How Much Revenue Do I Need For A Business Loan? (2024)

Most lenders have a minimum revenue qualification to take out a business loan. Although the thresholds vary by lender, most lenders require your business to make at least $100,000 annually.

However, qualifying for a loan with lower revenue may be possible, particularly if you look for alternatives to traditional loans, such as startup loans or business lines of credit. Along with meeting minimum revenue requirements, you’ll also need to fulfill other criteria, such as a certain credit score or amount of time in business.

How Much Money Do I Need To Make To Get a Business Loan?

To qualify for a business loan, your business typically needs to have an annual revenue of at least $100,000, though some lenders have requirements of $250,000 or more. Revenue is the income that your company generates, and it can also be referred to as your gross sales or top line.

If your business doesn’t make at least $100,000, you might have trouble qualifying for a business loan from a lender that considers revenue. However, you may have other options for borrowing money, such as:

• Business line of credit. A line of credit offers revolving financing you can draw on as needed, up to a predetermined limit. Some lenders offer lines of credit with low, or no, revenue requirements.
• SBA microloans. Microloans backed by the Small Business Administration come without minimum revenue requirements and are offered in amounts up to $50,000. Nonetheless, individual lenders offering these loans can set their own requirements, including time in business and credit score.
• Merchant cash advance. A merchant cash advance offers businesses cash in exchange for a portion of their future sales. This form of financing can be a good option for businesses with a high volume of sales that need cash quickly.
• Invoice factoring. With invoice factoring, a lender buys your outstanding invoices at a discount and then collects payments from your customers. This can give your business access to cash quickly, but it can be costly.
• Business credit card. A secured or unsecured business credit card can be a good option for short-term expenses, particularly since income requirements vary between card issuers. Before accumulating debt on a business credit card, have a plan to repay what you borrow, as the annual percentage rates (APRs) can be high.

Why Do Lenders Take Your Revenue Into Account?

Lenders consider your revenue to assess your likelihood to repay a business loan on time and in full. Sufficient, consistent revenue shows the lender that you’ll be able to make on-time payments on your business loan.

On the flip side, low or inconsistent revenue tells the lender that you’re a risky candidate for a loan. Even if you can qualify with insufficient revenue, you might get stuck with higher interest rates than you would if your revenue were higher.

If you’re struggling to meet a lender’s revenue minimum or other loan requirements, consider strengthening your application with collateral or a personal guarantee. Both provide reassurance to a lender that it will recoup the loan’s value if you’re unable to pay it back on time, but keep in mind that there are wide-ranging consequences if you default with these options.

How To Qualify for a Business Loan

When considering a business loan based on revenue, it’s worth shopping around with multiple lenders to find the best offer. Not only will rates and terms vary, but each lender will have its own loan requirements, with some having more flexible criteria than others.

In general, lenders want you to meet the following qualifications to get approved for a business loan:

• Minimum revenue. The minimum annual business revenue to qualify for a business loan is typically $100,000. If you don’t meet this requirement, search for business loans with a low-revenue requirement or other funding options, such as invoice factoring.
• Credit score. Lenders may review your credit score and history as well as the business credit score to assess risk and see how credit was previously managed. You’ll likely need a personal credit score of at least 600, but a good credit score of 670 or higher will help you qualify for better interest rates.
• Time in business. Lenders generally want to see that you’ve been in business for at least six months. Other lenders want to see that your business has been operating for at least one or two years.
• Collateral or personal guarantee. Depending on the loan type and other factors, a lender may ask you to pledge collateral or a personal guarantee on your business loan. Collateral is an asset that secures the loan, such as equipment or inventory. A personal guarantee also secures the loan, but it does so with your own personal assets, such as your savings or home. With both options, the lender can seize your asset if you don’t pay back your loan.

Can I Get a Business Loan With No Revenue or Income?

Having no or low revenue or income can make it challenging to get a business loan, but you may have other options. Some lenders don’t have a minimum revenue requirement and prioritize other factors, such as your credit score and time in business, when evaluating your application for a loan.

Others have lower revenue requirements or specialize in loans for startups or businesses with low revenue. SBA loans, for instance, may be more accessible to businesses with low revenue, especially microloans for up to $50,000.

A business loan with collateral or a personal guarantee may also be easier to qualify for. Plus, alternative financing options, such as a business line of credit, credit card, merchant cash advances or invoice factoring could be more accessible than a traditional term loan.

If you’re pursuing a business loan with low or no revenue, make it a priority to strengthen the other parts of your application. Provide the lender with a solid business plan, and make a strong case about your experience and assets to show the lender why your business is a safe investment.

Although this approach isn’t guaranteed to work, it could help show the lender you’re a reliable borrower and make them more likely to extend financing for your business.