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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 2, 2024, 1:52pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Startup business loans help new companies get off the ground without having to qualify for traditional business loans. Startup owners can rely on term loans, lines of credit, asset-based financing and business credit cards to cover operating costs. Whereas, funds from friends, family and crowdfunding campaigns can help startups with insufficient credit history access more flexible funding.
Why you can trust Forbes Advisor: Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.
All businesses are unique and are subject to approval and review.
1 year
Minimum credit score
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
OnDeck was founded in 2006 and has since been a leading provider in the business lending space, offering both term loans and lines of credit. Today, they have extended $14 billion in funding to small businesses.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Note: OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. What’s more, while it lends to over 700 industries, there are some industries it cannot serve.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
BEST FOR A LENDER COMPARISON SITE
Lendio
4.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Lendio is an online business loan marketplace that connects prospective borrowers with traditional banks and nonbank online lenders. By filling out one application, Lendio is able to connect business owners to over 75 lenders. Over its existence, Lendio has helped small business owners receive over $12 billion in funding nationwide.
Applicants may see Lendio as a one-stop-shop. You can apply for business loans, lines of credit, SBA loans, equipment financing, merchant cash advances (MCAs), commercial mortgages, invoice factoring and business acquisition loans. However, because Lendio is a marketplace and not a lender, it doesn’t publish specific terms. Instead, you’ll have access to its lending partners, and it will help you find the best offer for your specific needs.
Pros & Cons
One application connects you to more than 75 lenders
Wide variety of loan products, including term loans, lines of credit and SBA loans
Some lenders charge prepayment penalties
Terms and funding times vary depending on specific lender
Details
Overview
Lendio is an online business loan marketplace that connects prospective borrowers with traditional banks and nonbank online lenders. Over its existence, Lendio has helped small business owners receive over $12 billion in funding nationwide.
Applicants may see Lendio as a one-stop shop. You can apply for business loans, lines of credit, SBA loans, equipment financing, merchant cash advances (MCAs), commercial mortgages, invoice factoring and business acquisition loans. However, because Lendio is a marketplace and not a lender, it doesn’t publish specific terms. Instead, you’ll have access to its lending partners while helping you find the best offer for your needs.
Eligibility
Minimum Credit Score: 560
Time in Business: Six Months
Minimum Annual Revenue: $50,000
Funding time
Applying through Lendio takes 15 minutes. After you review your offers and are approved by your lender, you can receive your funds in as little as 24 hours.
BEST FOR SMALL AND LARGE LINES OF CREDIT
American Express® Business Line of Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
$2,000 to $250,000
Minimum Credit Score
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
660 FICO at the time of application
Monthly fee
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
660 FICO at the time of application
All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history and other factors.
Varies by loan term
see below for details
Editor’s Take
American Express Business Blueprint™ is best for its American Express® Business Line of Credit (formerly Kabbage from American Express and Kabbage Funding™), which gives business owners the chance to secure funding between $2,000 to $250,000. Repayment terms include six, 12, 18 and 24 months.
Line of credit customers incur a loan fee for each month they have an outstanding balance. Total monthly fees incurred over the loan term range from 3% to 9% for six-month loans, 6% to 18% for 12-month loans, 9% to 27% for 18-month loans and 12% to 18% for 24-month loans.
In addition to its line of credit, American Express Business Blueprint provides other tools beneficial to small business owners, including its own mobile app that provides comprehensive cash flow insights.
Pros & Cons
No prepayment penalty
Four different repayment options
Offers small to large lines of credit
Monthly fees on unpaid balances
Requires personal guarantee
Lines of credit over $150,000 are only available to borrowers who meet additional criteria
Details
Eligibility
Minimum credit score: 660 FICO at the time of application
Time in business: One year
Minimum revenue: At least $3,000 per month
All businesses are unique and are subject to approval and review.
Turnaround time
Funds can take up to three business days to appear in your account, depending on your bank.
BEST FOR FLEXIBLE LINES OF CREDIT
Bluevine
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
BlueVine is a financial technology company that provides financing solutions to small businesses nationwide. It specifically specializes in business lines of credit and checking accounts. As of December 2021, BlueVine no longer offers invoice factoring.
Startup owners looking to access a line of credit on an as-needed basis can receive funds between $6,000 and $250,000. Through BlueVine’s Flex 6 payment structure, startups make weekly payments over 26 weeks. What’s more, after 45 days of payment on Flex 6, you may be eligible for a credit line increase. BlueVine also offers its Flex 12 structure, but it requires at least three years in business, so it’s not suited for most startups.
BlueVine also charges weekly or monthly fees for its line of credit. Standard pricing is 1.7% per week or 7% per month for line of credit draws.
Note: BlueVine’s line of credit is available in most U.S. states except North and South Dakota, Puerto Rico and U.S. territories.
Pros & Cons
Receive a decision within five minutes and instant funding with a Bluevine business checking account, or receive funds within 24 hours
Lines of credit up to $250,000
Low credit score requirement
No mobile app for its line of credit
Monthly revenue requirement
Not available to businesses in Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories
Details
Eligibility
Eligibility varies on the specific program a business owner chooses.
Weekly plan
Minimum credit score: 625
Time in business: Two years
Minimum revenue: $40,000 monthly or $480,000 annually
Business type: Corporation or LLC
Bankruptcies: No past bankruptcies
Monthly plan
Minimum credit score: 650
Time in business: Three years
Minimum revenue: $80,000 per month or $960,000 annually
Business type: Corporation or LLC
Turnaround time
After you submit your application, you can receive a decision in as quickly as five minutes and instant funding with a Bluevine business checking account. Borrowers who don’t have a Bluevine business checking account can receive funds within 24 hours.
BEST FOR QUICK APPROVALS
Fundbox
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Fundbox is an AI-powered business lending platform that speeds up the application, decision-making and funding process. It offers decisions within three minutes and funds as soon as the next business day.
Prospective borrowers have two business financing options through Fundbox. Business owners can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks. Your available credit goes back up as you repay your line of credit.
Pros & Cons
No prepayment penalty
Low minimum annual revenue requirement
Next-business-day funding
Only short-term repayment terms are available
Does not disclose APRs
Details
Eligibility
Minimum credit score: 600
Time in business: Six months
Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
BEST FOR FUNDING OPTIONS
Biz2Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Revenue-based financing. Varies depending on product and qualifications
Does not disclose
575 or 650*
*See website for details
Editor’s Take
Biz2Credit is a digital funding platform that provides three funding options—term, revenue-based financing and commercial real estate (CRE) loans—ranging from Up to $1M+. It only takes a few minutes to apply.
Biz2Credit can connect business owners with revenue-based financing Up to $2M+ and term loans Up to $1M+. Revenue-based financing payments are flexible based on business performance, with a right to reconcile against actual business receipts while term loans are repaid through weekly, bimonthly or monthly payments over the course of 12 to 36 months. Biz2Credit also offers interest-only CRE loans from Up to $2M+ with terms between 12 and 36 months; payments are due monthly.
In the event that Biz2Credit cannot provide a financial product, it may present third-party options to qualified prospective borrowers. However, Biz2Credit confirms that “in the vast majority of cases, [it] will make a financing decision without referral to any external party.”
Pros & Cons
Revenue-based financing has flexible qualification requirements
Can pre-qualify for submitting an application
Offers term loans with weekly or biweekly payments
Does not disclose financing costs
Does not disclose turnaround time
High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
Minimum credit score: 650
Time in business: 18 months
Minimum revenue: $250,000 per year
Revenue-based financing
Minimum credit score: 575
Time in business: 6 months
Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
Weigh these tips when comparing startup business loans:
Consider time in business and annual revenue requirements. Because startup businesses don’t have long business histories, it’s crucial to find lenders that deem your business eligible. Lenders set minimum time in business and annual revenue requirements. When comparing lenders, be sure to find lenders that have a minimum time in business and annual revenue requirements that your startup meets.
Determine how you want to receive your funds. It’s likely you’ll receive business financing through one of two ways: as a lump-sum payment or on an as-needed basis. If you want to receive your funds up front, choose a traditional term loan. However, if you want to use funds only as you need them, a business line of credit might be a better option.
Consider the repayment terms and flexibility. Each business financing lender has its own repayment structures. While some types of financing require monthly payments, others may require daily or weekly payments. Compare different lenders’ repayment terms when choosing your preferred lender and business loan.
Look out for additional fees. Some lenders charge no origination fees, late payment fees, prepayment penalties or any other common loan costs. However, it might not always be the case. Be sure to confirm a lender’s fee structure when shopping for the best terms. Factor in additional fees into your decision-making process.
Evaluate the lender’s customer support options. If you’ve found a lender that’s prepared to offer the money you need at acceptable terms, consider the lender’s support options before signing the loan agreement. Customer support can make a huge difference down the line if you encounter issues with repayment. Research the lender’s customer service resources and read reviews to make sure it’s a good fit.
What Is a Startup Business Loan?
A startup business loan is a type of financing that’s accessible to businesses with limited—or no—business or credit history. While the most common startup loans are term loans or U.S. Small Business Administration (SBA) loans, startups may also opt for business credit cards or asset-based financing. Startup founders also can opt for less traditional financing tools like crowdfunding to get the working capital they need to start and grow their businesses.
How Does a Startup Business Loan Work?
Startup business loans refer to various forms of financing available to businesses without an established track record or credit history. For that reason, different types of startup loans have different qualification requirements and application processes. Available loan amounts and borrowing terms also vary by lender and loan type. In general, though, startup business loans have less stringent qualifications than traditional business loans, making them more accessible to new businesses.
Pros and Cons of Startup Business Loans
Startup business loans can give your venture the funding it needs to become successful, but that doesn’t come without a cost. Before taking on a loan, be sure to understand the pros and cons of borrowing.
Pros
Funding for your startup. A startup business loan can give your business the money it needs to get off the ground. This can include buying equipment, hiring employees or covering other business-related expenses.
Grow your business. The influx of cash from a business loan can help your startup grow, allowing you to funnel money toward expenses that need to be covered.
Build business credit. Receiving and regularly paying off a business loan can help build your business credit. This can help you qualify for loans in the future and lend more credibility to your venture.
Cons
High costs. Many startup business loans can come with high interest rates and fees as the loan itself is often viewed as risky by the lender. This can eat away at your bottom line and can make repaying the loan difficult.
May require collateral. If your business is just starting out, you may only be able to qualify for a loan backed by collateral or by a personal guarantee. If you default on a loan backed by collateral, the lender can take possession of that asset. With a personal guarantee, the lender can pursue you personally to repay the loan.
Can be difficult to attain. Having a limited time in business and revenue stream can make qualifying for a loan difficult. Consider a lender’s minimum requirements as you shop around for offers.
10 Types of Startup Business Loans
Getting a small business loan can be challenging if your company doesn’t have an established history of success. However, there are several types of startup loans that are suited to a range of needs and qualifications.
1. Online Term Loans
Term loans are typically available through traditional banks and online lenders; however, banks may require more qualification requirements than online lenders. Term loans from online lenders generally have maximum limits between $250,000 and $500,000, but newly established startups likely won’t qualify for loan amounts that high. What’s more, online lenders usually require startups to be operational for at least six months to one year before they can qualify.
Online term loans can be an excellent way for startups with at least six months under their belt to secure business financing to help grow their company. If your startup has not been in operation for this amount of time, consider the other seven startup business loans below.
The SBA Microloan program offers eligible business owners access to startup loans up to $50,000. Terms extend up to six years and interest rates typically are between 8% and 13%, though this number varies by lender.
Loans are issued through nonprofit lenders and other financial institutions and backed by the SBA, so they’re generally more accessible to startups with limited financial records and credit history. And, while not helpful to all businesses, SBA microlenders are often more committed to funding startups in disadvantaged areas and those owned by women and minorities.
3. Asset-based Financing
Asset-based financing is a type of lender financing that’s secured by a business’ valuable assets, including inventory, machinery and equipment, accounts receivable and real estate. Secured financing often comes with more flexible lending standards because it poses less risk to the lender. This makes it an excellent option for startups that can’t meet traditional business loan qualifications.
One of the most common types of asset-based lending, invoice factoring, involves selling outstanding invoices to a third party in exchange for a lump sum of cash—usually between 80% and 90% of the total invoice amount. This can provide startups with working capital quickly and without having to demonstrate a strong business credit score or meet other stringent borrowing requirements.
4. Personal Loans for Business
Startup founders may also benefit from taking out a personal loan rather than a traditional business loan. Notably, personal loans are easier for a new business owner to qualify for than a business loan—especially for startups with limited or nonexistent business history.
What’s more, the application and approval process may be less rigorous with some lenders than for a business loan. Startup owners may also be able to access lower annual percentage rates (APRs) than available with some business loans, though available borrowing limits are usually lower.
Borrowers who use personal loans to fund their startups are personally liable for repaying the debt. Still, most lenders look at an applicant’s personal credit score when evaluating a startup business loan application anyway, so startup founders are likely to be personally liable for a startup loan as well.
Keep in mind, however, that using personal loan funds for business operations also involves commingling personal and business assets, which may cause bookkeeping, tax and/or legal issues down the line. What’s more, some personal loan lenders prohibit the use of funds for business purposes, so be sure to confirm with your desired lender before applying.
Like personal credit cards, business credit cards offer revolving access to funds that can be used for everything from office furniture and supplies to legal fees, equipment and larger purchases.
The application and approval process is faster compared to traditional loans, and startup owners are more likely to get approved based merely on their personal credit scores. What’s more, business credit cards are unsecured so new business owners won’t have to come up with valuable collateral.
Business credit cards can be used on an as-needed basis, and cardholders only pay interest on any unpaid balances at the end of the billing cycle—typically every 30 days. This makes it a good option for month-to-month operating costs and other expenses that can be paid off each month to avoid interest. Some cards also offer introductory 0% APRs that let borrowers make interest-free purchases for six months to two years.
6. Friends & Family
It can be difficult to obtain business financing as a startup with limited credit history and financial records. Business owners who are unable to qualify for a traditional business loan or another method like a business credit card—or who only qualify for a small startup business loan—may want to borrow from friends or family.
Before agreeing to borrow money, startup owners should confirm they are comfortable entering into what is essentially a business relationship with them. This involves reviewing the business plan with the lending party, discussing their role (or lack of role) in the business and memorializing the terms of the loan in writing. Ensuring all parties agree to the loan amount, repayment terms, interest rate and other relevant factors can prevent conflict down the line.
7. Crowdfunding
If traditional lending tools aren’t an option and borrowing directly from friends and family feels too personal, crowdfunding may be a suitable alternative. Likewise, prospective borrowers who are unable to qualify for a business loan as a startup can use a crowdfunding platform like Kickstarter or Indiegogo to access cash and cover operating expenses.
To get started, choose an online fundraising platform, create an account and decide how much money you’re trying to raise. After setting up a crowdfunding campaign, users can donate varying sums of cash that will become available as soon as the campaign ends.
Not only does this form of business funding not require qualifying through a financial institution, but business owners also don’t have to give donors startup equity in exchange for funds. Likewise, the startup isn’t charged interest or other lender fees
Because of the nature of crowdfunding, this strategy is best suited to startup owners who don’t need to raise a large amount of money and businesses with creative or otherwise enticing offerings. It’s not necessary to provide a thank you gift, but campaigns may be more successful if startups entice donors with an exclusive product, service or commemorative gift.
8. Small Business Grants
A small business grant is money given to startups and other businesses to help them get off the ground and grow. Grants are offered by a range of entities, including state and local governments, the federal government and corporate organizations. Unlike other startup financing methods like loans and credit cards, small business grants don’t require repayment, and business owners aren’t charged fees or interest.
That said, this form of financing is extremely competitive and applications are often rigorous and time-consuming. Many grants also focus on specific types of businesses, including those owned by women, minorities, veterans and immigrants. So, it may be difficult to identify an appropriate open grant, prepare an application and await the award in the time available.
9. Business Lines of Credit
A business line of credit is a type of revolving debt that you can borrow money from as needed up to a certain predetermined limit. This financing option works similar to a credit card and is good for ongoing expenses, such as paying employees or covering gaps in cash flow.
Many lenders require at least two years’ time in business in order to get approved for a business line of credit. Some lenders may be willing to offer lines of credit to businesses that have been in operation for as little as six months.
10. Invoice factoring
With invoice factoring, you sell your outstanding invoices to a lender. The lender pays you for a portion of the outstanding invoices—typically 60% to 95% of the invoice amount—and then collects payments from your customers.
This can be a good solution for businesses that primarily work with established clients rather than retail customers. Invoice factoring companies base your approval on your client’s credit scores and repayment history, not your own, making them a good choice for startups. Keep in mind, this can be a costly way to get funding.
What Do I Need for a Startup Business Loan?
In general, lenders look at a startup owner’s personal and business credit scores when evaluating a loan application. Because startups generally have limited financial records and credit history, it can be more difficult to qualify for a business startup loan. In this case, the lender will rely primarily—or exclusively—on the borrower’s personal creditworthiness.
To qualify for a startup business loan, compile these documents before submitting an application:
Personal credit scores and reports. When finalizing your startup business loan application, a lender will conduct a hard credit inquiry—which can temporarily drop your score by up to five points—to confirm your creditworthiness. Request copies of your credit reports and check your credit score before applying for a loan to better understand your approval odds and the potential interest rate you’ll qualify for.
Tax returns. Where possible, be prepared to provide business tax returns from the previous two years. Also compile copies of your personal tax returns and IRS documents for the same period of time. Personal returns will be especially important if your startup is brand new and lacks past returns, and may be necessary for all of the business’ owners and registered agents.
Additional financial records. In addition to tax returns, the lender may require a startup’s bank statements, accounts receivable, credit card sales and unpaid invoices as part of the application process. Lenders often need records going back at least four months, which may be feasible even for a startup.
Business plan. In the absence of lengthy financial records, an up-to-date business plan demonstrates to lenders that your business is capable of repaying its debts. This document should also include a business forecast that describes likely future revenue and expenses.
Business licenses, registrations and legal documents. If applicable, you may need to provide copies of licenses and registration necessary to operate in your state or local jurisdiction. Lenders may also require copies of incorporation documents, business leases, franchise agreements and other contracts.
Banking information. If you’re approved for a startup business loan, the lender needs banking information so it can deposit the funds. This information is typically provided during the application process.
The process of getting a startup business loan varies by financial institution and financing type, but most banks and online lenders impose similar requirements. Even so, you may face some additional challenges as a startup with limited financial records and credit history. Follow these steps to get a business loan as a startup:
Evaluate what kind of loan you need. Available loan amounts and repayment terms vary by loan type and lender, so first consider how much you need to borrow and what type of financing you prefer. If you’re a brand new startup, consider whether alternative types of startup financing may be appropriate, or if you’re likely to qualify for a business loan based on your personal credit.
Check your personal and business credit scores. Before you apply for a startup business loan, check all your credit scores. This can help you gauge your approval odds for traditional financing. If necessary, take time to improve your credit score before applying for a startup loan. Likewise, if your startup has been in business for at least a year, it may have a credit score through Experian, Equifax or Dun & Bradstreet (D&B). But it usually takes up to three years for a business to establish credit.
Prepare your startup for due diligence. The loan underwriting process typically involves extensive due diligence to evaluate the business’ creditworthiness. This generally includes a review of the applicant’s business plan, personal and business bank statements and other financial documents. It may also be necessary to provide copies of applicable business licenses and legal documents, a description of how you will use the funds and details about available collateral. As a startup founder, it’s even more important to have a robust business plan that demonstrates the business’ likelihood of success.
Compare lenders to find the best deal. In general, the most competitive interest rates and terms are reserved for the most creditworthy borrowers. Depending on your personal credit score and how long your startup has been operational, it may be difficult to qualify for the lowest rates. However, shopping around and comparing multiple lenders will help you lock in the best rates available for your business.
Submit an application. After identifying your preferred lender, review the application process and compile the necessary documentation. Business loan application and underwriting processes vary by lender, but applications can generally be completed online, via telephone or at a branch. Once you submit an application, you may be contacted by a lender representative regarding additional information or documentation, such as business projections or proof of collateral.
Consider alternatives. If you’re not approved for traditional financing like a loan or credit card, evaluate whether there are any feasible alternatives. If you have a friend or family member who has expressed interest in supporting the new business, consider borrowing from them. Alternatively, using a platform like Kickstarter may be the most convenient way to attract new customers and investors.
How To Get a Startup Business Loan With Bad Credit
While some lenders don’t work with applicants who have bad credit, there’s a selection of lenders that cater to such borrowers. If you have a personal FICO credit score below 580, consider a business loan for bad credit.
Lenders may require more documentation than if you had a strong credit score and typically like to see a business plan and cash flow projections to ensure you can afford to take on a new loan. Note that applicants with low credit scores typically receive higher interest rates, which increases the overall cost of borrowing.
If you don’t qualify for a traditional startup loan or a business loan for bad credit, consider other options like a business credit card, which usually has more flexible qualification requirements but lower credit limits.
What If You Are Denied a Startup Business Loan?
Luckily, there are a number of steps you can take if you are denied a startup business loan. Start by finding out why your application was denied. This may be a matter of contacting the lender directly or, in the case of an SBA Microloan, reviewing the notice of denial.
Once you understand why your application was rejected, take steps to address those shortcomings. This often involves waiting to borrow until your startup has more established financials, or taking steps to improve your personal credit score by paying down debt and making on-time payments.
Alternatively, consider another type of startup financing with less stringent lending requirements. For example, if you are denied a traditional loan, a business credit card may offer the funds you need with less robust qualifications. If your startup is simply too new to qualify for any kind of conventional financing, consider starting a crowdfunding campaign or working with friends and family to raise the funds you need.
Methodology
We reviewed 15 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
Loan cost: 35%
Loan details: 20%
Customer experience: 20%
Eligibility and accessibility: 10%
Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Frequently Asked Questions (FAQs)
Which loan is best for starting a business?
Startups with at least six months of business under their belt should consider business term loans and lines of credit from online lenders, and SBA microloans. If your business has been in operation for less than six months, look into business credit cards for new businesses. Business credit card providers typically rely on your personal credit score for qualification and not your business history.
How much can I get for a startup business loan?
Startup business loans typically range from $1,000 to $250,000, depending on the specific type of loan. Additionally, the largest loan amounts are usually reserved for startups with long business history, substantial annual revenue and strong credit profiles.
Are loans good for startups?
Startup business loans are an excellent way to start or grow your business, as long as you can afford to repay what you plan to borrow. If you’re unsure if your startup can afford a traditional loan, look into alternative funding methods like friends, family, grants or investors.
Is it hard to get a startup business loan?
Startup business loan may be difficult to get depending on how long your business has been in operation. If you can find a lender willing to work with your startup you’ll typically need to do extra legwork. You may need to come up with detailed business projections and market studies, as well as a solid business plan. You may also need to put up collateral for the loan, such as business or personal assets. However, this means your lender can repossess that collateral if you default.
How long does it take to get a startup business loan?
Depending on the lender and type of loan, the loan can be funded within a few days or it can take a month or longer. Having documentation ready—such as your business plan, tax returns and other financial records—can speed up the process.
Do banks give loans to start a business?
Banks do give loans to startups, but not very often. Most banks require at least a few years business and consistent income before they’ll consider you for a business loan.
Can I get startup business loans with no revenue?
It’s possible to get a startup business loan with no revenue, but it’s rare. Most lenders want to see sufficient business history and revenue that shows you can afford a loan. Businesses with no revenue often look to angel investors, loans from friends and family, secured loans, crowdfunding and grants.
What credit score do you need for a startup business loan?
This will vary by lender, but the minimum personal credit score requirement can be as low as 560. Some lenders may also want to see your business credit score, so it’s best to start establishing that credit history as soon as possible.
Helping You Make Smart Loans Decisions
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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
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