Funding readiness

The 7-Point Fundability Checklist

What underwriters check when they review an application, so you can check your file first.

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You want an approval on the first try. Here's what underwriters check, so you can check it first. Even owners with 720 and 740 credit scores get denied when something else in the file is off.

Fundability is not your credit score.

Your score is one number. Lenders read your whole profile, and they weigh more factors than most applicants expect. Applying before you're ready can mean a denial and a hard inquiry, which can make the next approval harder. So before you apply for anything, check your file against these seven.

Part 1

The seven checkpoints

Each one controls a piece of the story your file tells the bank. Where you can't honestly check the box, that's the place to work on first.

Your credit profile, not just the score

Your score is a starting point. A score over 700 opens more options, but it doesn't mean you're qualified. Underwriters read the profile underneath the number, and that's where many files come up short.

Two things catch people: utilization is read per card, not just overall (one card at 60% hurts even when the rest are low, and authorized users do not fix it), and negative marks such as collections and charge-offs weigh heavily (even a small collection, or a paid-in-full account still showing as a charge-off, can hurt an application).

You pass whenutilization is under 30% on every open unsecured card (under 15% is stronger), zero collections, charge-offs, or public records, no late payments in 2 years (and no 60 or 90 day lates in 5), fewer than 4 hard inquiries per bureau in the last 6 months, and an average account age of 2.5 years or more.

Revenue consistency

Lenders do not just want revenue. They want predictable cash flow. $50K one month, $5K the next, and $20K after that is volatile, and volatile reads as risk. Six steady months reads as fundable.

For revenue-based products like working capital, lenders weigh what comes through your bank account more heavily than your score, and many set a low score floor or none. So the deposits have to be consistent and real.

You pass whendeposits are consistent across 6 or more months. Rough lender floors by product: $10K to $20K a month for working capital, $100K a year for a line of credit, and $125K to $500K a year at many SBA lenders, depending on the loan.

Time in business

Funding is a ladder, and your time in business decides which rung you can reach. Each rung builds on the one below it, and applying above your rung is where many denials come from.

Apply for a term loan at 6 months in business and you'll most likely get a denial and an inquiry you didn't need.

You pass when you know your rung6+ months opens working capital, 12+ months opens a business line of credit, 24+ months opens most bank term loans. SBA lenders usually want 2 years, though the SBA also lends to startups with a larger down payment.

Your bank account history

This is the blind spot that catches many owners. When you apply, lenders ask for 3 to 6 months of statements, and they read your daily balances, not just today's number.

What lenders flag: NSFs (non-sufficient funds returns) and overdrafts (even one in the last 90 days can count against you), negative balance days, inconsistent deposits, accounts open less than 90 days, and mixing personal and business funds in the same account. A business account with grocery charges and Venmo transfers to friends signals you are not operating like a real business.

You pass whenthe account is 90 or more days old, no NSFs, no negative balance days, deposits are consistent, and business money is kept separate from personal.

ChexSystems

The banking bureau almost no one checks. It tracks overdrafts, forced account closures, and unpaid negative balances. If you are in their system, it can block you from opening the bank accounts and getting the funding you are going after.

An owner with a 750 credit score can still be denied over a forced account closure from years ago that they'd forgotten about. If you've ever been denied a bank account or funding with no clear credit reason, this is worth checking.

You pass whenyou have pulled your free ChexSystems report and know exactly what is on it before a lender does.

Debt service: your income vs your obligations

For larger products, lenders run the math on whether you can comfortably carry the new payment. The number that stops the most term loan and SBA applications is your debt service coverage ratio, or DSCR.

DSCR is your net operating income divided by your total debt payments. If your monthly cash flow after expenses is $10,000 and your debt payments are $8,000, your DSCR is 1.25: your income is 25% more than your payments. SBA's own minimum is 1.15x, and many lenders look for 1.25x or more.

You pass whenyour DSCR is at least 1.25x, which many lenders look for (SBA's own minimum is 1.15x, and 1.35x and up is stronger). If you don't know your number, calculate it before you apply. For term loans and SBA, it often matters more than your credit score.

Your industry

Some industries are an automatic decline at most lenders no matter how clean your file is: adult, cannabis, crypto, firearms, unregistered multi-level marketing, and a handful of others. A general application in a restricted lane usually ends in a denial and an inquiry you didn't need.

You pass whenyou know whether you are in a restricted lane, and if you are, you apply with a lender who specializes in it instead of spending inquiries on general applications.

All 7 checkpoints are locked Get the checklist ↑

Part 2

What your file qualifies for

Where your numbers land decides which door is open right now. Find the row that matches your file.

Funding product	Credit score	Time in business	Revenue
SBA financing	640 to 680+	2+ years at most lenders	$125K to $500K / yr, by lender
Business line of credit	Varies by lender	1+ year	$100K+ / yr
Working capital	No set floor at many lenders	6+ months	$10K to $20K / mo
Bank term loan	Varies by lender	2+ years	Varies by lender

These are typical lender expectations, not program rules, and each lender sets its own. SBA's minimum debt service coverage ratio (DSCR) is 1.15x, and many lenders look for 1.25x or more.

Part 3

If you get denied, you're not done

The reconsideration play

Many denials come from an automated system running an algorithm, not a human looking at your full picture. A human underwriter can override it. That's what a reconsideration call asks for, and it can change the outcome.

Call soon after the denial. Ask for reconsideration once per application.

Reframe the denial. If they cite too many inquiries, explain they are strategic and business-related, not desperation, and offer to start with a lower limit. If they cite revenue, ask them to consider your personal and business income together, since the automated system usually does not. It's worth one call.

The owners who get funded are rarely the ones with the most revenue. They're the ones whose file is ready before they apply.

Run your file through the seven. Where you can't check the box, that's what to fix first.

Which of the seven is costing you right now?

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