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Is It Hard to Get a Business Loan?

Editor's note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone.

How Hard Is It to Get a Business Loan?

There’s no single deciding factor for how difficult it will be to get a business loan. Plus, when it comes down to it, you want to do more than get a business loan, you want to get the right business loan for your business.

That being said, there are some factors to consider when trying to figure out which loan options your business is qualified for.

Details about your business and its history will impact how hard it is to get a business loan. If you haven’t been in business long, have challenged credit, or low annual revenue, you’ll find it’s pretty hard to get a business loan that’s affordable. On the other hand, if you’re an established business owner with strong financials—like a long business history, good credit, and high annual revenue—getting a business loan won’t be so hard for you.

How hard it is to get a business loan will also depend on what kind of business loan you apply for. The most difficult business loans to get—as far as underwriting standards and the time and energy you’ll have to put into the application—are SBA loans and traditional bank loans. Meanwhile, the easiest business loan to get is a merchant cash advance, offering very fast and accessible—but expensive—capital.

Keep reading to learn about the easiest and most difficult business loans to get and whether or not your business qualifies.

Why Getting a Business Loan Can Be Hard

For starters, let’s address the big, overarching question—how hard is it to get a small business loan?

Unfortunately, there’s no definitive, tidy answer to this question. How hard it is to get a small business loan will always depend on the situation you find yourself in when you’re applying for a business loan.

How is your business doing? What does your business need funding for? What industry is your business in? How much are you willing to pay for funding? The list goes on.

While it’s not a perfect science, there is a list of factors that are pretty consistently judged when applying for any loan that you’ll want to consider.


The Different Types of Business Loans, Ranked by Accessibility

Ready to look into how easy each type of business loan is to qualify for?

Here are the different types of business loans, ranked by general accessibility, starting with the easiest type of business loan to qualify for. In addition to these details, we’ll also explore how to apply for each one.

Merchant Cash Advance

First up on our list is the easiest type of business loan to qualify for—the merchant cash advance.

This small business funding option is actually technically not a loan—it’s an advance. With a merchant cash advance, a lender will advance your business’s future credit card revenues that you will repay with a predetermined daily percentage of your business’s credit card sales.

Because it is the most accessible business funding option, a merchant cash advance will also almost always be the most expensive of all your options. The cost of a merchant cash advance is most often expressed as a decimal factor rate which, if multiplied by your loan amount, will show you how expensive your MCA will turn out to be.

All that said, MCA’s are remarkably easy to qualify for—you’ll just need:

  • At least five months in business
  • 400+ personal credit score
  • $75,000+ in annual revenue

Merchant cash advances are one of the best options for under-qualified businesses in need of funding. However, before you agree to this financing product, make sure your business can sustain the high interest rates. Otherwise, you may find yourself stuck in debt you can’t pay off.

Invoice Financing

Next up, invoice financing is another relatively accessible business funding option for less-qualified businesses.

With invoice financing, a lender can advance your business up to 90% of your outstanding invoice’s value. But this advance doesn’t come free—they’ll charge you a certain percentage of interest per week that the invoice is outstanding. So the further away you are from your invoice’s fulfillment day, the more expensive your invoice financing will be.

That said, because invoice financing is self-secured business funding, it’s relatively easy to qualify for. Invoice financing comes with these general minimum requirements:

  • At least six months in business
  • $50,000+ in annual revenue
Business Lines of Credit

Third on our list, business lines of credit are yet another business funding option that are reasonably accessible for less-qualified businesses.

A business line of credit basically works like an intangible credit card—your business will be extended a line of credit from which you can spend, and you only have to pay back however much you spend, plus interest.

Business lines of credit are often relatively easy to access. They come with general minimum requirements that are pretty easy to fulfill:

  • At least six months in business
  • $50,000+ in annual revenue
Short-Term Loans

The next most accessible type of business loan is the short-term loan. A short-term loan will function a lot like a condensed version of a traditional term loan—you’ll receive a lump sum of funding that you’ll pay off, plus interest, over time.

However, with short-term loans in general, the loan amounts will be smaller, the APRs will be higher, and the repayment terms will the shorter. Plus, instead of scheduled monthly payments, you’ll likely pay scheduled daily or weekly payments. Some short-term loans even express their rates in factor rate instead of APR (which is a tell-tale sign of some pretty expensive funding).

However, short-term loans come with less desirable terms because they’re much more accessible than their longer-term counterparts. You’ll just need to fulfill the following minimum requirements for short-term loan:

  • At least one year in business
  • 550+ personal credit score
  • $50,000+ in annual revenue
Equipment Financing

Next, the fifth-most accessible type of business funding is equipment financing. Just like invoice financing, equipment financing is a self-secured form of business funding.

Equipment financing is a form of business loan used for acquiring equipment. If you qualify for equipment financing, you’ll be able to finance up to 100% of a piece of equipment’s value.

The equipment itself functions as collateral for the loan, and thus makes equipment financing less risky for the lender and more affordable for the borrower. However, because equipment financing offers such ideal terms, its minimum requirements present a bit of a hurdle. You’ll first need to make sure that you fulfill the following minimum requirements for equipment financing:

  • One to two years in business
  • 600+ personal credit score
  • $100,000+ in annual revenue
Term Loans

The second-least accessible type of business loan on our list is the term loan.

When you picture a business loan, you’re probably picturing a term loan—a lump sum that you receive and pay off, plus interest, with scheduled monthly payments. Term loans offer a straightforward, affordable funding solution for small businesses.

Unfortunately, these ideal terms might be difficult for some small businesses to qualify for. You’ll have to first fulfill the following minimum requirements to even be considered for a term loan:

  • At least one year in business
  • 600+ personal credit score
  • $90,000+ in annual revenue
SBA Loans

Last, but certainly not least, SBA loans are the final, least-accessible business loan option on our list.

SBA loans are the cream of the crop of small business loans—because the Small Business Administration partially guarantees SBA loans, lenders are willing to lend to small businesses more often and with better terms.

However, because they come with such ideal terms, SBA loans will still be the hardest type of business loan to qualify for, despite the partial SBA guarantee that makes it less risky for lenders. SBA loans come with the following minimum requirements that might stop some business owners in their tracks:

  • At least two years in business
  • 640+ personal credit score
  • $100,000+ in annual revenue

Applying for a Business Loan

What Matters in Your Application

Though things are always shifting within the ever-growing and innovating industry that is small business lending, there are some consistencies in exactly which factors will affect how hard it will be to get a business loan.

There are three main factors that impact your business’s eligibility: your personal credit score, your business’s age, and your annual revenue. We’ll explain them in more detail below.

Your Personal Credit Score

It might seem counterintuitive and maybe even unfair, but your personal credit score will be one of the three biggest determining factors for how easily your business will be able to secure a loan.

From a lender’s perspective, you as the business owner will be in charge of spending and paying back any of the funds you secure through a business loan. It shouldn’t be a shock then that your personal finances are used to tell how responsible you’ll be when it comes to your business finances.

Because of this, many lenders will establish a minimum personal credit score that they’re willing to work with, so double-check your personal credit score before you dive into the application process. Some banks offer credit monitoring for free with your account, but you can also check it for free online

Generally, if your personal credit score is somewhere in the high 600s, then you should fulfill almost any lender’s minimum FICO score requirement.

Your Business’s Age

The next factor that will partially determine how hard it will be for your business to get a loan is your business’s age.

When you consider that only a fraction of businesses with employees will survive their first year, it goes without saying that younger businesses are riskier to lend to.

As such, lenders will look to your business’s age as an indicator of your business’s likelihood to stay in business and, by extension, your ability to pay back your debts.

Just like with your personal credit score, with your business’s age, many lenders will establish a minimum requirement. Again, you should ensure you fulfill a lender’s minimum business age before sinking time into applying for funding from them. Generally speaking, if your business has over two years of business history, then you should be good to go, but it can never hurt to double-check.

Your Business’s Revenue

Your business’s revenue is the last of the big three factors that will determine how hard it will be for your business to qualify for a loan.

Just like your personal credit and your business’s age, your business’s revenue will be a big indicator of how likely your business will be to pay off the loan that it’s asking for. As such, it will be another big factor that underwriters will consider when deciding whether to approve your loan application.

Your business’s revenue will show a potential lender how much money your business is taking in within a given time. And though different lenders will ask for your business’s revenue within different spans of time—sometimes a monthly revenue, but more often an annual revenue, they’ll always want an idea of how much business you’re doing.

Just as lenders will establish minimum personal credit score and business history requirements, they’ll also establish a minimum revenue they’re willing to work with.

How Involved Is the Business Loan Application Process?

The next way to go about answering the question, “how hard is it to get a business loan?” is to consider how involved the business loan application process is. Again, the answer to this question will vary based on lender and the type of financing you’re applying for.

By and large, certain types of business loans will require more of your time and effort when it comes to applications than others will. So, if you’re wondering, “How hard is it to get a small business loan?” within the context of the amount of time and energy it will require to apply, it will be helpful to consider each loan type’s application requirements and funding speed.

We’ll go through the different types of loans from the least time-consuming application process to the most time-consuming.

Invoice Financing

The type of business loan with the most efficient and straightforward application process is invoice financing. Invoice financing’s purpose is based on optimal timing—you need an invoice’s value now and not whenever your customer plans to fulfill it in the future—and invoice financing lenders tend to move quickly. In fact, you can secure invoice financing in as little as one day.

As for documentation that you’ll need to apply for invoice financing, you’ll just need to collect the following paperwork:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Credit score
  • Outstanding invoices
Short-Term Loans

Another type of business loan with a particularly speedy application process is the short-term loan. You’ll be able to get funded with a short-term loan in as little as one day.

This will, of course, depend on how quickly you gather the necessary paperwork. But, luckily, the paperwork that short-term loan applications require is also pretty minimal. You’ll just need to get the following documents ready for your short-term loan application:

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

Another business funding option with a swift application turnaround is the business line of credit. Yet again, if you’re able to move quickly on your end, you can get funded in as little as a day.

However, a business line of credit will require a bit more paperwork, which might slow down your application process. To apply for a business line of credit, you’ll need to gather these documents:

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

If you’re willing to wait a little longer in order to avoid additional paperwork, then equipment financing might be a good business loan option for you. With a funding speed of as little a two days, equipment financing is still a pretty speedy option as far as business loans go.

Plus, you’ll only need to compile the following documents for your application for a business line of credit:

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

Another business loan option that will fund you in as little as two days is the term loan. Though term loans tend to offer pretty long repayment terms, their turnaround on applications can be surprisingly swift.

That said, you’ll still need to compile a good bit of paperwork if you want to apply for a term loan:

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

As a surprising twist, you’ll find that, on average, merchant cash advances actually lag a bit when it comes to funding speed. Though they’re the easiest type of business loan to qualify for, merchant cash advances will take longer than a week to fund, on average. That’s because they rely on either verifying or setting up merchant services, which will slow down the funding process.

You’ll just need these six documents to apply for a merchant cash advance:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Credit score
  • Business tax returns
  • Credit card processing statements
SBA Loans

Last up, again, is the SBA loan. Because SBA loans have such high standards, and because it involves a government entity, their application process will involve a bit of bureaucracy, which can slow things down. As such, an SBA loan will usually take at least three weeks to process and fund.

Plus, you’ll need to gather a pretty substantial stack of paperwork. The following documents are necessary for an SBA loan application:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Balance sheet
  • Profit and loss statements
  • Business tax returns
  • Personal tax returns
  • Business plan
  • Business debt schedule: at the very least, 3 weeks

Your Next Steps

With the question, “Is it hard to get a business loan?” answered, what’s your next move?

It’s time to think about where your priorities lie.

As you’ve probably gleaned from this article, the types of business loans that are the easiest to get are quite often the most expensive. On the other hand, the types of business loans that are the hardest to get are often worth the effort due to the ideal terms they offer.

Lucky for you, there are tons of resources out there to make your journey toward funding your business a smooth one. And you’re already on the right path by consulting this guide.

The way we see it, the types of business loans that are hard to get, like term loans and SBA loans, are worth the effort it might take to apply or even to improve your business’s credentials in order to qualify. And you can use a resource like Fundera to make the application process as smooth as possible.

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