How Hard Is It to Get a Business Loan? When Banks Say No, Try This

Last Updated on August 25, 2025 by Olga Davis

How hard is it to get a business loan? What you need to qualify often comes down to meeting strict criteria from banks or SBA programs, while online lenders and newer options tend to be more accessible but come with their own drawbacks. In 2025, the small business lending market is growing rapidly, with a projected compound annual growth rate (CAGR) of 13% through 2032, reaching $7.22 trillion globally. However, many small businesses still face barriers like high costs and lengthy approvals. This guide on qualifying for business loans covers what you need, the key requirements, the benefits, and practical tips to improve your chances.

How Hard Is It to Get a Business Loan? Understanding the Challenge

Getting a business loan is like passing a test of your business’s financial stability and repayment ability. Lenders prioritize low risk, especially since the Bureau of Labor Statistics reports that about 50% of small businesses fail within five years. In 2025, small businesses face additional hurdles: 44% avoid applying for loans due to fear of rejection, and only 14.6% of loan applications are approved by big banks, per the Small Business Credit Survey. Here’s what shapes the challenge:

Average business survival rate (2024). Source: U.S. Bureau of Labor Statistics

Here’s how you can approach the challenge:

1️⃣ Preparation Reduces the Challenge. Being prepared makes the process seem less daunting. Compile financial documents, run a credit check, and learn what lenders are looking for. If you’re new to this, consider it similar to applying for a job: to stand out, you need a strong resume that includes your financials and business plan. Your chances are also increased if you target the appropriate lender, such as one that focuses on low-credit or startup companies.

2️⃣ Lender Types Set the Bar. The most difficult to obtain are loans from traditional banks and SBAs (government-backed through the U.S. Small Business Administration). A strong personal credit score (690 or higher on the FICO scale, which goes from 300 to 850), at least two years of business operation, and yearly revenue of at least $150,000 are frequently prerequisites. These requirements guarantee that you have a history of sound money management and earning enough revenue to pay back your loans. If your cash flow—the amount of money coming in compared to the amount going out—is consistent, online lenders are more accommodating and will occasionally approve companies with credit scores as low as 500. A retailer with steady sales, for instance, might be eligible even with a lower score.

Source: www.experian.com

3️⃣ Your Business’s Risk Profile Matters. Lenders evaluate risk according to your sector. Because their revenue can fluctuate (due to seasonal dips, for example), high-risk industries like restaurants and retail are subject to stricter scrutiny. Businesses with more consistent cash flows, like tech or consulting firms, might find it easier. The state of the economy also matters; lenders tighten their standards in a weak economy to prevent losses.

4️⃣ Why Repayment Ability Is Key. Since loans are investments for lenders, they prioritize repayment. They lose money if your business fails or is unable to pay. They investigate your finances for this reason: revenue indicates that you have income, time in business indicates stability, and credit scores demonstrate how you have managed debt (such as credit cards or mortgages). In contrast to a six-month-old startup with $50,000 in sales, a two-year-old company with $200,000 in sales is less risky.

Key Factors You Need Before Qualifying For A Business Loan

Lenders evaluate several core elements to determine if you qualify:

1) Credit Scores

Your debt management history is reflected in your personal FICO score, which is 690+ for bank or SBA loans. For well-established businesses, business credit scores (0–100 via Dun & Bradstreet, Experian, or Equifax) are important. Improve by keeping debt low, paying bills on time, and checking reports for errors at business bureaus (fees apply) or AnnualCreditReport.com (free for personal).

2) Revenue and Cash Flow

Depending on the loan, lenders require yearly revenue of between $100,000 and $250,000. By dividing yearly operating income by total debt payments, they determine your debt service coverage ratio (DSCR). You can cover payments if your DSCR is greater than 1.25. You might be forced to consider options like invoice factoring if your revenue is low.

3) Time in Business

Online lenders might accept six months, but banks and SBA lenders usually demand two years. Startups can compensate for their limited history by using personal credit or thorough business plans.

4) Business Plan

The potential of your business is demonstrated by a well-defined plan that includes financial projections, management resumes, and a repayment strategy, particularly for newer endeavors.

5) Collateral or Guarantees

Equipment and inventory are examples of assets needed for secured loans. Owners are held accountable in the event of a business default on SBA loans exceeding $50,000, which frequently require collateral and personal guarantees. There are unsecured options, but they are more difficult to obtain.

How Hard Is It to Get a Business Loan? Specific Requirements

Lenders need documentation and conditions to verify eligibility:

• Financial Documents. To verify trends in revenue and cash flow, submit two years’ worth of personal and business tax returns, balance sheets, profit and loss statements, and bank statements.

• Legal Documents. To demonstrate legitimacy, submit commercial leases, articles of incorporation, business licenses, and debt schedules.

• Industry and Size. Your company must fall under the SBA’s “small” definitions, which vary by sector (for example, manufacturing companies must have fewer than 500 employees) and stay away from prohibited industries like gambling and adult entertainment. Restaurants and other high-risk industries are subject to heightened scrutiny.

• No Defaults. Companies that have previously defaulted on federal loans, including late student loans (more than 90 days), are not eligible for SBA loans.

Average time from application to funded loan. Source: www.canopyservicing.com

Business Loans Risks and Challenges

Struggling to Get a Business Loan? Crypto Lending May Help

For businesses that can’t meet traditional loan requirements or are cautious about taking on too much risk, crypto loans can be an alternative. They let you use your cryptocurrency as collateral, so approval depends on the value of your assets than on your credit score or paperwork. If you’re still wondering whether crypto is worth holding in the first place, check out our guide on 10 reasons why you should invest in cryptocurrency.

What does this mean for your business? It gives you access to funding that might otherwise be out of reach, speeds up the approval process, and provides flexibility in how you use the funds. Startups, freelancers, or companies in higher-risk industries can benefit from opportunities that traditional banks often don’t offer.

• No Credit Checks. Approval depends on your cryptocurrency’s value, not your FICO score or business history. For instance, if you own $15,000 in Ethereum, you might borrow $7,500-$10,500 (50-70% loan-to-value ratio). This helps someone like a freelance web designer with a 550 credit score, who banks reject, to fund new equipment.

• Minimal Paperwork. You only need to verify assets ownership via a crypto wallet. Unlike banks requiring extensive tax returns, CoinRabbit crypto lending platform needs just an email. A food truck owner needing $5,000 for a sudden repair can apply and get funds the same day, avoiding weeks of bank delays.

• Fast Funding. CoinRabbit crypto loans can be approved in minutes with cash or stablecoins (like USDC) sent to your wallet. This speed is critical for urgent needs. For example, a small e-commerce shop facing a supplier deadline can use a crypto loan to pay for inventory overnight, avoiding lost sales. And if you’re new to crypto, be sure to explore our guides on Coinbase vs Binance, crypto ETFs and what is the easiest business loan to get. Start learning, start growing!

• Broad Access. Startups, low-revenue businesses, or high-risk industries (e.g., crypto startups or cannabis retail) can qualify when banks say no. For example, a six-month-old blockchain consultancy that doesn’t qualify for an SBA loan could use $20,000 in Bitcoin to borrow up to 90% of the collateral’s value for marketing purposes.

Comparing Business Loan Types

Different loans balance accessibility, cost, and purpose: