimum depends on the product. Each band of personal credit score opens more options:
| Score range | What typically opens up |
|---|---|
| 500 to 579 | Lines of credit, term loans, bridge loans, equipment financing, factoring, AR financing |
| 580 to 619 | Above, plus FHA-style residential mortgage programs |
| 600 to 649 | Above, plus commercial mortgages (programs commonly start at 600 to 650) |
| 650 to 699 | Above, plus SBA loans and 0% APR business credit cards |
| 700+ | The best card introductory terms and higher limits, and generally the lowest pricing across products |
At the low end of any band, expect smaller amounts and higher cost. Scores above 650 typically qualify for longer terms and better rates on working capital products. If your score sits just under a threshold, a credit repair program or simply paying down card balances before applying can move you into the next band.
Do you need collateral to get a business loan?
Not always. Many working capital products are unsecured by specific assets, while others are built around collateral:
- Secured by the thing being financed: equipment financing (the equipment), commercial mortgages (the property).
- Secured by receivables: factoring and AR financing, where your customers' credit matters as much as yours.
- Secured by personal property: a HELOC, which uses your home equity.
- Commonly unsecured by a specific asset: many lines of credit and term loans, though lenders often file a general lien on business assets and ask for a personal guarantee.
Collateral can offset weaker credit or a short history. A business declined for an unsecured term loan may qualify for equipment financing because the lender can recover the asset.
What is debt service coverage, and what ratio do lenders want?
Debt service coverage ratio (DSCR) compares the cash a business generates to the loan payments it owes:
DSCR = annual cash available for debt service ÷ annual debt payments (including the new loan)
Say a hypothetical auto repair shop generates $150,000 a year in cash available for debt payments, and its existing payments plus the proposed loan total $110,000 a year. Its DSCR is $150,000 ÷ $110,000 = 1.36. It earns $1.36 for every $1.00 of debt payments.
Conventional lenders commonly look for a DSCR of about 1.25 or higher. For SBA 7(a) Small Loans ($350,000 or less), the SBA set a minimum DSCR of 1.10, on a historical or projected basis, effective March 1, 2026. That same notice retired the FICO SBSS score the SBA had used to prescreen small loans; lenders now apply their own credit analysis.
Are there extra requirements for SBA loans?
Yes. On top of credit and cash flow, SBA loans have program eligibility rules. As of 2026:
- The business must be for-profit, operate in the United States, and meet the SBA size standard for its industry.
- Effective March 1, 2026, 100% of the direct and indirect owners of a 7(a) or 504 applicant must be U.S. citizens or U.S. nationals whose principal residence is in the U.S. Lawful permanent residents are no longer eligible to hold any ownership share.
- Start-ups (under SOP 50 10 8, businesses generating revenue for one year or less) must inject equity of at least 10% of total project costs.
- Owners generally cannot have delinquent federal debt or recent defaults on government loans.
The SBA's updated operating procedure, SOP 50 10 8.1, takes effect October 1, 2026, so confirm current rules with the lender before you apply.
What automatically disqualifies a business loan application?
A few items stop most applications regardless of revenue:
- An open, undischarged bankruptcy
- Unresolved tax liens or judgments against the business or owners
- Heavy existing short-term debt, especially several advances already stacked on the same account
- Businesses in industries a lender excludes, which varies by lender
- Deposits that fall below the minimum or show repeated overdrafts
Most of these are timing problems rather than permanent ones. A lien that is paid off or a debt that is consolidated can change the answer on the next application.
How do you know which requirements you meet?
Line your business up against the tables above. Two hypothetical businesses show how different profiles point to different products:
| Business A | Business B | |
|---|---|---|
| Time in business | 7 months | 4 years |
| Average monthly deposits | $22,000 | $85,000 |
| Owner credit score | 560 | 710 |
| Existing debt | None | Equipment loan, $1,800/month |
| Likely starting point | Line of credit, term loan, or equipment financing | SBA loan, term loan, or line of credit, with better pricing |
Business A qualifies for revenue-based products today and could grow into SBA eligibility over time. Business B meets most requirements across the board, so its decision is about which product fits the use, not whether it qualifies.
If you meet the baseline minimums, you can apply once and let Sagamore match your profile to lenders whose requirements you already clear.
