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Best Startup Business Loans of February 2024

By Randa Kriss
Last updated on February 2, 2024
Edited bySally Lauckner
Fact checked and reviewed

⏰ Estimated read time: 11 minutes

Although some lenders offer business loans for startups, you may need alternative solutions to finance a new business.

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Startup business loans help new entrepreneurs get their small businesses up and running. Funds can cover the cost of equipment, inventory, payroll, utilities and insurance.
Most startup business loans are available from online lenders that offer capital to borrowers with one year or less in operation. Although it may be more difficult for new businesses to qualify for traditional small-business loans, some bank and SBA lenders provide startup-friendly options.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 11 startup business loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA Microloan

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Best for SBA loans for startups

$50,000620

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Wells Fargo Small Business Advantage® Line of Credit

5.0/5

Best for Bank business loans for startups

$50,000680

Fundbox - Line of credit

5.0/5

Best for Unsecured business loans for startups

$150,000600

Bank of America Cash Secured Line of credit

5.0/5

Best for Secured business loans for startups

Undisclosed670

Headway Capital - Line of credit

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5.0/5

Best for Quick business loans for startups

$100,000625

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OnDeck - Online term loan

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5.0/5

Best for Short-term business loans for startups

$250,000625

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American Express® Business Line of Credit

5.0/5

Best for Streamlined application process

$250,000660

Fora Financial - Online term loan

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4.5/5

Best for Startup business loans for bad credit

$1,500,000500

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AltLINE - Invoice Factoring

4.5/5

Best for Invoice factoring for startups

$10,000,000300

National Funding - Equipment Financing

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4.5/5

Best for Equipment loans for startups

$150,000600

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Accion Opportunity Fund - Small Business Working Capital Loan

4.0/5

Best for Startup business loans for minority entrepreneurs

$250,000570

Here are 11 startup business loans

Best for SBA loans for startups

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

Best for Bank business loans for startups

Wells Fargo

Max Amount

$50,000

Min. Credit Score

680

Best for Unsecured business loans for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Secured business loans for startups

Bank of America

Max Amount

Undisclosed

Min. Credit Score

670

Best for Quick business loans for startups

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for Short-term business loans for startups

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Streamlined application process

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

Best for Startup business loans for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

500

Best for Invoice factoring for startups

AltLINE

Max Amount

$10,000,000

Min. Credit Score

300

Best for Equipment loans for startups

National Funding

Max Amount

$150,000

Min. Credit Score

600

Best for Startup business loans for minority entrepreneurs

Accion

Max Amount

$250,000

Min. Credit Score

570

I'M INTERESTED IN:

Our pick for

SBA loans for startups

The SBA microloan program is designed to offer small loans to new and traditionally underserved businesses. Qualification requirements vary based on lender. In the 2023 fiscal year, approximately 25% of SBA microloans issued went to startups.

SBA Microloan

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Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.

Max loan

$50,000

Min. Credit score

620

Apr range

8.00-13.00%

SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.

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Our pick for

Bank business loans for startups

This SBA-backed business line of credit offers up to $50,000 for startups with less than two years in operation.

Wells Fargo Small Business Advantage® Line of Credit

Max Loan Amount
$50,000
Min. credit score
680
Est. APR
13.00-15.00%
Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Max loan

$50,000

Min. Credit score

680

Apr range

13.00-15.00%

Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Our pick for

Unsecured business loans for startups

Fundbox offers business lines of credit up to $150,000 and does not require physical collateral. You could qualify with a minimum of six months in business.

Fundbox - Line of credit

Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
May fund quickly

Max loan

$150,000

Min. Credit score

600

Apr range

36.00-99.00%

Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.

Our pick for

Secured business loans for startups

Businesses with at least six months in operation may qualify for Bank of America’s Cash Secured Line of Credit. You can use this credit line to establish a positive account history and build business credit.

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 cover working capital needs and establish business credit.

Max loan

Undisclosed

Min. Credit score

670

Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.

Our pick for

Quick business loans for startups

You can apply for a line of credit of up to $100,000 from Headway Capital with a simple online application, and if approved, receive funding as quickly as the next business day. You may be able to qualify with a minimum of six months in business.

Headway Capital - Line of credit

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

Max loan

$100,000

Min. Credit score

625

Apr range

35.00-80.00%

Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

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Our pick for

Short-term business loans for startups

OnDeck offers loans for businesses that have been in operation for at least one year, with terms up to 24 months. These loans can be approved within the same day.

OnDeck - Online term loan

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
35.40-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly

Max loan

$250,000

Min. Credit score

625

Apr range

35.40-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

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Our pick for

Streamlined application process

The American Express® Business Line of Credit has a streamlined application process. Owners that started their business at least a year ago may be able to qualify.

American Express® Business Line of Credit

Max Loan Amount
$250,000
Min. credit score
660
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Max loan

$250,000

Min. Credit score

660

The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Our pick for

Startup business loans for bad credit

Fora Financial provides working capital loans for a variety of needs. You may be able to qualify with at least six months in business and a minimum credit score of 500.

Fora Financial - Online term loan

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Max Loan Amount
$1,500,000
Min. credit score
500
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.

Max loan

$1,500,000

Min. Credit score

500

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.

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Our pick for

Invoice factoring for startups

AltLINE provides invoice factoring with competitive factoring rates. The lender does not have a minimum time in business requirement for approval.

AltLINE - Invoice Factoring

Max Loan Amount
$10,000,000
Min. credit score
300
AltLINE offers fast invoice factoring with competitive factoring rates.

Max loan

$10,000,000

Min. Credit score

300

AltLINE offers fast invoice factoring with competitive factoring rates.

Our pick for

Equipment loans for startups

National Funding offers equipment loans of up to $150,000. You may be able to qualify with six or more months in business.

National Funding - Equipment Financing

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Max Loan Amount
$150,000
Min. credit score
600
Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.

Max loan

$150,000

Min. Credit score

600

Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.

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Our pick for

Startup business loans for minority entrepreneurs

Accion is a nonprofit lender that specifically targets minority, women and low-to-moderate income entrepreneurs. It offers funding up to $250,000 for businesses that have been operating for at least 12 months.

Accion Opportunity Fund - Small Business Working Capital Loan

Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-29.67%
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.

Max loan

$250,000

Min. Credit score

570

Apr range

8.49-29.67%

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.

How Much Do You Need?

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What is a startup business loan?

A startup business loan is any type of loan that helps open or grow a new business. Most of these loans are available from online or alternative sources. Many traditional lenders won’t fund startups because they are considered to be more risky than established businesses, i.e. those that have been in operation for a couple years.
Without an established track record, lenders have no proof that the business will succeed and be able to repay the loan. As a result, startup business loans may have higher rates, require stronger credit and request high-value physical collateral, such as equipment or real estate.

How do lenders define a startup?

In general, a startup is a company that’s in its early stages of development and is focused on growth. This definition can include both businesses that haven’t started operating yet, as well as those that have been operating for several years. In the lending space, however, a startup typically refers to a business that’s been in operation for less than two years.

Types of startup business loans

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 in the fiscal year 2023 was $15,644.
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. The loans typically go to established businesses that can provide collateral that a lender can sell if you default. The qualifications are strict, and even if you qualify, applying for an SBA loan can take several months.

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.

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.

Online business 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.

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 factoring

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, especially if it takes your customers a long time to pay their invoices.

Revenue-based financing

Revenue-based financing is a type of funding that allows you to trade an agreed-upon percentage of your future revenue for upfront cash. Depending on your business model, this type of financing can work well because your monthly payment is dependent on how much you make that month.
This means that if you have a month with lower revenue, your required debt payment will be lower too. Revenue-based loans are typically best for high-growth startups that don’t have a lot of other monthly expenses.

How to qualify for a startup business loan

Without an established history of success, it can be difficult to access a startup business loan. Before you start applying for financing, therefore, consider these tips to help you qualify for the most competitive options.

Check your 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.
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.
If you need to improve your credit before applying for a loan, check your credit reports for mistakes that could be weighing down your score and dispute them with the credit bureaus. You should also maintain a low balance on your credit cards and pay all bills on time.

Assess any 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.

Demonstrate strong business data if you have it

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.

How to get a startup business loan

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. In general, however, you can follow these steps to get a startup business loan:

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 be able to meet the following minimum criteria:
  • Personal credit score: 500 or higher.
  • Annual revenue: $50,000.
  • Time in business: Six months.

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, you should think about factors such as loan types, interest rates, repayment terms, fees, the application process, funding speed and lender reputation.

4. 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.
  • Collateral information.
Your lender will also likely ask you to sign a personal guarantee and/or take out a UCC lien on your assets.

5. 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.

Alternatives to startup business loans

A startup loan may not always be the best option to finance your new business. If you’re having trouble qualifying, or are wary of taking on debt, consider other types of startup funding.

Small-business grants

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.

Friends and family

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.
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.

Business credit cards

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.

Crowdfunding

Crowdfunding is a popular way for small businesses to raise money. Sites like Kickstarter and Indiegogo let you solicit funds through online campaigns. Instead of paying back your donors, you offer them gifts or other perks, which is why this system is also called rewards-based crowdfunding.
Avenues are also available for equity crowdfunding, in which you tap a public pool of investors who agree to finance your small business in exchange for equity ownership. You can even reach out to mom-and-pop investors with this type of crowdfunding, and not just accredited investors.
Crowdfunding is a great funding option for business owners who want to test out their product or service with a customer base and gauge the response without having to take on debt.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.

Compare small business loans without affecting your credit

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Last updated on February 2, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from both traditional and online lenders.
We collect over 30 data points on each lender, taking into account features we consider to be small-business friendly, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices.
Each startup business loan option on our list meets the following criteria:
-- Maximum loan amount of at least $50,000. -- Transparent rates and repayment terms. -- Funding available within two weeks of applying. -- Personal credit score requirements of 680 or below. -- Available to businesses with less than two years in operation.

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

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