Startup Business Loans: Best Options and How to Get One
Startup loans have flexible time in business requirements that make them easier to access for new companies.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Updated · 9 min read
Written by
Senior Writer & Content Strategist 
Edited by
Managing Editor If you’re a new entrepreneur, a startup business loan can provide the funds you need to get your operations up and running. Startup business loans can be used to cover working capital expenses, including inventory, payroll, utilities and insurance, as well as to purchase fixed assets such as furniture, equipment, machinery and real estate.
How much do you need?
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.
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. These lenders tend to have less strict requirements for how long you've been in business. As a result, they usually charge higher interest rates and offer shorter repayment terms than more traditional lenders.
Traditional lenders, like banks and credit unions, are less likely to fund startups because these businesses don’t yet have a proven track record of repaying debt.
Types of startup business loans
Here are some of the most common types of startup loans. The right option for your business depends on your individual needs and qualifications.
SBA microloans
Best for: Startups with small funding needs
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.
- Maximum loan amount: $50,000.
- Average SBA microloan (FY 2026): $15,260.
- Percentage awarded to startups (businesses in operation for two years or less): 26%.
SBA microloans are administered by nonprofit community lenders.
Pro:
- Easier to qualify for than larger SBA loans.
Con:
- Funding may not be sufficient for all borrowers.
SBA 7(a) loans
Best for: Semi-established startups with good credit.
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.
Pros:
- Low interest rates.
- Long repayment terms.
Cons:
- Tougher to qualify.
- Typically requires revenue and collateral.
It’s not impossible, however, to get a 7(a) loan as a startup.
- 7(a) loans awarded to businesses with less than two years in operation (FY 2026): 14.3%.
- 7(a) loans awarded to startups opening a business (FY 2026): 16.4%.
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 its SBA loan requirements for startups.
» MORE: How to get an SBA startup loan
Microloans
Best for: Startups who may not qualify for traditional financing.
Microloans are also available outside of the SBA program. Microlenders and nonprofit lenders can be a more accessible option for 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.
Pros:
- More accessible for borrowers with weak finances.
- Focus on underserved communities.
- Better terms than private lenders.
Cons:
- Small maximum funding amounts.
Equipment financing
Best for: Startups that need to purchase equipment.
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.
Pros:
- Designed specifically for equipment purchases.
- No additional collateral typically required.
Cons:
- May require down payment.
- Lose equipment if you can’t repay.
Equipment loan interest rates and repayment terms vary depending on the lender, your business qualifications, the value of the equipment and its useful life.
Online loans
Best for: Startups that need fast funding.
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.
Pros:
- Available to newer businesses.
- Fast funding (often within 24 hours).
- Multiple financing options.
Cons:
- Smaller loan amounts.
- Shorter repayment terms.
- Higher interest rates.
CDFI loans
Best for: Startups in low-income or underserved communities seeking flexible, affordable financing.
Community development financial institutions (CDFIs) are another provider of startup business loans.
These banks, credit unions, and community lenders provide financial products and services to local residents and businesses in low-income communities.
Pros:
- Competitive interest rates.
- More flexible qualification requirements than traditional bank loans.
Cons:
- Only available to businesses in their service area.
- Can be slow to fund.
CDFI loans can be found in all U.S. states, the District of Columbia, Guam and Puerto Rico.
Invoice factoring
Best for: Startups with cash tied up in unpaid invoices.
Invoice factoring is a type of business financing that involves selling your unpaid invoices for cash. A third-party factoring company buys your outstanding invoices at a discount.
Pros:
- Faster and easier to access than a traditional bank loan.
- Doesn’t require taking on additional debt.
Cons:
- Can be expensive.
» MORE: Best invoice factoring companies
Merchant cash advances
Best for: Startups with strong credit card sales that can’t qualify for other options.
A merchant cash advance (MCA) is an advance of money that’s repaid using future credit and debit card sales.
Pros:
- Easy to qualify.
- Fast to fund.
- Flexible time in business requirements.
Cons:
- One of the most expensive forms of business funding.
You’ll want to consider all other startup financing options before opting for an MCA.
If you are interested in exploring this option, take a look at our list of the best merchant cash advance companies, many of which we’ve vetted and partnered with.
Best startup business loan options
Why trust NerdWallet
250+ small-business products reviewed and rated by our team of experts.
80+ years of combined experience covering small business and personal finance.
50+ categories of the best business loan selections.
Objective and comprehensive business loans ratings rubric. (Learn more about our star ratings.)
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
| Product | Max loan amount | Min. credit score | |
|---|---|---|---|
 Fora Financial - Online term loan Nerdwallet Rating with Fundera by NerdWallet | $1,500,000 | 570 | with Fundera by NerdWallet |
 Giggle Finance - Merchant cash advance with Fundera by NerdWallet | $10,000 | 300 | with Fundera by NerdWallet |
 OnDeck - Online term loan Nerdwallet Rating with Fundera by NerdWallet | $400,000 | 625 | with Fundera by NerdWallet |
 Fundbox - Line of credit Nerdwallet Rating with Fundera by NerdWallet | $250,000 | 600 | with Fundera by NerdWallet |
 SBA microloan with Fundera by NerdWallet | $50,000 | 620 | with Fundera by NerdWallet |
 AltLINE - Invoice factoring Nerdwallet Rating with Fundera by NerdWallet | $5,000,000 | 300 | with Fundera by NerdWallet |
 Forward Financing - Merchant cash advance with Fundera by NerdWallet | $500,000 | 500 | with Fundera by NerdWallet |
 Headway Capital - Line of credit Nerdwallet Rating with Fundera by NerdWallet | $100,000 | 625 | with Fundera by NerdWallet |
 National Funding - Equipment financing Nerdwallet Rating with Fundera by NerdWallet | $150,000 | 600 | with Fundera by NerdWallet |
 Wells Fargo BusinessLine® Line of Credit Nerdwallet Rating with Fundera by NerdWallet | $150,000 | 680 | with Fundera by NerdWallet |
How to get a startup business loan
Without a proven track record of success, it can be difficult to convince lenders to grant you a startup business loan.
While the process for getting a business loan varies based on the type of funding and lender you choose, there are some general steps you can take to prepare.
1. Determine what kind of financing you need
Think carefully about what option is right for your needs.
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 disrupting your cash flow.
2. Evaluate your credentials
Next, 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".
- May be expensive — 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 is ideal.
- A higher personal credit score helps you qualify for the best rates.
Available collateral
Offering substantial collateral can strengthen your loan application, even when it’s not required.
- Shows your creditworthiness and ability to repay.
- May help you you access more competitive rates and terms.
Business data
If you haven’t yet started your business, creating financial projections can improve your application.
- Shows your business’s potential.
- Demonstrates you’re serious about 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.
- Best if the cosigner has good personal credit and assets.
- If you default on the loan, the cosigner’s credit will be impacted along with your own.
3. Research and compare lenders
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.
- Lender reputation.
4. Create a 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.
A well-thought-out and comprehensive business plan will support your loan application and can help persuade lenders on your business's potential for success.
The funding request section of your plan should explain how much funding you need, what loan terms you’re looking for and how the money will be used.
5. Gather documents and apply
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 (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 file a UCC lien on your assets.
6. Review your options
Compare multiple loan offers to make sure you’re getting the best deal for your new business. Once you’ve made a decision, thoroughly review your business loan agreement and ensure that you understand all the key details, including interest rates, fees, loan terms and the repayment schedule.
If you have any questions or concerns about the document, contact your lender for clarification before signing.
What to do 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.
Ask the lender what influenced the decision.
You may be able to address the lender’s concerns and then reapply.
- If the decision was due to a poor credit score, you may be able to take steps to improve your score.
- If the lender felt a loan was too risky to approve, you might offer collateral or a cosigner to lower the risk.
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.
- Be aware that nontraditional options may have higher rates and shorter terms.
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.
You might:
- Offer fewer products.
- Run the operation yourself instead of hiring staff.
- Delay the lease of a commercial property.
You can also try starting a crowdfunding campaign to validate an idea, test demand and get user feedback before expanding to a wider market.
Strengthen your business plan.
Providing projected financial statements covering at least three years can demonstrate how you plan to generate enough profit to repay a loan.
- You can hire a company that specializes in writing business plans for a fee,
- Or 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 having trouble qualifying or are wary of taking on debt, consider other startup funding options:
Startup business grants
Consider if: You don’t want to take on debt.
Grants from private foundations, government agencies or small-business incubator programs offer funding you don't need to repay. Startup grant applications are often competitive and require a significant time investment, but may be worth it if you can get funding.
Grants may be a particularly good option for startups in specific industries or demographics, including:
Startup business credit cards
Consider if: You need to cover daily expenses and want to earn rewards for your spending.
Many entrepreneurs rely on business credit cards to help fund early expenses. You can use this option as short-term financing for business purchases that you can pay off quickly.
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, 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.
Family and friend loans
Consider if: You can’t access other options; you have people in your network willing to invest.
One of the most common ways of financing a new business is to borrow money from friends or family.
Of course, as you would with a lender, you’ll have to convince them that you’ll be able to pay them back. Also, to avoid misunderstandings, it’s best to put the loan terms in writing so all parties clearly understand the agreement.
Plus, the potential cost of failure isn't just financial; it's personal. Limit 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.
Frequently asked questions
How do you get a startup business loan?
To get a startup business loan, you may need:
- A personal credit score of 500 or higher.
- Annual revenue of $50,000 or more.
- Three or more months in business.
- Physical collateral.
- A business plan.
- Business and personal tax returns.
- Business and personal bank statements.
- Financial statements.
How much can I get for a startup business loan?
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.
How hard is it to get a startup business loan?
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.
Do banks loan money to startups?
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.
What credit score do you need for a startup business loan?
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.
Article sources
NerdWallet writers are subject matter authorities who use primary,
trustworthy sources to inform their work, including peer-reviewed
studies, government websites, academic research and interviews with
industry experts. All content is fact-checked for accuracy, timeliness
and relevance. You can learn more about NerdWallet's high
standards for journalism by reading our
editorial guidelines.
- 1. U.S. Small Business Administration. Microloans Summary Report. Accessed Jan 5, 2026.
- 2. U.S. Small Business Administration. 7(a) & 504 Summary Report. Accessed Jan 5, 2026.
- 3. Community Development Financial Institutions Fund. CDFI Certification. Accessed Jan 5, 2026.
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.
On this page
