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Best Startup Business Loans of December 2024

Written by
Randa Kriss
Edited by
Sally Lauckner
Last updated on December 9, 2024

Fact checked and reviewed
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Startup loans can provide up to $1.5 million to help you cover your new business’s expenses.

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Startup business loans help entrepreneurs get their new companies up and running. Most of these business loans are available from online lenders that offer capital to borrowers with at least three months in operation. Although it may be more difficult for new businesses to qualify for traditional small-business loans, some bank and SBA lenders also provide startup-friendly options.

Here are 8 of the best startup business loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA Microloan

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Best for low interest rates

$50,000620

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Headway Capital - Line of credit

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4.7/5

Best for fast funding

$100,000625

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Fora Financial - Online term loan

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4.7/5

Best for bad credit

$1,500,000570

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OnDeck - Online term loan

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4.8/5

Best for short-term loans

$250,000625

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Giggle Finance Merchant Cash Advance

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Best for low revenue businesses

$5,000300

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National Funding - Equipment Financing

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4.6/5

Best for equipment loans

$150,000600

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Bank of America Cash Secured Line of credit

Read Review
4.8/5

Best for secured loans

Undisclosed670
Read Review

Accion Opportunity Fund - Small Business Working Capital Loan

Read Review
4.9/5

Best for low-income entrepreneurs

$250,000600
Read Review

Here are 8 of the best startup business loans

Best for low interest rates

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

Best for fast funding

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

Best for short-term loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for low revenue businesses

Giggle Finance

Max Amount

$5,000

Min. Credit Score

300

Best for equipment loans

National Funding

Max Amount

$150,000

Min. Credit Score

600

Best for secured loans

Bank of America

Max Amount

Undisclosed

Min. Credit Score

670

Best for low-income entrepreneurs

Accion

Max Amount

$250,000

Min. Credit Score

600

I'M INTERESTED IN:

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

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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%

Our pick for

fast funding

If you need fast access to capital, you might consider Headway Capital for a startup business loan. You can apply for this line of credit quickly and easily and get a decision in just 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 six months in operation.

Headway Capital - Line of credit

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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

NerdWallet rating 
4.7/5
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%

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

Read Review

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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.
  • Charges an origination fee.

Fora Financial - Online term loan

NerdWallet rating 
4.7/5
Max loan amount
$1,500,000
Min. credit score
570

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

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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.
  • Charges origination fee.
May fund quickly

OnDeck - Online term loan

NerdWallet rating 
4.8/5
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
May fund quickly

Our pick for

low revenue businesses

If you’re just starting out and haven’t earned much revenue yet, you might consider Giggle Finance for a small injection of capital. Giggle offers cash advances up to $5,000 that are repaid using a percentage of your future sales. To qualify for a Giggle advance, you’ll need at least three months in business and $3,000 in monthly revenue. Giggle doesn’t have a minimum credit score requirement.

Giggle Finance Merchant Cash Advance

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Max loan amount
$5,000
Min. credit score
300

Pros

  • No minimum credit score requirement.
  • Same-day funding available.
  • Specifically designed for freelancers and self-employed individuals.

Cons

  • Funding maxes out at $5,000.
  • Factor rate and fee information not available on website.
  • Charges an origination fee.

Giggle Finance Merchant Cash Advance

Max loan amount
$5,000
Min. credit score
300

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

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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 offers only short-term loans and equipment financing/leasing.
  • Charges an origination fee.

National Funding - Equipment Financing

NerdWallet rating 
4.6/5
Max loan amount
$150,000
Min. credit score
600

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

Read Review
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

NerdWallet rating 
4.8/5
Max loan amount
Undisclosed
Min. credit score
670

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

Read Review
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 with online lenders.
  • Charges an origination fee.
  • Not available in all U.S. states.

Accion Opportunity Fund - Small Business Working Capital Loan

NerdWallet rating 
4.9/5
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%

How Much Do You Need?

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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 $16,124 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.

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 three 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 three 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.
Paper documents wrapped with a ribbon that has a checkmark on it.
Ask the lender what influenced the decision.You may be able to address the lender’s concerns and then reapply. For example, if the decision was due to a poor credit score, you may be able to take steps to improve your score. Or, if the lender felt a loan was above its risk tolerance, you might offer collateral or a cosigner to lower the risk for the lender.
Couple of hands typing on a laptop.
Try a different type of loan.If you’ve been denied a bank or SBA loan, you may want to look for loans with more flexible qualification requirements. Consider online loans, microloans or CDFI loans, but be aware that these loans often have higher rates and shorter terms.
A person looking at a mobile phone.
Start a scaled-back version of your business. If you can’t get funding to start your business, consider launching a smaller version of your business that you can finance on your own. This may involve offering fewer products, running the operation yourself instead of hiring staff and delaying the lease of a commercial property.
Laptop with upward chart.
Strengthen your business plan.Providing projected financial statements for a minimum of three years can demonstrate how you plan to generate enough profit to repay a loan. There are also companies that specialize in writing business plans for a fee, or you could use the free or low-cost services offered by your local Small Business Development Center or SCORE office.


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.
Last updated on December 9, 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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