03/05/2025: What Are the Main Criteria for Qualifying for a Business Loan in Today’s Market?

If you are in the market for one or more business loans, a bank in Ashmore, IL, may be able to help.

What Are the Main Criteria for Qualifying for a Business Loan in Today’s Market?

Credit Score

When considering you for a loan, a lender will gauge your creditworthiness. This is usually done by assessing your personal credit score as well as your business credit score, if you have one. Business credit scores above 80 are generally considered good (in models such as Dun & Bradstreet), in a range from 0 to 100.

For personal credit scores, traditional lenders like banks usually require a score of at least 690 before offering a loan with favorable terms. There is more flexibility, however, with online lenders, with some accepting personal credit scores as low as 500 to qualify for a business loan.

Revenue

To qualify for a business loan, you must also demonstrate that you have enough revenue to be able to pay off the loan. Traditional lenders usually set the requirement for minimum annual revenue at between $100,000 and $250,000.

The minimum requirement set by online lenders may be lower. Some require proof of as little as $36,000 in annual revenue to qualify for a business loan. The focus of online lenders is often more on cash flow rather than strictly earning history.

Time in Business

Lenders generally want to see signs of stability, and how long you’ve been in business is a key sign of stability. Traditional lenders usually want to see at least two years of business operations before approving a loan.

Online lenders may give loans to businesses who have been operating for only a short time; some as little as six months in business. This is often the case among lenders who are catering to startups.

Other Considerations

Business Plan and Financial Statements

To qualify for a traditional bank loan, you will generally be required to provide a detailed business plan outlining how the loan will be used and how it will be repaid. You will also need to show your business financial statements, including profit and loss statements.

Which Industry You’re In

There are certain industries, such as restaurants or construction, that are considered to be higher risk due to fluctuations in the economy. If you are in one of those higher-risk industries, some lenders will subject your business to greater scrutiny before providing a loan. In addition, some institutions will not provide loans for industries such as gambling or adult entertainment.

Collateral for Secured Loans

Secured loans offered by traditional lenders often require collateral, such as real estate or equipment. This is particularly true for larger loans or for businesses that are considered to be higher risk.

What to Consider If Shopping for Business Loans in Ashmore, IL

You want to have a loan specialist who is willing to listen to your situation and assess your needs, whether they are capital improvements, working capital financing, or something else. Look for a lender who is willing to work with your situation and who can provide you with a loan that will help your business grow.

If you are looking for a business loan, get in touch with our loan specialist here at Prospect Bank in Ashmore, IL, or any of our other locations: Brocton, Champaign, Gilman, Homer, Kansas, Paris, Sidell, and Terre Haute.