Small Business Loan Eligibility Checker

How to calculate small business loan eligibility?

Lenders typically use a weighted scoring model based on the 5 Cs of Credit: Character, Capacity, Capital, Collateral, and Conditions. This multi-factor approach ensures a comprehensive view of your business health beyond just a single credit score.

Eligibility Score = (Revenue Weight × 0.4) + (Credit Weight × 0.3) + (Time in Business × 0.2) + (Collateral × 0.1)

Using the Eligibility Checker: an example

Imagine a small retail business requesting a $100,000 loan. The business has been operating for 3 years with consistent growth and a clean financial record. Using the checker helps quantify their readiness for a prime-rate loan.

Step-by-step calculation:

1. Verify revenue-to-loan ratio (at least 1.25x)
2. Assess owner credit score (>680 for prime rates)
3. Apply industry risk multipliers

Frequently Asked Questions

What is the minimum credit score? While it varies by lender, a score of 680 or higher is generally required for prime rates and SBA loans.

Does industry matter? Yes, lenders categorize industries by risk levels; high-risk sectors may require higher revenue or more collateral to qualify.

What if I have no collateral? Unsecured loans are available, but they often come with higher interest rates to offset the lender's risk exposure.