Sep 13, 2020

Qualifying for a Business Loan in the Pandemic

The coronavirus has changed virtually everything about the way we live our lives and operate our businesses, including the qualifications for small business loans. We believe that if you know what to expect when applying for a loan, you can better prepare and increase the likelihood that your business is funded. 

To give you a sense of what lenders are looking to see, we’ve put together the criteria many lenders are using to determine a borrower’s qualifications. Of course, loan decisions are made on a case by case basis, so there’s no guarantee, but it should give you a sense of how you’ll stack up. 

ACH Loan

An ACH loan can be an ideal solution when your business is experiencing cash flow issues, which is why it’s also referred to as a “cash flow loan.” An ACH loan can fund within 24 hours of approval, so it’s a great option when time is of the essence. 

What are the basic qualifications for an ACH loan during the pandemic?

What documents will your business need to provide?

Business Line of Credit

Financing for whatever you need whenever you need it. A business line of credit offers small businesses the most flexibility. There are no restrictions on how you use the funds. You can borrow as much as you like (up to a predetermined amount) as often as you need over the course of the loan term. 

What are the basic qualifications for a business line of credit during the pandemic?

What documents will your business need to provide?

Business Term Loan

The classic small business loan has helped thousands of businesses succeed through thick and thin. Fixed payments over a set term give you the financing you need with one of the rarest commodities in this pandemic: predictability. 

What are the basic qualifications for a business term loan during the pandemic?

What documents will your business need to provide?

SBA 7(a) Loan

SBA 7(a) loans have long been a small-business-favorite because of their low interest rates and long terms. SBA 7(a) loans provide financing with a low cost of capital, but you can expect higher competition, increased paperwork, and longer wait times. This one follows the adage, “Good things come to those who wait.” 

What are the basic qualifications for an SBA 7(a) loan during the pandemic?

What documents will your business need to provide?

Equipment Financing 

Finally, a loan specifically designed to help you pay for purchases and repairs on all the stuff you need to run your business. Whether you need commercial garage kitchen appliances, work-from-home office furniture, or repairs to your trusty tractor, equipment financing can provide you with the capital you need to make it happen. Because this loan type is secured by the equipment you’re using it to purchase or repair, it can be easier to qualify for. Bonus: an equipment loan typically doesn’t have a minimum revenue requirement because it’s a secured loan.

What are the basic qualifications for equipment financing during the pandemic?

What documents will your business need to provide?

Accounts Receivable Financing

If you’re experiencing working capital strains in the time between invoice and payment, accounts receivable financing may be able to help. 

What are the basic qualifications for accounts receivable financing during the pandemic?

What documents will your business need to provide?

How to Compare Loans During the Pandemic

There are 2 ways to approach applying for a loan. First, you can make a list of lenders and research them all independently, or you can apply through a lending marketplace, which allows you to shop multiple options from a variety of lenders, the same way you might use Kayak or Orbitz to compare flight options. Shopping around gives you the certitude that you’ve secured the best loan for your business—it’s just a question of if you want to do it the easy way or the hard way. 

If you’re ready to start comparing offers, you can complete a 15-minute application to get instantly matched with lenders in our network.

About the author

Mary Kate Miller
Mary Kate Miller
Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.

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