Here are 10 of the best startup business loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
Headway Capital - Line of credit with Fundera by NerdWallet | 4.7/5 Best for best overall startup business loan | $100,000 | 625 | with Fundera by NerdWallet |
SBA Microloan with Fundera by NerdWallet | Best for low interest rates | $50,000 | 620 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 4.9/5 Best for short-term loans | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit | 5.0/5 Best for fast funding | $150,000 | 600 | Read Review |
Bank of America Cash Secured Line of credit | 4.7/5 Best for secured loans | Undisclosed | 670 | Read Review |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.8/5 Best for bad credit | $1,500,000 | 570 | with Fundera by NerdWallet |
National Funding - Equipment Financing with Fundera by NerdWallet | 4.5/5 Best for equipment loans | $150,000 | 600 | with Fundera by NerdWallet |
AltLINE - Invoice Factoring | 4.7/5 Best for invoice factoring | $5,000,000 | 300 | Read Review |
Accion Opportunity Fund - Small Business Working Capital Loan | 4.8/5 Best for low-income entrepreneurs | $250,000 | 600 | Read Review |
Huntington National Bank - Lift Local Business Program | Best for veterans, women or minority entrepreneurs | $150,000 | Undisclosed | Read Review |
Here are 10 of the best startup business loans
Best for best overall startup business loan
Best for low interest rates
Best for short-term loans
Best for fast funding
Best for secured loans
Best for bad credit
Best for equipment loans
Best for invoice factoring
Best for low-income entrepreneurs
Best for veterans, women or minority entrepreneurs
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Our pick for
best overall startup business loan
With Headway Capital, you can use your line of credit as needed and only pay interest on the money you borrow. As you make payments, you can continue to draw from the line. The revolving nature of this product makes it ideal for new businesses (with at least six months in operation) that need to manage a variety of startup costs.
Headway Capital - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Headway Capital - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
With Headway Capital, you can use your line of credit as needed and only pay interest on the money you borrow. As you make payments, you can continue to draw from the line. The revolving nature of this product makes it ideal for new businesses (with at least six months in operation) that need to manage a variety of startup costs.
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: Six months.
- Minimum annual revenue: $50,000.
Our pick for
low interest rates
If you need $50,000 or less in funding, you might consider an SBA microloan. SBA microloans are specifically designed to offer small dollar loans to new and traditionally underserved businesses. Although qualification requirements vary, SBA microloans are more startup-friendly than other SBA loan options. In fact, in the 2024 fiscal year, 24% of microloans were issued to startups (businesses in operation for two years or fewer).
SBA Microloan
Max loan amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
Pros
- Can be used for a variety of funding purposes.
- Designed to finance traditionally underserved businesses.
- Startups and business owners with bad credit may be able to qualify.
- Competitive interest rates, low fees and long repayment terms.
- Intermediaries typically offer business training and educational resources.
Cons
- Loan amounts max out at $50,000.
- Can’t be used to pay existing debt or purchase real estate.
- Collateral is likely required.
- Slow funding timeline.
SBA Microloan
Max loan amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
If you need $50,000 or less in funding, you might consider an SBA microloan. SBA microloans are specifically designed to offer small dollar loans to new and traditionally underserved businesses. Although qualification requirements vary, SBA microloans are more startup-friendly than other SBA loan options. In fact, in the 2024 fiscal year, 24% of microloans were issued to startups (businesses in operation for two years or fewer).
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.
Pros
- Can be used for a variety of funding purposes.
- Designed to finance traditionally underserved businesses.
- Startups and business owners with bad credit may be able to qualify.
- Competitive interest rates, low fees and long repayment terms.
- Intermediaries typically offer business training and educational resources.
Cons
- Loan amounts max out at $50,000.
- Can’t be used to pay existing debt or purchase real estate.
- Collateral is likely required.
- Slow funding timeline.
Qualifications:
- Be a U.S. business.
- Show your ability to repay the loan.
- Personal guarantee and collateral likely required.
- Specific financial qualifications determined by individual lender.
Our pick for
short-term loans
OnDeck’s short-term loan can help you purchase equipment or inventory, buy furniture and supplies or launch marketing campaigns. This is a good term loan option for startups that are semi-established; you need at least one year in business and $100,000 in annual revenue to qualify.
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
May fund quickly
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck’s short-term loan can help you purchase equipment or inventory, buy furniture and supplies or launch marketing campaigns. This is a good term loan option for startups that are semi-established; you need at least one year in business and $100,000 in annual revenue to qualify.
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: One year.
- Minimum annual revenue: $100,000.
- Must have business bank account.
May fund quickly
Our pick for
fast funding
If you need fast access to capital, you might consider Fundbox for a startup business loan. You can apply for this line of credit quickly and easily and get a decision in as little as three minutes. Once you’re approved, you can get funds as soon as the next business day. To qualify, your startup needs to have at least three months in operation.
Fundbox - Line of credit
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Pros
- Financing available within one business day after approval.
- Simple application with minimal documentation required.
- Startup-friendly -- accepts borrowers with a minimum of three months in business.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- May require personal guarantee.
- Weekly repayments required over a short term (maximum of 24 weeks).
May fund quickly
Fundbox - Line of credit
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
If you need fast access to capital, you might consider Fundbox for a startup business loan. You can apply for this line of credit quickly and easily and get a decision in as little as three minutes. Once you’re approved, you can get funds as soon as the next business day. To qualify, your startup needs to have at least three months in operation.
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
Pros
- Financing available within one business day after approval.
- Simple application with minimal documentation required.
- Startup-friendly -- accepts borrowers with a minimum of three months in business.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- May require personal guarantee.
- Weekly repayments required over a short term (maximum of 24 weeks).
Qualifications:
- Minimum credit score: 600.
- Minimum time in business: 3 months.
- Minimum annual revenue: $30,000.
May fund quickly
Our pick for
secured loans
Bank of America’s Cash Secured Line of Credit can help startups with at least six months in business cover day-to-day expenses while also building business credit. This product is backed by the security deposit you provide ($1,000 minimum). Using the credit line regularly allows you to establish a positive account history and build your business credit. Bank of America also performs account reviews after 12 months to help you graduate to an unsecured credit line.
Bank of America Cash Secured Line of credit
Max loan amount
Undisclosed
Min. credit score
670
Pros
- Available to borrowers with at least six months in business.
- No origination fee.
- Responsible spending can help you graduate to an unsecured credit line.
Cons
- Credit limit is based on the security deposit you provide.
- Must have a Bank of America checking or savings account to apply.
Bank of America Cash Secured Line of credit
Max loan amount
Undisclosed
Min. credit score
670
Bank of America’s Cash Secured Line of Credit can help startups with at least six months in business cover day-to-day expenses while also building business credit. This product is backed by the security deposit you provide ($1,000 minimum). Using the credit line regularly allows you to establish a positive account history and build your business credit. Bank of America also performs account reviews after 12 months to help you graduate to an unsecured credit line.
Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.
Pros
- Available to borrowers with at least six months in business.
- No origination fee.
- Responsible spending can help you graduate to an unsecured credit line.
Cons
- Credit limit is based on the security deposit you provide.
- Must have a Bank of America checking or savings account to apply.
Qualifications:
- Minimum time in business: Six months.
- Minimum annual revenue: $50,000 per year.
- Bank of America checking or savings account required.
- Minimum deposit of $1,000.
Our pick for
bad credit
Fora Financial has one of the lowest minimum credit score requirements on our list at 570. If you have a bad credit score and at least six months in business, you might consider this term loan to pay for startup costs or manage cash flow. Keep in mind, however, that you’ll need to be making at least $20,000 per month in revenue, which is higher than other online lenders.
Fora Financial - Online term loan
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
Fora Financial - Online term loan
Max loan amount
$1,500,000
Min. credit score
570
Fora Financial has one of the lowest minimum credit score requirements on our list at 570. If you have a bad credit score and at least six months in business, you might consider this term loan to pay for startup costs or manage cash flow. Keep in mind, however, that you’ll need to be making at least $20,000 per month in revenue, which is higher than other online lenders.
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
Qualifications:
- In business for at least six months.
- At least $20,000 per month in revenue.
- No open bankruptcies or dismissed bankruptcies within the past year.
Our pick for
equipment loans
If you need to purchase equipment for your startup, National Funding might be a good option to consider. You can finance up to 100% of the cost of new or used equipment, with a maximum loan amount of $150,000. Because the equipment serves as collateral on the loan, National Funding can offer more flexible qualification requirements than traditional lenders. And, unlike some equipment lenders, National Funding does not require a down payment for its financing.
National Funding - Equipment Financing
Max loan amount
$150,000
Min. credit score
600
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing.
National Funding - Equipment Financing
Max loan amount
$150,000
Min. credit score
600
If you need to purchase equipment for your startup, National Funding might be a good option to consider. You can finance up to 100% of the cost of new or used equipment, with a maximum loan amount of $150,000. Because the equipment serves as collateral on the loan, National Funding can offer more flexible qualification requirements than traditional lenders. And, unlike some equipment lenders, National Funding does not require a down payment for its financing.
Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing.
Qualifications:
- Minimum credit score: 600.
- Minimum time in business: Six months.
- Minimum annual revenue: $250,000.
Our pick for
invoice factoring
If you’re a new business-to-business company with capital tied up in unpaid invoices, you might consider AltLINE. Invoice factoring from AltLINE allows you to get fast access to your funds — that you can then invest back into your startup. Because this type of financing is based on your invoices, AltLINE focuses more heavily on the creditworthiness of your customers compared to traditional lending criteria. There is no minimum time in business or credit score requirement for approval.
AltLINE - Invoice Factoring
Max loan amount
$5,000,000
Min. credit score
300
Pros
- Capital available within 24 to 48 hours.
- No collateral required.
- Manages payment collection from your customers.
- Accepts startups and businesses with bad credit.
Cons
- Fees can become expensive the longer it takes your customers to pay.
- Difficult to compare factoring costs to other types of business loans.
AltLINE - Invoice Factoring
Max loan amount
$5,000,000
Min. credit score
300
If you’re a new business-to-business company with capital tied up in unpaid invoices, you might consider AltLINE. Invoice factoring from AltLINE allows you to get fast access to your funds — that you can then invest back into your startup. Because this type of financing is based on your invoices, AltLINE focuses more heavily on the creditworthiness of your customers compared to traditional lending criteria. There is no minimum time in business or credit score requirement for approval.
AltLINE offers fast invoice factoring with competitive factoring rates.
Pros
- Capital available within 24 to 48 hours.
- No collateral required.
- Manages payment collection from your customers.
- Accepts startups and businesses with bad credit.
Cons
- Fees can become expensive the longer it takes your customers to pay.
- Difficult to compare factoring costs to other types of business loans.
Qualifications:
- All credit scores may be accepted (ranging from 300 to 850).
- No minimum time in business requirement.
- No minimum annual revenue requirement.
- Must be a B2B business.
Our pick for
low-income entrepreneurs
Accion is a nonprofit lender that specifically targets low-to-moderate income entrepreneurs, as well as women and minority business owners. The company offers loans of up to $250,000 for startups that have been operating for at least 12 months. In addition to funding, Accion also provides educational resources, business coaching and support networks in English and Spanish.
Accion Opportunity Fund - Small Business Working Capital Loan
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared to online lenders.
- Not available in all U.S. states.
Accion Opportunity Fund - Small Business Working Capital Loan
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%
Accion is a nonprofit lender that specifically targets low-to-moderate income entrepreneurs, as well as women and minority business owners. The company offers loans of up to $250,000 for startups that have been operating for at least 12 months. In addition to funding, Accion also provides educational resources, business coaching and support networks in English and Spanish.
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared to online lenders.
- Not available in all U.S. states.
Qualifications:
- Minimum credit score: 600.
- Minimum time in business: 12 months.
- Minimum annual revenue: $50,000.
Our pick for
veterans, women or minority entrepreneurs
Banks don’t typically fund startups, but Huntington National Bank’s Lift Local Business loan program is designed to help new veteran-, women- and minority entrepreneurs start and grow their businesses. Through this program, you can take advantage of longer-terms, overdraft fee relief and waived monthly account service fees. The program also offers lower credit score requirements than the bank’s other loan options, as well as free financial entrepreneurial courses powered by Operation Hope, a nonprofit financial literacy organization.
Huntington National Bank - Lift Local Business Program
Max loan amount
$150,000
Min. credit score
Undisclosed
Pros
- Loans starting as low as $1,000.
- No origination fees.
- SBA loans offered with SBA fees paid by Huntington.
- Free financial entrepreneurial courses.
Cons
- Low maximum loan amounts.
- Program only available in certain U.S. states.
- Limited information on terms and fees available online.
Huntington National Bank - Lift Local Business Program
Max loan amount
$150,000
Min. credit score
Undisclosed
Banks don’t typically fund startups, but Huntington National Bank’s Lift Local Business loan program is designed to help new veteran-, women- and minority entrepreneurs start and grow their businesses. Through this program, you can take advantage of longer-terms, overdraft fee relief and waived monthly account service fees. The program also offers lower credit score requirements than the bank’s other loan options, as well as free financial entrepreneurial courses powered by Operation Hope, a nonprofit financial literacy organization.
Huntington National’s Lift Local Business loan program is designed to support minority-, woman- and veteran-owned small businesses from startup and on.
Pros
- Loans starting as low as $1,000.
- No origination fees.
- SBA loans offered with SBA fees paid by Huntington.
- Free financial entrepreneurial courses.
Cons
- Low maximum loan amounts.
- Program only available in certain U.S. states.
- Limited information on terms and fees available online.
Qualifications:
- No bankruptcies in the last 4 years.
- Requirements for credit score, time in business and business revenue not disclosed.
What is a startup business loan?
A startup business loan is any type of small-business loan that’s available to a company with a limited operating history. Typically, lenders define a startup as a business with less than two years in operation.
Startup business loans are usually available from online or alternative sources. Traditional lenders are less likely to fund startups because they don’t have an existing track record of success to prove they will be able to repay their debts.
As a result, startup business loans often have higher interest rates and shorter repayment terms than more traditional options.
Types of startup business loans
Startup business loans can be used to cover working capital expenses such as inventory, payroll, utilities and insurance, or to purchase fixed assets such as furniture, equipment, machinery and real estate. Here are some of the most common types of startup loans.
SBA loans
The U.S. Small Business Administration's microloan program is startup-friendly, offering loans of up to $50,000 for small businesses looking to start or expand. The average SBA microloan was $16,121 in the 2024 fiscal year— with 24% of microloans going to startups (businesses in operation for two years or less).
SBA microloans are administered by nonprofit community lenders and are typically easier to qualify for than larger-dollar loans. The downside: Funding may not be sufficient for all borrowers.
The SBA’s flagship 7(a) loan program also offers financing that borrowers can use to start businesses. But SBA 7(a) loans are tougher to get. These loans typically go to established businesses because they have proof of consistent revenue and can provide collateral that a lender can sell if you default.
It’s not impossible, however, to get a 7(a) loan as a startup. In fact, 16.8% of loans issued in the 2024 fiscal year went to businesses with less than two years in operation and 15.5% went to startups who needed funds to open their business. If you’re interested in a 7(a) loan, you can start your search with a lender you have a previous relationship with and ask about their SBA loan requirements for startups.
» MORE: How to get an SBA startup loan
Microloans
Microloans are also available outside of the SBA program, and microlenders and nonprofit lenders can be a less difficult route to access startup business loans, especially if you have weak finances. Many of these lenders focus on minority or traditionally underserved borrowers, as well as small businesses in communities that are struggling economically.
Because these startup loans often come from mission-based organizations, the terms will likely be better than you would receive from a private lender, making it possible for you to grow your business and establish better credit. That can help you qualify for other types of financing in the future.
Online loans
Many online lenders offer business loans for startups with one year or less in operation. You'll typically need a minimum of six months in business to qualify. Depending on the lender, you may be able to access different types of financing, such as short-term loans and startup business lines of credit. Compared to more-established businesses, however, you'll generally receive smaller loan amounts, shorter terms and higher interest rates.
CDFI loans
Community development financial institutions (CDFIs) are another provider of startup business loans. These banks, credit unions, and other capital lenders provide financial products and services to local residents and businesses in low-income communities. CDFI loans typically offer competitive interest rates and more flexible qualification requirements than traditional commercial bank loans.
CDFI lenders can be found in all U.S. states, the District of Columbia, Guam and Puerto Rico.
Equipment financing
When securing equipment is necessary for your startup business, an equipment loan can help you finance the purchase. Unlike some other loans, you typically won’t need to put up additional collateral because the equipment you purchase serves that purpose.
Interest rates and repayment terms of equipment loans vary depending on the lender, your business qualifications, the value of the equipment and its useful life.
Invoice financing
Invoice factoring is a type of business financing that involves selling your unpaid invoices for cash. A third-party factoring company purchases your outstanding invoices at a discount.
Invoice factoring is often faster and easier to access than a traditional bank loan — and it doesn’t require you to take on additional debt. This type of financing can be expensive, however, based on the factoring company’s fees and the time it takes your customers to pay their invoices.
Merchant cash advances
A merchant cash advance (MCA) is an advance of capital that’s repaid using future credit and debit card sales. This form of short-term financing is usually easy to qualify for and fast to fund. And because repayment is based on your sales, merchant cash advance companies may be more flexible with their time in business requirements.
MCAs are one of the most expensive forms of business funding, however. You’ll want to consider all other startup loan options before opting for an MCA.
Pros and cons of startup business loans
Pros
Provides funds to get a business off the ground or grow a young one.
May build business credit history.
Can be helpful in obtaining future funding.
Cons
Can be challenging to obtain.
Higher interest rates and shorter terms, typically.
Increases business debt and monthly expenses.
May require personal guarantee and/or collateral.
How to get a startup business loan
Without an established history of success, it can be difficult to access a startup business loan. While the process for getting a business loan will vary based on the type of funding you choose, as well as the lender or financial institution, there are some general steps you can take to best prepare yourself.
1. Determine what kind of financing you need
As a startup, it may be more difficult to get more traditional forms of business financing, so you’ll want to think carefully about what option is right for your needs.
You’ll want to consider how much capital you need and how you’re going to use it. You should also calculate how much debt you can afford, making sure you can cover potential payments without decimating your cash flow.
2. Evaluate your credentials
Next, you’ll want to review common business loan requirements, so you have a sense of where you stand before applying. Although requirements for startup business loans vary, it’s helpful to consider the following minimum criteria:
- Personal credit score: Although some online lenders offer startup business loans for bad-credit borrowers (those with a personal credit score below 630), be wary of any lender that offers startup loans with no credit check or guaranteed approval. It could be an expensive option — or a scam. You’ll typically need a personal credit score of 500 or higher; otherwise, you may need to build your credit before applying.
- Personal finances. Your personal finances will likely weigh heavily into your startup business loan application. A lower debt-to-income ratio and higher personal credit score are ideal to qualify for the best rates.
- Available collateral. It can be helpful to offer substantial collateral on your loan application, even when it’s not required. In general, anything you can use to show your creditworthiness and ability to repay the financing will help you qualify for a startup business loan — as well as help you access more competitive rates and terms.
- Business data. If you’ve been in business for at least six months, putting in the time and effort to create financial projections not only gives a lender an idea of your business’s potential, but it also demonstrates that you are serious about your growth and success. If you’ve already started your business, you’ll need to provide financial and bank statements as well.
- Consider a cosigner. A cosigner on a business loan acts as a second guarantor and can help improve your chances of approval with a lender. If you know a trustworthy person with good personal credit and assets, it may be worth asking them if they’d consider cosigning your startup loan, if needed. However, keep in mind that if you default on the loan, the cosigner’s credit will be adversely affected in addition to your own.
3. Research and compare lenders
You should research several lenders in order to find the right fit for your startup business. As you compare different options, think about factors such as loan types, interest rates, repayment terms, fees, the application process, funding speed and lender reputation.
4. Create a comprehensive business plan with a funding request
A business plan can help you get a loan when it includes a funding request in addition to a market analysis, marketing plan, financial statements and other important information on your business.
A well-thought-out and comprehensive business plan will support your loan application and can help persuade lenders of the potential of your business. The funding request section of your plan can be used to explain how much funding you need, what loan terms you’re looking for and how the money will be used.
5. Gather documents and submit your application
Your business loan application process will vary based on the lender and type of loan you choose. Typically, however, you’ll need to provide some, if not all, of the following:
- Basic information about you and your business, such as an employer identification number or EIN.
- Business licenses or formation documents.
- Personal and business bank statements.
- Personal and business tax returns.
- Financial statements, such as balance sheets and profit and loss statements (if your business is already operating).
- Cash flow projections.
- A business plan for funding.
- Collateral information.
Your lender will also likely ask you to sign a personal guarantee and/or take out a UCC lien on your assets.
6. Review your options
You’ll want to compare multiple loan offers to make sure you’re getting the best deal for your new business. Once you’ve made a decision, you should thoroughly review your business loan agreement and ensure that you understand the rates, terms, fees and repayment schedule.
If you have any questions or concerns about the document, you should contact your lender for clarification before signing.
Steps you can take if you are denied a startup business loan
If you’re denied a startup business loan, there are steps you can take that may allow you to still move your business forward.
Alternatives to startup business loans
A startup loan may not always be the best option to finance your new business. If you’re just trying to get your business off the ground, for example, it may be difficult to qualify for a loan.
If you’re having trouble qualifying, or are wary of taking on debt, consider other startup funding.
Some entrepreneurs use personal funds to start up their businesses — bootstrapping, as it’s often called. This may include dipping into personal savings or retirement accounts to access cash for startup costs. Withdrawals of money from retirement accounts for business uses are commonly called Rollovers as Business Startups (ROBS) transactions. While self-funding can be a quick path to getting funding for your businesses, it could also result in the loss of money you’ve set aside for retirement, if your business fails.
Startup business grants from private foundations, government agencies or small-business incubator programs can provide free access to capital. Grant applications are often competitive and require a significant time investment, but may be worth it if you can get funding. Plus, with an incubator or accelerator program, you can advance your business skills and network with other small-business owners and stakeholders.
Grants may be a particularly good option for startups in specific industries or demographics. Businesses in the tech sector, for example, may be able to qualify for funding through the Small Business Innovation Research or Small Business Technology Transfer programs. If you served in the U.S. military, you can apply for business grants for veterans. There are also business grants for women, grants for minority entrepreneurs and business grants for people who have previously been convicted of a felony.
One of the most common ways of financing a new business is to borrow money from friends or family. Of course, like with a lender, you’ll have to convince them that you’ll be able to pay them back. Also, to avoid misunderstandings, it’s recommended that you put the loan terms in writing so everyone involved has a clear understanding of what’s involved.
Plus, the potential cost of failure isn't just financial; it's personal. Trim your list of friends and family to those who understand your plans, and do your best to make certain they're comfortable with the risks involved.
Many entrepreneurs rely on business credit cards as funding. You can use this option as short-term financing for business purchases that you can pay off quickly. Startup business credit cards also typically come with rewards programs that offer cash back, points or miles — so you can earn more for your spending.
Carrying a balance allows interest charges to accumulate, however, so you’ll want to make sure you can pay off anything you purchase.
It’s also important to keep in mind that business credit card providers will use your personal credit history to evaluate your application and set interest rates. As a result, it may be difficult to qualify with bad credit.
Last updated on October 16, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
To come up with our list of the best startup business loans, we selected lenders with a minimum time in business requirement of one year or less.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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Frequently Asked Questions
To get a startup business loan, you may need:
- A personal credit score of 500 or higher.
- Annual revenue of $50,000 or more.
- Six or more months in business.
- Physical collateral.
- A business plan.
- Business and personal tax returns.
- Business and personal bank statements.
- Financial statements.
It’s more challenging for a startup to get a business loan compared to an established company, but it’s not impossible. Good personal credit, strong finances and available collateral can all help you qualify for a startup loan.
In some instances, banks will offer loans to startups. Although most banks require that you have two or more years in business to qualify for a loan, others may lend to startups that can show excellent credit, strong finances and sufficient collateral — usually valued at or above the amount of the loan request.
Bank of America, Wells Fargo, U.S. Bank and Huntington Bank, for example, all offer certain loan options for startups.
Maximum funding amounts for startup business loans can range from $50,000 to upward of $1 million, although it will be more difficult to qualify for larger loan amounts. Typically, startups receive smaller loans than more established businesses because they pose a greater risk of default to lenders.
To get a startup business loan, you’ll need a personal credit score of at least 500, although a higher score is preferable and requirements vary by lenders. Online lenders typically accept lower credit scores than traditional banks, but online loans have higher interest rates and shorter terms.
Learn more about credit score requirements for business loans.