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By: rkapur
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Business Loan Requirements: A Complete Guide to Get a Loan Approved

When we talk about business loan requirements, what are the most common you need to gather to start your application? Is there any way to prepare yourself and thus increase your chances of getting approved?

It is much easier to get your loan application if you prepare. That means being ready with the documents you need to provide.

Table of Contents
1.  How to Get a Business Loan
2. How to Apply For a Business Loan
3. Types of Business Loans
4. Requirements Needed to Get a Loan Approved
5. Requirements for a Startup Business Loan For New Business
5. Documents Required for Business Loan by Most Lenders
6. Camino Financial has fewer requirements
7. Get the capital you need to grow your business
8. FAQs On Business Loan Requirements

loan application form with business loan requirements described

How to Get a Business Loan

Follow these steps to get business capital:

  1. Search for a lender with business loan requirements you can meet. For example, no collateral to secure the loan, a minimum revenue that matches your business sales, or a minimum credit score.  
  2. Decide on a loan amount to meet your business needs in a range you can repay comfortably (consider the monthly interest rates).
  3. Get the required documents before you apply. Typical documents include personal and business tax returns, ID, EIN, financial statements, business documents, bank statements, and SSN. Some lenders will accept ITIN if you don’t have an SSN.
  4. Apply for the loan. The majority of lending institutions allow borrowers to apply online, while others require you to apply in person. The documents you gathered will provide most of the required information.
  5. Submit the documentation. If the lender prequalifies you, they will ask for some additional documents. If you applied with an online lender, you’d be able to send them online.
  6. Sign the contract and receive the capital.

How to Apply For a Business Loan

These are the basic steps to complete a loan application.

  1. All applications ask for basic business information, like name, address, EIN, SSN or ITIN, phone numbers, business legal structure, and years in business. 
  2. You’ll also have to add personal information. 
  3. Fill in information relating to the type of loan, loan amount, and the loan’s purpose. For example, most applications ask for information about business deposit accounts, business debts, and a list of collateral owned by the business.
  4. Read the authorization agreement, and sign and date the application.

Types of Business Loans

These are the most common types of business loans:

  • Term loans: For a specific term of 24 – 60 months, the borrower repays the lender at an APR, including the interest rate and all fees the lender charges.
  • SBA loans: Applicants can apply for government-backed loans at participating lenders. Generally, SBA loans have stricter regulations, flexible terms, and lower interest rates.
  • Unsecured business loans: Borrowers gain access to cash without needing collateral to secure the loan. Because the lender assumes more risk, they charge higher interest rates and offer smaller loan amounts.
  • Secured business loans: This financing option does require you to pledge collateral.
  • Loans for working capital: Borrowers can improve their cash flow by using the proceeds to pay for business expenses such as payroll, utilities, and other day-to-day expenses.
  • Equipment loans: Proceeds help finance the acquisition of needed equipment such as farm machinery, restaurant ovens, and freezers, or a hospital X-ray machine.
  • Peer-to-peer lending: Predominantly available from online lenders, peer-to-peer loans are offered through a network of investors instead of financial institutions.
  • Business lines of credit: Available through banks, credit unions, and online lenders, the lender approves a specific amount of money on which the borrower can make withdrawals. Borrowers make repayments and can access cash up to the amount of the line of credit. 
  • Invoice factoring loans: The business sells a percentage of the value of its invoices to a third party minus invoice factoring fees in exchange for immediate cash. 
  • Merchant cash advances: Lenders advance cash for a percentage of a business’s future credit and debit card sales. They usually charge a very high APR.

8 Requirements You Need To Fulfill to Get a Loan Approved

These common business loan requirements will determine if you get approved for a business loan, so make sure you fully understand them before applying!

1. The number of years that you have been in business

Most lenders will insist that your company should have been in existence for at least two years. This is a typical business loan requirement.

This is one of the most critical requirements. If you are a new company or have set up operations recently, the likelihood of getting a loan is low.

Why? Because the failure rate for new ventures is high, and lenders don’t want to take any risks that would lead them to lose any money.

If a bank advances money to a new business and closes down, how will the bank recover the money?

Data provided by the Small Business Administration (SBA), a United States government agency that supports entrepreneurs, reveals that about two-thirds of new businesses close down within two years of being open. And only half of those survive after five years.

infographic about the average establishment survival rate

2. The type of industry that you operate in

A lender may view specific sectors as unacceptable. They may be unwilling to advance money to companies that work in these areas.

This list could include gambling and pawn shops. A bank may not want to provide finance to such businesses as it could harm their reputation.

Similarly, many lenders are reluctant to advance funds to nonprofits.

That’s because these organizations are often dependent upon donations for running their day-to-day operations. If this source of income dries up, how will they repay?

Online lenders like Camino Financial are not only open to the idea but have restaurant owners among their main customers.

Why? Because we understand, like no other lender, the unique features, challenges, and needs of this industry.

We go beyond lending capital and guide business owners in their entrepreneurial journey to guarantee their success.

3. The loan amount that you are looking for

The amount of money you plan to borrow plays a crucial role in determining whether the bank will approve your application. There are two reasons for the loan amount being among the most critical small business loan requirements:


Firstly, every lender has an upper lending limit as well as a floor level below which it will not provide a loan.

Setting a maximum loan amount would ensure that there is a cap on the lender’s risk. Similarly, each lender’s internal rules would stipulate a floor below which it would not lend.

The reason is that every loan involves processing and underwriting costs as well as servicing expenses.

These remain the same regardless of the size of the amount the lender advanced. Consequently, low-value loans can be uneconomical for the lender.

Cash flow

There is a second reason that you need to consider the loan amount as a key factor.

The bank or financial institution advancing money to you would like to be sure that your business could generate the cash flow you’ll require to repay the borrowed amount.

Ask for too much, and you can be sure that the bank will turn down your application.

How can you determine your company’s repayment capability?

A simple way to do this is to work out the monthly installment that you can comfortably afford to pay.

As an added precaution, limit your borrowing to a sum that requires a monthly payment that is 80% of this amount.

This will give you a buffer in case of an emergency.

Use a business calculator to arrive at your monthly installment. If you key in the loan amount, the payment term, and the monthly interest rate, our Business Loan Calculator will tell you your installment amount.

Doing these calculations will provide you with the loan amount that you can comfortably afford to repay.

4. The use you’ll give the money

The lender would like to know how you would be using the money that you plan to borrow. Of course, you must deploy the funds in your business; the financial institution will not allow you to take a business loan and then use the funds for your expenditure.

You should be ready to provide an explanation that covers the following points:

  • How will you deploy the funds that you borrow?
  • What is the extra income that the loan will help you generate?
  • Is this amount sufficient to repay the loan?

Remember that the term of the loan should match the period over which you will generate additional income.

For example, you may borrow to purchase new machinery, which has a life of five years. You should ensure that the loan repayment term is also five years or a little less than that.

You don’t want to be in a position where you are repaying a loan that you took for an asset that isn’t generating revenue any longer.

businesswoman and businessman shaking hands

5. Your personal credit score

You may wonder why a lender would consider your personal credit score if you are applying for a business loan.

However, this score provides the lender with information about how you meet your financial commitments but most banks and financial institutions will take this score into account before deciding on your loan application.

For the credit score required for a business loan you need, keep in mind the following:

If you are trying for a low-cost SBA loan or a bank loan, you stand a better chance of receiving a positive reply if your personal credit o business score is at least 650 or more.

Are you worried that you won’t get approval because of your poor score?

Fortunately, there are ways around this problem. It’s possible to boost your credit score by 60 points in 60 days.

6. Your business credit score

Most lenders will use your personal credit score to decide on your loan application. But SBA lenders and banks will usually ask for a business credit score as well.

The credit bureau will calculate your business credit score by analyzing your payment data and how you utilize your credit facilities.

If your company delays payments or uses all its credit facilities as soon as they are available, it can result in a lower score.

However, don’t let a low score deter you. There are ways to build business credit quickly

7. Annual sales of your company

Rising sales indicate that your business is gaining popularity among customers, so that let the lender know that you will have the cash to repay the money you borrow.

Some lenders consider your sales to be among the more critical small business loan requirements.

They even calculate the loan amount that you are eligible for by using your annual sales figure. For instance, a lender may be willing to advance between 10% and 12% of your revenues as a loan.

Of course, your revenue will not be the only consideration.

How you utilize the money that you receive by selling your product or service, it’s something that lenders will also consider.

If your profit margins are slim and most of your funds go towards buying raw materials and paying other expenses, you may not be able to get loan approval even if your sales volumes are rising.

One of the other critical loan requirements is that your sales must be more than a particular threshold.

Some lenders stipulate that your company must have annual revenues of at least $100,000.

However, all lenders don’t set such a high minimum figure. You can apply for a loan from Camino Financial if your firm generates sales of $30,000 annually or $2,500 a month.

8. The collateral you bring to the table

Some lenders insist that you agree to put up business loan collateral before they consider your loan application.

Why do they do that?

They aren’t sure if you are capable of repaying the sum that you borrow.

The collateral that you provide assures them that they will not lose money if you default. If you fail to repay, they will sell the building or the machinery that you have provided as security.

Many small business owners do not have any collateral to put up. The good news is that some lenders don’t insist on collateral. They extend what they call unsecured business loans.

The essential business loan requirements stipulated by Camino Financial don’t include the necessity of providing collateral. As long as you meet the other criteria we lay down, you could still be eligible for a loan.

Requirements for a Startup Business Loan For New Business

If you have a new business, you might have noticed that you don’t qualify for most business loans because they generally require you to have been in business for at least 2 years.

What you need is a startup business loan. They have more lenient requirements:

  • Have a new business or a business idea (you’ll require a business plan)
  • Personal bank account and tax returns
  • Business registration and licenses (if you’ve already started the business)
  • Employer identification number
  • A minimum income (the amount they’ll require depends on the lender)
  • Collateral (if you want a secured loan)
  • EIN and SSN
  • Minimum credit score

At Camino Financial we offer a financial product that is perfect if you want to start a business. We call it the Solopreneur Loan and it has minimal requirements:

  • ITIN or SSN
  • You can apply if you have no credit history
  • A bank account (active for at least 6 months)
  • Minimum monthly income of $1,500 in
  • Be current with outstanding debt

businesswoman sitting at desk smiling to camera

10 Documents Required for Business Loan by Most Lenders

Prepare the following business loan documents that you need to have when getting a business loan.

As you read, keep in mind that you can cut this list in half (saving yourself the time, paperwork, and the occasional headache) by approaching an alternative small business loan lender like Camino Financial.

You can create a folder and keep in it physical copies of the essential papers relating to your business, so when they ask you, you can furnish this to comply with the bank’s requirements. But it’s even better to keep digital copies and save them on a cloud drive like Dropbox or Google Drive. This way you can access them quickly at any time, and wherever you are.

1. Bank Statements

This is one essential business loan requirement. Your lender would want to know how much money people deposit into your bank every month and how you use it.

They will also look for:

  • The name of your business on your bank statement. Your official business name should appear in the bank’s records.
  • The fees that you pay your bank. For example, a lender would like to see if your balance falls below the required minimum. This could entail a penalty in the form of a monthly maintenance fee.
  • The figures in your business bank statements and other financial statements (explained below) should be consistent. If there is a difference between the two, you should be in a position to explain the reason why this happened.

At Camino Financial, the business loan process involves checking your bank statements, which is fast and easy. You don’t need to visit your branch to get your reports or print and fax documents. 

All you have to do is connect your bank account with PLAID so we can review the last six months of your banking activity.

Rest assured, this process is entirely safe, and your information remains private.

bank statement icon

2. Tax Returns

You will have to provide your tax returns if your venture is a sole proprietorship or a partnership. These are “pass-through entities,” which allow your business’s profits that they let reflect in your tax return.

At Camino Financial, we require the last year of your personal tax returns (that should include your reported business income). This is not needed for our microloans (from $5,000 to $50,000).

Of course, if your business files a tax return (because it’s an LLC or a corporation), you would have to furnish this as well and provide your business tax returns. Strong tax returns showing a profit can significantly impact the interest rate you will pay on your loan.

At Camino Financial, we only request your business tax returns for loans over $50,000.

icon of tax return

3. Proof of Business Registration

You will have to tell the lender how you structure your business. Most small ventures fall into one of four categories.

Your firm could operate as a sole proprietorship, a partnership, a limited liability company, or a corporation.

Documentation for different types of business structure

Type of business structureDocumentation required
Sole proprietorshipProof of DBA Registration
PartnershipBusiness partnership agreement
Limited liability company (LLC)Articles of organization and the LLC operating agreement
CorporationArticles of incorporation, Bylaws, Written Action of Incorporator, Agreements between shareholders

4. Business Licenses and Permits

These documents are critical as they help to establish your ownership of the business. Remember that your lender would like to be sure that they are dealing with the correct person when they are appraising your loan application.

For all businesses that work in an activity regulated by a federal agency, you require a federal license or permit.

Ensure that the license and permit copies that you provide your lender have not expired. If any of them need it, complete this activity well in time.

It’s a good idea to put in a little effort into finding out about the different licenses that your business needs. Noncompliance could lead to the lender refusing your loan application. It could also expose your company to penalties as well as legal liability.

business licences icon

5. Employer Identification Number (EIN)

This is a nine-digit number assigned by the Internal Revenue Service (IRS). It is also called the Federal Employer Identification Number or the Federal Tax Identification Number.

Corporations and partnerships need to obtain the EINs.

Sole proprietorships need an EIN if they have employees.

Remember that some banks may require an EIN to open a business bank account.

If you don’t qualify for an SSN or an EIN, you can apply for an ITIN. ITIN stands for “Individual Taxpayer Identification Number”: it’s a tax identification number generally used by foreigners who do not meet the requirements to have a social security number.

The Government issue the ITIN regardless of immigration status since both residents and foreigners have the tax obligation to file returns and tax payments.

Remember that at Camino Financial Online Business Loans, we just need this number as part of the application. If your business still doesn’t have an ITIN, learn here the easy steps to get it.

Employer Identification Number icon

Get your Small Business Loan Today!

6. Financial Statements

One of the business loan requirements that you have to fulfill is to provide your financial statements.

These three documents will provide details about your company’s financial performance for the previous year and the years before. You should prepare to furnish your financial statements for the last two years or more.

Before taking a credit decision, a lender would like to see the following:

  • Profit and loss statement
  • Balance sheet
  • Cash flow statement

A lender could also ask you to provide financial projections. When you prepare these, remember that you must also mention the assumptions that you are making. For example, if you say that your sales will increase next year, you should be ready to explain how you plan to achieve this.

icon of financial statement with a calculator and coins

7. Accounts Receivable Aging and Accounts Payable Aging

These two reports are of particular interest to the lender because they provide information about how you manage your working capital.

Lenders will require accounts receivable aging only for a firm that operates in the business-to-business (B2B) segment.

Many B2B companies supply goods or services to their customers on credit terms. If your customers are slow to pay you, it will show up on your accounts receivable aging report.

If your clients delay payments regularly, there is a greater chance of your level of bad debts increasing. This would affect your cash flow as well as your profitability.

Your accounts payable aging report provides the lender with information about the number of days of credit that you receive from your suppliers.

If your suppliers allow you generous credit terms, it is to your advantage. However, if you delay payments beyond the stipulated credit period regularly, it will reflect poorly on your company.

icon of dollar bills

8. Details of Your Other Loans

The lender will require you to provide information about your other borrowings. Every bank or financial institution you approach will consider this one of the key business loan requirements.

Why would a bank want to know about your other loans?

Lenders know that you will use the cash flows that your business generates to repay the money that you have borrowed from different sources. If you have taken on a significant amount of debt, you may not be in a position to meet all your obligations. If they think that your debt burden is higher than you can handle, they are likely to turn your loan application down.

icon of money bag

9. Proof of Collateral

The lender will require you to furnish real estate or other assets to secure your loan. Some lenders will consider your loan application only if you are in a position to provide collateral of sufficient value. Banks and other traditional lenders typically don’t advance unsecured loans.

What if you don’t have any collateral to put up?

Fortunately, it is possible to raise a small business loan without providing collateral. Online lenders like Camino Financial don’t have this part of the requirements. You don’t even have to provide a personal guarantee.

icon of properties, a car and a house

10. Business Plan

Most lenders usually don’t need a business plan as part of their loan requirements. But still, it’s a good practice to prepare yours. It will help you calculate precisely how much you need to borrow. It also helps you calculate the Return On Investment (ROI) you expect to get in return, and in how long. Those are valid questions that most lenders will ask you to evaluate during your application.

A good business plan is a document that details your business goals and how you plan to meet them. Your document should include a brief description of your business, how you market your products or services, and how you plan to increase sales volumes.

Every relevant aspect of your operations should find a place in your plan. Here are some of the specific details you can include in your plan:

  • Your product’s or service’s attributes – what are you selling? How is it better than what the competition offers? You need to convince the lender about the merits of your product and its ability to retain or increase its market share.
  • Customer analysis – describe your current market and how you plan to increase sales.
  • Supply chain – how do you source your raw materials and supplies? Could prices rise and affect your profitability?
  • Industry analysis – entrepreneurs should be familiar with the sector in which they operate.
  • Your finances – how will you raise the money for your expansion? How much money have you invested in the business?
  • Cash flow – most lenders want to know how you use your company’s money from business operations and other sources.

Does gathering all this information seem to be a difficult task?

You needn’t worry – it’s relatively simple to prepare your business plan. Of course, you need to have a high degree of familiarity with your company’s operations and how your industry works.

an icon with a sheet and a bulb

Business loan application checklist

Use this checklist to get that commercial loan you need.

  • Decide on loan amount
  • Establish the loan’s purpose
  • Know your personal and business credit scores
  • Verify preferred lender’s business industry requirements
  • Confirm business revenue
  • Confirm the number of years in business
  • Confirm business assets

Don’t forget to gather these documents: 

  • 6-12 months of bank statements (some lenders will review the online with apps like Plaid)
  • 1-2 years of personal and business tax returns
  • business registration, licenses, and permits
  • document verifying tax ID number (EIN, SSN, or ITIN)
  • 12 months of profit and loss
  • balance sheet
  • list of existing loans and agreements
  • cash flow statements
  • list of accounts receivables and payables
  • business plan
  • list of business assets

Camino Financial won’t ask you for this many documents. We have minimal business loan requirements that make the whole process fast and easy.

How to get approved for a business loan?

Here are some tips to get approved:

  • Make sure your business meets the business loan requirements before you apply for a loan.
  • If there are errors on your credit report, contact the credit bureaus before applying for a loan to take steps to have them reviewed and removed. 
  • Don’t borrow more money than you can safely repay.
  • Be transparent about the information you provide on an application. It’s better to give too much information than not enough.

What are the qualifications for small business loans?

Lenders verify these standard qualifications to approve a loan:

  • Number of years in business
  • Your business industry designation
  • The loan amount you need and can comfortably repay
  • The loan’s purpose
  • Credit scores: Both personal and business
  • Annual revenue
  • List of assets owned by the company (potentially to be used as collateral)

Fortunately, some lenders, like Camino Financial, have minimal business loan requirements.

Camino Financial has fewer requirements

Many small business owners get discouraged when they learn they have to arrange for documentation from various sources. This takes time and effort.

But the required documents required vary greatly depending on the lender you approach.

For example, Camino Financial has minimum requirements!

Check out the chart below to compare the list of documents required by most traditional lenders or banks, and the documents required by Camino Financial, an alternative online lender providing microloans and small business loans:

💰Traditional LendersCamino Financial
Bank Statements✔️✔️
Tax Returns✔️✔️(only for loans $50k or above)
Proof of Business Registration✔️✔️
Business Licenses and Permits✔️✔️
EIN✔️✔️(in default, ITIN)
Financial Statements✔️
Accounts Receivable and Account Payable✔️
Information on other Debt/Loans✔️
Business Plan✔️

Qualify For A Business Loan Today

a smiling business owner opening their store

Get the capital you need to grow your business

When you get your documents ready for the lender, read each one carefully, and understand them. This will help you during the loan appraisal process. It will also provide you with a way to ensure that you don’t submit the wrong documents.

Remember that the application process to obtain a small business loan from Camino Financial is simpler and faster than with most online lenders.

Our requirements are less strict, and the list of documents we need from you is shorter. As you have seen, you can apply even if you don’t have a Social Security Number (in default, all we require is your ITIN) or collateral.

Plus, our application doesn’t affect your business credit score.

In the time you take to gather all the documents required by other lenders, you could have in hand the cash you need to grow your business by choosing Camino. You can receive your loan within 2 to 10 business days!

The bottom line

If your business needs a cash infusion, consider taking a loan from Camino Financial.

We are more flexible than traditional lenders like banks since we don’t base our decision on all the factors mentioned above.

Mainly, we take into consideration the personal credit of the business owner and global cash flows.

Also, you can use the funds from our loans to pay off personal loans or credit cards you have utilized for business purposes. You can even use the loan to purchase a second business.

To apply for a loan with Camino, you should generate sales of $30,000 annually or $2,500 a month, a much lower amount than the one required by other lenders, and your company must have been operating fur just 9 months. That’s much less than the 2 years that most lenders require.

And remember: Camino Financial is open to extending finance to borrowers with no credit history. Additionally, you don’t have to provide us with collateral.

All you have to do to start is submit your loan application.

It will take only a few minutes, and you will receive an instant response informing you if you prequalify Subsequently, one of our representatives will get in touch with you and guide you through the borrowing process.


FAQs On Business Loan Requirements

How hard is it to get a business loan?

Qualifying for a loan depends on the type of loan you apply for and lender requirements. 

Some lenders approve applicants with bad credit while others do not. 

Lenders look at a business’s credit history, how many years they’ve been in business, and other factors before approving a loan. 

Their rates, charges, and loan amounts are directly proportional to the degree of risk they assume and go up and down accordingly.

What collateral is needed for a business loan?

Secured loans offered by lenders typically require collateral for loan approval, while unsecured business loans do not. 

Borrowers should review lender requirements before applying for a business loan. Most lenders do not require collateral for short-term loans, lines of credit, and credit cards. 

In lieu of collateral, a lender may request a personal guarantee which means the applicant will personally repay the loan if the business defaults on loan payments.

Do business loans require a down payment?

Lenders offering online loans generally do not require a down payment. 

If a lender asks you to pay a fee in advance or will charge you a certain amount to approve you, be careful. They could be fraudulent lenders going after your money.

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