What underwriters actually weigh — beyond the headline FICO and revenue numbers — and the qualitative factors that tip close decisions.
Small business underwriting isn't a black box. Lenders weigh the same handful of factors, with different weights depending on the product. Knowing what they look at — and which weights matter for which product — is the difference between a strong application and a guess.
Measured from the date you started receiving customer revenue, not the date you registered the LLC. The cliffs that matter: 6 months (most working capital products unlock), 12 months (lines of credit, non-bank term loans), 24 months (bank term loans, SBA). See what you need before applying for business funding if you're still building toward month 6.
Calculated from bank deposits, not stated revenue. Lenders typically look at 3-6 month averages. Most working capital products require $10k+/month; non-bank term loans want $25k+/month; bank-tier products want $50k+/month.
The personal FICO of the primary guarantor is the gating score for most products. Tiers that matter:
Existing debt payments as a percentage of net income or net cash flow. Lenders typically want DSCR of 1.25× or better — meaning $1 of net cash flow for every $0.80 of debt service. If your existing debits already eat 70-80% of net cash flow, new financing is unlikely to be approved.
Some industries are restricted or surcharged: cannabis, adult, gambling, firearms, debt collection, some construction subcontractors. Other industries get preferred pricing: medical, legal, professional services, B2B with strong receivables. Industry isn't a fixed disqualifier, but it shifts pricing meaningfully.
Different lenders weight these factors differently and almost none publish their exact scorecards. As a directional guide to which factors do most of the work for each product:
Different products weight different factors. The same business that's a 9/10 for an MCA might be a 5/10 for a bank loan. Knowing which factors a particular product cares about — and matching strength to product — is what separates a strong application from a hopeful one. Once you know your strengths, gather the full document checklist and see Timing your funding requests and Improve your approval chances — or check the mistakes that kill approval odds before you submit. Your tax filings feed this picture too — see small business tax basics for first-time filers, and how your entity structure changes what income counts in S Corp vs LLC funding implications — and if you've already elected S Corp, see 5 S Corp disadvantages owners discover too late for how reasonable-comp choices affect qualifying income, and the reasonable compensation enforcement rules that drive it.
Five quantitative factors: time in business, average monthly revenue (from bank deposits, not stated), owner personal FICO, debt service coverage ratio, and industry/NAICS code. Plus qualitative factors that tip close decisions: customer concentration, geographic concentration, bank balance trends, existing debt mix, use of proceeds, and owner industry experience.
Approximate tier cutoffs in 2026: 500-579 unlocks working capital and equipment financing only at highest-tier pricing; 580-619 opens more working capital options; 620-679 enables non-bank term loans and lines; 680-719 starts bank-tier products; 720+ gets best pricing in every category. SBA 7(a) Small Loans no longer carry a mandated FICO SBSS threshold as of March 2026 — the SBA sunset that requirement, and lenders now apply their own scoring models instead.
DSCR measures whether a business generates enough cash flow to service its debt. Calculated as net cash flow ÷ debt payments. Lenders typically want DSCR of 1.25× or better — meaning $1 of net cash flow for every $0.80 of debt service. If your existing debits already eat 70-80% of net cash flow, new financing is unlikely to be approved without consolidation.
Yes. Some industries are restricted or surcharged: cannabis, adult, gambling, firearms, debt collection, some construction subcontractors. Others get preferred pricing: medical, legal, professional services, B2B with strong receivables. Industry isn't usually a fixed disqualifier but shifts pricing and eligibility meaningfully across the lender network.
Critical. Three cliffs matter: 6 months (most working capital products unlock), 12 months (lines of credit, non-bank term loans), 24 months (bank term loans, SBA). Time in business is typically measured from when you started receiving customer revenue, not the date you registered the LLC. Some lenders measure from EIN issuance.
No. The Equal Credit Opportunity Act (ECOA) prohibits lenders from denying credit based on race, color, religion, national origin, sex, marital status, age, or because income comes from public assistance. Lenders CAN price based on creditworthiness signals like FICO, time in business, revenue, and DSCR. If you suspect discrimination, you can file a complaint with the CFPB or your state attorney general.