Answers
Your business loan questions, answered.
Short, direct answers from the banker's side of the desk. Each one links to the chapter that goes deeper.
Qualifying for a business loan
What Do Banks Look for in a Business Loan? A Lender's Checklist
Banks look at five things: cash flow, financial statements, existing debt, credit, and collateral. Here is how a commercial lender scores each one, and the documents to have ready.
What DSCR Do Banks Require for a Business Loan?
Most banks want a debt service coverage ratio of at least 1.25. Here is what that means, how banks calculate it, and how to raise yours before you apply.
How Much Can My Business Borrow? How Banks Size a Loan
Banks size a business loan from your cash flow first, then check it against collateral. Here is the simple math a lender uses, with a worked example.
What Credit Score Do You Need for a Business Loan?
Most banks want owners with personal credit scores around 680 or higher. SBA lenders and online lenders can go lower. Here is how lenders use your personal and business scores.
Business Loan Documents Checklist: What Banks Ask For
The standard list of documents a bank needs for a business loan: tax returns, financial statements, a debt schedule, agings, and personal financial statements for each owner.
Why Was My Business Loan Denied? 5 Reasons and How to Fix Each
A commercial lender explains the five most common reasons business loans are declined, how to fix each one, and the three things to ask the bank right after a no.
SBA loans
SBA 7(a) Loan Requirements: What You Need to Qualify in 2026
To get an SBA 7(a) loan you need a for-profit U.S. business owned 100% by U.S. citizens or nationals, cash flow that covers the payments, and a personal guarantee from every 20% owner. Here is the full list.
SBA 504 Loan Requirements: Who Qualifies and What It Takes
SBA 504 loans are for buying or building real estate and long-life equipment. You need a for-profit business that occupies at least 51% of the building, 10% to 20% down, and cash flow that covers the payments.
SBA 7(a) vs. 504 Loan: Which One Fits Your Business?
SBA 7(a) loans are flexible and cover almost any business need. SBA 504 loans are built for buying real estate and big equipment with a low, fixed rate. Here is how to choose.
How Much Is the Down Payment on an SBA Loan?
Most SBA loans need 10% down. SBA 504 loans need 10% to 20% depending on your business and building. Startups and business purchases need at least 10%, and a seller note can cover up to half of it.
How to Use an SBA Loan to Buy a Business
SBA 7(a) loans are the most common way to buy a small business. You need at least 10% down, cash flow that covers the payments 1.25 times, and a seller who exits fully or guarantees the loan for two years.
How Long Does an SBA Loan Take?
Most SBA 7(a) loans take 30 to 90 days from a complete application to closing. SBA 504 loans often take 60 to 90 days or more. SBA Express gets an SBA decision in about 36 hours, then closes in weeks.
SBA Express Loan: How It Works and Who It Fits
SBA Express loans go up to $500,000 with an SBA decision in about 36 hours. They can be a term loan or a line of credit. The trade-off is a smaller 50% guarantee, so lenders can be stricter.
Choosing the right financing
Business Line of Credit vs. Term Loan: Which Do You Need?
Use a line of credit for short-term cash gaps you pay back within a year. Use a term loan for things that last for years. Matching the loan to the need is the first rule of borrowing.
Merchant Cash Advance Factor Rate to APR: The Real Cost
A merchant cash advance with a 1.35 factor rate paid back over six months costs about 126% APR. Here is how to convert any factor rate and what to use instead.
Financing by industry
Gas Station Financing: How Banks Underwrite a Gas Station Loan
Most gas station purchases are financed with SBA 7(a) or 504 loans with 10% to 15% down. Lenders look at fuel gallons and margin, inside store sales, operator experience, and the environmental history of the tanks.
Hotel Financing: How Banks Underwrite a Hotel Loan
Hotels are usually financed with SBA 504 or 7(a) loans with 15% to 20% down, or bank loans with 30% or more. Lenders look at occupancy, ADR, RevPAR, the franchise agreement, and any required renovation plan.
Multifamily Loans: How to Finance an Apartment Building
Apartment buildings with 5 or more units use commercial loans. Banks typically lend 70% to 75% of value, want a DSCR of 1.20 to 1.25 on the property's income, and look closely at the rent roll and your experience.