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The Top New Business Loan Requirements You Need to Know

Maddie Shepherd

Staff Writer at Fundera
Maddie Shepherd is staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!
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If you’re a new business owner looking for business funding for your startup, your options might be limited. But it’s helpful to know the new business loan requirements that you might come across in your search for financing.

During the underwriting process, many business lenders will evaluate your business history to see how risky lending to your business would be. If you haven’t been in business for very long, a lender will be less willing to lend to you.

Basically, lenders assume that the longer you’ve been in business, the longer your business will stay in business. And therefore, the more likely you’ll be able to pay back your business loan.

This can be a frustrating reality for new businesses searching for a business loan. Many lenders require a minimum time in business for any eligible borrower to even apply for funding from them, much less qualify for it.

Your Guide to New Business Loan Requirements

That said, a few types of small business loans are far more accessible to new businesses than others. As such, new business loan requirements look a little different from your average, everyday business loan requirements.

Plus, new business loan requirements vary, depending on the type of startup business loan you’re looking for.

new-business-loan-requirements

So, as you’ve probably gathered, the question “What is required to get a small business loan?” for new businesses isn’t quite a simple one to answer.

That said, it can be answered, especially if you break it down depending on the type of startup loan on the table.

Without further ado, let’s tackle all the new business loan requirements you need to know:

What Does Your New Business Need to Qualify for a Business Loan?

Generally speaking, to qualify for a business loan, your new business needs to come to the table not only with certain qualifications but also with the paperwork that proves those qualifications.

So, as you approach the application process for whatever new business loan you decide to vie for, know that you not only need to come bearing your business’s qualifications but also the documents that provide proof that these qualifications are indeed true.

What Kinds of Business Loans Are Available to New Businesses?

As a reminder, new business loan requirements certainly vary depending on the type of business loan. Because of this variation, it’s most helpful to wrap your head around new business loan requirements by looking at the top startup business loan types individually.

So, to start, what types of business loans are available to new businesses?

Well, though the shifting nature of the small business loan market makes this question impossible to answer in full, there are four best types of small business loans that are far more accessible to startups than other types:

  • Lines of credit
  • Invoice financing
  • Equipment financing
  • Short-term loans

Because these four types of loans are much easier for startups to qualify for, we’ll dive into the subject of new business loan requirements by breaking them down into these four categories.

Let’s get started with the requirements that usually come with lines of credit:

New Business Loan Requirements for Lines of Credit

First up, business lines of credit are one of the main types of business loans that startups will have better access to.

These types of new business loans provide a revolving credit limit to new businesses from which they can withdraw funds as needed. For instance, let’s say your business needs to buy $3,000 worth of inventory, but you lack the capital because you’re waiting for a few key clients to pay their invoices.

If your business has a line of credit for $10,000 in its back pocket, then it will be able to withdraw that $3,000 and pay it back gradually over the repayment term length.

After you repay that $3,000, your line of credit is back to $10,000 whereas before when you had withdrawn that $3,000, your line of credit was down to $7,000.

new-business-loan-requirements

All in all, even if your new business doesn’t need capital right this moment, a line of credit is an amazing type of business loan for a startup to have at the ready.

What do you need to get this type of startup small business loan in your back pocket?

As far as qualifications go, for most lines of credit, you and your business need to check off the following two boxes:

  • Generally speaking, your business needs at least six months in business. So, if your new business is younger than this, you’ll have to bide your time before applying for a business line of credit.
  • You typically need to be taking in at least $50,000 in annual revenue to be eligible for a business line of credit.

As for paperwork that you typically need to have to apply for this type of new business loan, plan to compile the following stack for your business line of credit application:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Balance sheet
  • Profit & loss statements
  • Credit score
  • Business tax returns
  • Personal tax returns

Though, of course, these new business loan requirements vary from lender-to-lender, these are the qualifications and documents that your business typically needs in order to be eligible for a business line of credit.

New Business Loan Requirements for Invoice Financing

Invoice financing is another type of business loan that is more accessible to new businesses. Through invoice financing, new businesses can access advances for their outstanding invoices.

This type of new business loan is particularly ideal for startups because it’s a form of self-secured financing.

What does that mean, exactly?

Well, invoice financing is a form of self-secured funding because it takes a business’s outstanding invoice as a form of collateral. As such, the lender is taking on less risk, and you won’t have to offer up any of your assets as collateral all the while.

With invoice financing, a lender will advance your business up to 90% of its outstanding invoice value. Depending on how many weeks your invoice is outstanding, your lender will charge you interest for the advance. Once your customer fulfills the invoice in question, the lender will take the interest from the remaining invoice amount (the amount that you didn’t receive in your financing) and return the rest to you.

new-business-loan-requirements

Now, to be sure, this is another new business loan that’s not available to brand-new businesses. Even just by nature of being secured by an outstanding invoice, this type of new business small loan requires that your business have at least enough business history to have obtained an invoice from a customer.

So, your business needs to come bearing the following qualifications in order to be eligible for invoice financing:

  • By and large, you likely need to have at least six months of business history to be eligible to apply for invoice financing.
  • Additionally, you typically need to have made at least $50,000 in annual revenue to fulfill the new business loan requirements for invoice financing.

In order to prove your business’s qualifications for the invoice financing applications,  you need to bring the following documents:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Credit score
  • Outstanding invoices

Invoice financing is yet another example of a small business loan that—with its relatively easy-to-fulfill new business loan requirements—is more accessible to startups. That said, if your startup has less than six months in business, then you’ll have to bide your time before applying for invoice financing.

New Business Loan Requirements for Equipment Financing

Another form of self-secured business loan that offers funding that’s relatively accessible to new businesses is equipment financing. Equipment financing offers small business loans specifically meant for purchasing equipment for business operations.

With equipment financing, the equipment you purchase with the loan proceeds acts as collateral for the loan. As such, the lender will be taking on less risk by lending to your business, and your business will be more likely to qualify for equipment financing. Plus, you won’t have to offer up any of you pre-owned assets as collateral to secure the new business loan.

That said, equipment financing is typically more long-term than invoice financing, and, as a result, is typically more difficult for new businesses to get.

Equipment financing requires even more time in business, even higher annual revenue, and a minimum personal credit score.

Let’s take a look at these new business loan requirements for equipment financing:

  • For minimum time in business for equipment financing, you typically have to have been in business for at least 11 months.
  • As for minimum personal credit score for equipment financing, you, as the business owner, need a personal credit score of at least 600.
  • Finally, you need at have made at least $100,000 in annual revenue to be eligible to apply for equipment financing.

Plus, when you apply for equipment financing, you’ll need to gather a decent amount of paperwork. Generally speaking, you need to get your hands on the following documents for an equipment financing application:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Credit score
  • Business tax returns
  • Equipment quote

As always, these new business loan requirements will vary from lender to lender, but if you’re seriously considering seeking equipment financing for your new business, then make sure you have these new business loan requirements taken care of.

New Business Loan Requirements for Short-Term Loans

Yet another type of business loan that’s relatively accessible to new businesses?

A short-term loan.

This type of new business loan works a lot like a condensed version of your traditional business term loan. With a short-term loan, your business receives a lump-sum of capital that it will pay off, plus interest, over a certain amount of time.

With short-term loans, however, the repayment term will be, well, much shorter. Typically between 3-18 months.

As a result of their shorter repayment terms, short-term loans typically come in smaller loan amounts, with higher interest rates and with more frequent payments. These features might make small-term loans less ideal for small businesses. That said, short-term loans are going to be much easier for new businesses to qualify for.

Let’s take a look at the new business loan requirements that typically come with short-term loans.

Generally speaking, short-term loans generally require more business history than other new business loans but are laxer with other new business loan requirements.

As far as qualifications go, you and your business need to come to the table with the following criteria:

  • To be eligible to apply for a short-term loan, you will need to have at least one year in business.
  • You, as the business owner, need to have a personal credit score of at least 525 to be able to apply for a short-term loan.
  • To fulfill the new business loan requirements for a short-term loan, your business needs to have made at least $50,000 in annual revenue.

If your startup fulfills those three minimum requirements and a short-term loan sounds like your ideal new business loan, then your next step is to apply.

To do so, you need to gather the remaining new business loan requirements for the short-term loan applications—all the necessary paperwork:

  • Driver’s license
  • Voided business check
  • Proof of ownership
  • Bank statements
  • Credit score
  • Personal tax returns

If you have a new business that has at least a year of business but your other business qualifications aren’t necessarily stellar, then a short-term loan could be the perfect new business loan for your situation.

Alternative Sources of Funding for New Businesses: 0% Intro APR Cards

Now, after reading through these new business loan requirements, you might have run into a common obstacle—your business isn’t quite old enough for the best types of new business loans out there.

What if you need funding for your startup now, and you can’t afford to bide your time until your business is old enough to fulfill most new business loan requirements?

If you’re asking yourself this question, then business credit cards could be the exact financial solution that your new business needs.

business-credit-cards-for-fair-credit

Business credit cards are an amazing option for new businesses because card issuers typically look to the business owner’s credit score—rather than the business’s own financial history—to decide whether or not to issue a business credit card.

So, with business credit cards, instead of worrying about new business loan requirements, you just have to make sure your personal credit score qualifies you for a business credit card.

One of the very best types of business credit cards for new businesses that need funding?

Business credit cards with 0% intro APR periods.

This type of business credit card will grant your business an introductory period in which any balance you carry with the card will accumulate 0% interest, provided you make your minimum monthly on time every month.

This means that, during a 0% intro APR period, carrying a balance from month to month will cost you zero money. Just be sure to make any balance transfers within the designated transfer period—typically 60 days after account opening—and to make your monthly minimum payments on time, every time. Otherwise, you might forfeit your 0% intro APR periods.

Essentially, for however long a card’s 0% intro APR period lasts, the business credit card functions sort of like a free loan.

Sound like just what your business needs?

Let’s take a look at some of the very best 0% intro APR business credit cards available to new business owners like you:

The American Express Blue Business Plus

First up on the list of the top 0% intro APR business credit cards for new businesses is the American Express Blue Business Plus.

What makes this business credit card the very best for 0% intro APR? Well, quite simply, it offers the longest 0% intro APR on the market.

With the Blue Business Plus, you’ll gain access to a whole 15 months of 0% intro APR if you stay on track with your minimum monthly payments. After this 15 months, your APR will set in at a rate that will depend on your creditworthiness and the market Prime Rate, so be sure to see the issuer’s terms and conditions for the latest APR information.

Beyond this lengthy intro APR period, though, the rewards that the Blue Business Plus offers—2x points on the first $150,000 spent every year, and 1x for every dollar spent thereafter—don’t quite stack up to competitors. If you’re looking for a business credit card with a 0% intro APR and a robust rewards program, look to your other options.

The Chase Ink Business Cash

The next-longest 0% intro APR period available on the market comes with the Chase Ink Business Cash. The Ink Cash comes with an intro APR period of 12 months, after which a variable APR sets in, so be sure to see the issuer’s terms and conditions for the latest APR information on this card as well.

However, with the Ink Cash, this 0% intro APR is merely scratching the surface of the perks it can offer.

For starters, its welcome bonus offers the opportunity to earn a $300 statement credit if you spend $3,000 within your first three months from account opening. Additionally, you’ll earn sustained cash back at the following rates when you spend with the Ink Cash:

  • 5% cash back on the first $25,000 you spend at office supply stores and on cellular phone, landline, internet, and cable TV services annually
  • 2% cash back on the first $25,000 you spend at gas stations and restaurants annually
  • 1% cash back on all other card purchases with no limit to the amount you can earn

As far as bonus categories for cash back go, the Ink Cash boasts some of the most small business-friendly, lucrative cash back returns on the market.

If you’re looking for a business credit card that has it all, and you’re okay with only gaining access to 12 months of 0% intro APR rather than 15 months of 0% intro APR, then the Ink Cash could be the perfect financing solution for your new business—no new business loan requirements necessary.

The Bottom Line for Understanding New Business Loan Requirements

There you have it—all of the new business loan requirements for the most popular types of startup loans.

Are you ready to apply for one of these top types of new business loans today?

Or will you have to look to 0% intro APR cards until your business has enough business history to fulfill these typical new business loan requirements?

Either way, you’ve got some pretty stellar funding options, even though your business is a young one.

Who’s to say new businesses don’t have choices?

Whether you’re carrying an interest-free balance on a business credit card that you acquired with just your personal credit score, or you’ve qualified for a business loan by fulfilling its new business loan requirements, your business finances will thank you.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Maddie Shepherd

Staff Writer at Fundera
Maddie Shepherd is staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!

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