Finimpact

Best Small Business Startup Loans

Businesses may need a business startup loan to pay for startup and operational costs as well as licenses and permits, inventory, and salaries. Business startup loans can help protect the owner’s personal wealth and help them retain their ownership stake.

Business Startup Loans
Allison Bethell
Written by:Allison Bethell
Real Estate Expert

Business startup loans help get your new business off the ground without having to use all of your personal resources. You may need one if you don’t want to get a partner or spend your savings. Common uses of business startup loans include things like renting or purchasing office space, hiring key staff members, purchasing equipment and inventory, and setting up marketing campaigns to promote your business. Our team of financial experts reviewed and ranked the top online lenders to help you get funded.

Our Top Picks for Best Startup Business Loan

biz2credit review
  • Multiple loan types available
  • Funding in 48h
  • Soft credit pull
credit score
Min. Credit Score 600+
loan amount
Loan Amount $25K - $6M
loan repayment
Loan Repayment 12-36 months
Torro review
  • Hundreds of financing options
  • Use the loan for any purpose
  • Fast process
min credit score
Min. Credit Score 680+
loan amount
Loan Amount Up to $575K
Loan Repayment
Loan Repayment 12 - 48 months
Fundbox review
  • No monthly fees or prepayment penalties
  • Same-day or next-day funding
  • Best for business lines of credit
Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $5K - $150K
repayment
Loan Repayment 6-12 months

How to Choose the Best Startup Business Loan?

When choosing the best startup loans, there are certain important factors to consider. In fact, our experts used the following factors to rank lenders:

  • Loan Features: Review your business plan and determine approximately how much you need to borrow and how your business will be able to pay it back. Startups often need cash quickly but don’t want to hold debt long-term so consider fast funding times and shorter loan terms.
  • Application process - How invasive is the application process and is it time consuming? Find out if prequalifying can be done online and if it’s a hard-pull or soft-pull on your credit.
  • Interest rates and fees - Compare interest rates but also compare fees. Know if the lender charges loan origination fees and any other fees upfront or if you pay off the loan early. You want to know exactly how much you’re spending so you can really compare apples to apples when researching startup business loans.
  • Qualification process - Know each lender’s basic qualifications and see if your business meets them. For instance, startups don’t have a lot of time in business, so the lender will need to have lenient time in business qualifications. Other things to consider are minimum credit score, annual revenue, and business history requirements.
  • Customer support - Do you like to talk to a live customer support rep or do you prefer live chat options? Know what type of support is offered and what their business hours are. You may have questions during the loan term or may need to get in touch with someone immediately if you fall behind on your loan.
  • Online user reviews - Check out reviews on independent review sites like Trustpilot and see what users have to say about the lender. Read a few negative and positive reviews to get overarching thoughts about the company.
  • Perks and Bonuses - Consider specified service offerings like payment flexibility, advertising transparency, and advanced technology. Startups often need payment flexibility when they are first getting set up.

Best Startup Business Loans - Full Overview

The best startup business loans and an overview of each company including what they’re best for is below:

1. Biz2Credit - Best for Interest Only Loans

Three major types of startup business loans are offered by Biz2Credit: real estate loans, working capital loans, and term loans. They all have varying qualification criteria. The company has funding specialists on staff so you have a live person to talk to about your application or loan details. Funding times can be as fast as 72 hours and applications are filled out online in a few minutes. Their lending platform matches small businesses to the best startup business loan products.

Pros
No application fees: Only pay if loan closes
Multiple loans: From various lenders
Interest Only Options: For 36 months
Cons
Website: Lacking specific loan details
Real estate loans: 18+ months in business
Receipts: To qualify for higher amounts

biz2credit
Loan terms at Biz2Credit typically range from 12 - 36 months. Once the business starts to have sales, they can also arrange to pay back the loan from their receipts. Loan amounts range from $25,000 to over $2 million, and that increases to $6 million if real estate is involved. Time in business starts at six or more months and loans can be paid back daily, weekly, bi-weekly, or monthly. Annual revenue requirements vary between loan products but are generally $250,000 or more. Interest rates start at 7.99% and interest only options are available on certain loan products for 36 months.

The Bottom Line

Ideal for startup business loans, Biz2Credit funds quickly, has quick application processes, and offers different loans with lower time in business criteria like six months for their working capital loans. They also offer flexible repayment plans which can help a business’ budget in its early stages, as well as interest only options.

Try Biz2Credit

2. Torro - Best for Pre-Revenue Business

Torro is an alternative funding source that specializes in lending money to startup businesses. It helps startups qualify for loans that other lenders may turn down. It has a three step application process and works with businesses in various industries to get the best startup business loans. The company has loan products specifically for pre-revenue businesses including franchises, buying a new business, and starting your own concept. There are a team of funding specialists to help answer your questions during the loan process.

Pros
Online chat: Questions answered quickly
Options: Three loans for startups
Limited asset verification:Good for startup
Cons
Lack of transparency: Info missing on site
Website: Not high tech or professional
Unknown: Rates and terms til you apply

This lender provides unsecured working capital in the form of startup business loans. Loan amounts range from $25,000 - $125,000. The website says no appraisal, asset, or paperwork is required. Minimum credit scores and loan terms aren’t disclosed and you have to fill out a pre-qualification application to find out loan specifics. They offer three types of startup business loans: one for business ideas, one for startups, and one for business purchases.

The Bottom Line

This lender is a good option for pre-revenue businesses that want to obtain a relatively small amount of capital. The application process is also easy and only requires limited asset verification which is ideal for startups.

Try Torro

3. Fundbox - Best for Fast Funding

Fundbox offers business startup loans to companies that have been in business for at least six months. It’s designed to help you grow and expand your business in the early stages. There are two types of loan products: term loans and lines of credit. Pricing is transparent and examples are given on the site and they don’t charge prepayment penalties if you repay the loan early. The company offers fast access to working capital and has credit score requirements on the lower side.

Pros
Fast funding: As soon as the next day
Help center: Startup business loan topics
No prepayment penalty
Cons
Low loan amounts: Only up to $150,000
No long term loans: Only up to one year
Doesn’t build credit: No agency reporting

FundBox offers short-term lines of credit and startup business loans. The minimum credit score requirement is 600 and the business needs to be open for at least six months with annual revenues of $100,000 or more. Maximum loan amounts are $150,000. Interest rates start at 10.1% and loan terms range from 12 weeks to 52 weeks. Fast financing is available as soon as the next business day after your loan is approved.

The Bottom Line

This lender allows borrowers with newer businesses and fair credit scores to get access to startup business loans. It’s also ideal for a business who wants a quick application process and fast funding.

Try Fundbox

4. BlueVine - Best for Micro Loans

A financial technology company, Blue Vine offers startup business loans in the form of lines of credit. These give new business owners the flexibility to repay what they use and only borrow what they need. The company has a fast online application process and a dedicated account representative to help you each step of the way. To apply you need to have basic information about your business ready and connect your bank account with their platform or provide yearly bank statements.

Pros
Small loan minimums: Starting at $6,000
Easy application: Connect with bank account
Credit replenishes: As you pay balance
Cons
No long-term loan: Maximum 1 year
Low loan maximums: Only up to $250,000
No options: Just one startup loan

BlueVine’s lines of credit are their startup business loan product and come with terms ranging from six to twelve months. You pay back each draw with fixed weekly or monthly payments. Instead of getting a lump sum, you have access to a revolving line of credit. Similarly to a credit card, once you pay down your balance, the funds replenish themselves. To qualify, a startup must have been in business for six or more months and have at least $120,000 in annual revenue. Interest rates start as low as 4.8% and lending decisions are made quickly, usually within 5 minutes.

The Bottom Line

If you’re looking for a micro loan, then BlueVine is a great choice for your startup business loan. They have loans as low as $6,000 with ast decision and funding times. They also have flexible repayment schedules.

Try BlueVine

5. OnDeck - Best for Flexibility

OnDeck offers flexibility for borrowers in its two types of startup business loans: lines of credit and short-term loans that are funded with one lump sum. These can be used to reopen or expand your business, finance marketing campaigns or invest in renovations. This lender has fast funding times, easy online applications, and dedicated customer support agents. There are also loan comparison tools and resources geared towards startups.

Pros
Fast funding: Same day as approval
Flexibility: Lump sum or credit line
Fair credit score: Only need 600+
Cons
Loan Maximums: May not be enough
No Long term loans: Max 24 months

To qualify for one of OnDeck’s business startup loans, you need to have a minimum credit score of 600, be in business for at least one year, have at least $100,000 in annual gross revenue, and have an active business checking account. Additionally there are some restricted industries including dispensaries, rooming houses, and places that sell firearms. Rates vary based on the type of loan, borrower requirements, and market conditions. Funding times are fast and some loans will fund the same day you’re approved.

The Bottom Line

OnDeck is a good option for startup business loans that want repayment flexibility, lenient qualifications, and fast funding. It’s also a good option if you need a smaller amount of capital and don’t want to borrow more than you need.

Try OnDeck

6.Kabbage - Best for Extra Services

Kabbage offers startup business loans in addition to other financial services for small business owners including business checking and payment processing. This can be convenient if you want to use one company for all of these services. Their startup loans are backed by American Express so you have access to more cash flow management tools and resources. Their application process takes a few minutes and you need to connect your business account with their platform so they can see if it meets their loan qualifications. You only pay loan fees on the capital that you actually use. There are no prepayment penalties but there are monthly fees on the amount of capital that you use.

Pros
Fast funding: Usually within 3 days
Low annual revenue: $50,000+
Convenience: Funds deposited in your account
Cons
Loan Amount: Only upto $150,000
Credit Score Minimum: 640+
Time in business: One year or more

Loan terms are either six, twelve, or eighteen months for startup business loans. They don’t offer long-term loans. They also don’t charge prepayment penalty fees but do charge monthly fees on the money you use. The site details how the fees are structured with examples for clarity. Rates typically start at 9% and loan amounts range from $1,000 to $150,000. A minimum credit score of 640 is required and the business needs to make at least $50,000 in annual revenue to qualify for funding.

The Bottom Line

Kabbage is a good option if you’re looking for a startup business loan that offers some extras. For instance, you can use their payment processing and checking account services. Additionally, they offer $150 if you’re approved for a startup business loan. They also offer low loan amounts if you just need a small loan.

Try Kabbage

7. National Funding - Best for Customized Loans

National Funding is a direct lender that offers startup business loans. It customizes these loans to the needs of each business instead of relying solely on an algorithm or a computer generated decision. It has a team of funding specialists that work with you to help get your loan approved. Automatic payments are set up and there are no collateral requirements. They offer specific startup loans within different industries so they can focus on that industry’s needs, such as agricultural loans and commercial trucking business loans. There is no application fee and funding can happen in as little as 24 hours after you apply.

Pros
Fast funding: 24 hours or more
Personalized service: Custom loans
Resources: Startup loan info on site
Cons
No high loan limits: Stop at $500,000
Rates: Vary and you don’t know til you apply
Back and forth: With an agent to get approved

Loan amounts at National Funding have a large range from $5,000 to $500,000. Each loan is tailored to the business it is funding and may be industry specific to make it better tailored for the startup’s needs. Dedicated loan specialists are on staff to assist with the loan process and resources are listed on their website to answer additional business startup loan questions. Loans are used to cover capital expenditures and to grow your business. Minimum credit score requirements are usually 500 or higher and the business needs to have been up and running for at least six months. Rates vary as do minimum revenue requirements.

The Bottom Line

National Funding is a solid option for startup business loans because it offers personalized service that all companies don’t provide. You get to work with a live person and select a loan that will best suit the type of startup business you need to fund.

8.Lendio - Best for Loan Comparisons

With Lendio, you have access to more than 75 lenders who offer a variety of startup business loans with varying requirements and qualifications. You can compare lenders and loan products including rates and terms for your startup business all in one place. SBA loans, term loans, and lines of credit are available with one online application that usually takes about 15 minutes to complete. Funding times vary but can be completed in as little as 24 hours.

Pros
Multiple lenders: One marketplace
Various Loans: Term and lines of credit
Lenient: Credit score and time in business
Cons
Variance: Between lenders
High rates: On some startup loans
Fees: Prepayment penalties

Lendio’s rates, terms, loan offerings, and lender qualifications all vary between lenders, as do minimum time in business requirements. However, minimum credit scores usually start at 560 and the minimum time in business is generally at least six months. Loans range from $500 to $5 million. The site has loans specifically for new ventures in a variety of industries.

The Bottom Line

Lendio is ideal for startup business loans because it’s easy to compare these loans and their rates and terms all in one place like a one-stop-shop. In addition, there are loans specifically for startups with more lenient qualifications than you would find at a bank or other lender.

Try Lendio

Best Business Startup Loans Features Comparisons

Company

Min. Credit Score

Min. Time in Business

Min. Annual Revenue

Loan Amount

Interest Rate

Biz2Credit

575

6 months

$250,000

$25,000 - $6 million

7.99%+

Torro

Not disclosed

Not disclosed

Not disclosed

$25,000 - $125,000

Varies

FundBox

600

6 months

$100,000

Up to $150,000

10.1%+

BlueVine

600

6 months

$120,000

$6,000 -$250,000

4.8%+

On Deck

600

1 year

$100,000

$5,000 - $250,000

Varies

Kabbage

640

1 year

$50,000

$1,000 - $150,000

9%+

National Funding

500

6 months

Varies

$5,000 - $500,000

Varies

Lendio

560

6 months

Varies

$500 - $5 million

Varies


What Is a Startup Business Loan?

A startup business loan is used by brand new companies to fund initial setup costs. These businesses have little to no prior operational experience and lack financial history, which typically coincides with higher rates and shorter terms than other types of financing.

Given the aforementioned hurdles, new businesses need to be resourceful when it comes to financing. This entails entertaining a wide range of products, including credit cards, microloans, and asset-based borrowing.

How Do Startup Business Loans Work?

Startup business funding has three key goals:

  • To cover large initial purchases like equipment, stock, or staff costs
  • To stabilize your cash flow so you don’t go under in your first six months
  • To help establish a good credit history and lay the groundwork for future expansion and bigger loans

Many brand new ventures can often find it difficult to secure funding, but there are actually a lot more options available than you might think:

  • Lenders that specialize in new businesses - We’ve covered many of these lenders above. While eligibility requirements can be stringent, good rates are available to those that qualify.
  • SBA loans - Small Business Administration (SBA) loans are partially guaranteed by the federal government. You might have to jump through a few hoops to get one, but they’re worth the wait. Several of the lenders on our list offer this option.
  • Credit cards The most common source of small business lending, largely due to the fact they don’t require long business histories. Borrowing limits are usually lower on credit cards, but the funding can be ideal for small outlays.

Common Uses for Startup Loans

A startup loan can be used for a variety of purposes, like, but not limited to:

  • Equipment purchase – a startup loan can be used for purchasing/renting equipment essential for running the business.
  • Leasing space – you can pay for the lease of necessary space/office/warehouse/etc. with your loan funds.
  • Fix up space – the loan can be used to fix up your premises, like buying furniture, fixtures, renovate the space, and the like.
  • Marketing and promotion – the startup loan can be used to pay for the marketing and promotion of your startup business and products/services.
  • Working capital – a startup loan can be a good source of working capital or paying the day-to-day expenses of running a business.
  • Hiring staff – you can use your startup loan to hire new employees, train them and run payroll.
  • Business Startup Loan Requirements

    If you run a new small business of 1,500 employees or fewer and less than $7 million in revenue, a business startup loan may be for you. However, there are some things you need to keep in mind when you apply:

    • How long does funding take? – If you’re prepared, some loans for startup business projects can take just a few weeks to complete. However, if you’re required to justify your application, it could take a few months. That said, more and more platforms are now offering fast turnaround times.
    • How should I choose a startup loan? - The loan you choose will depend on your needs. For example, startup business loans with no collateral requirement are ideal for brand new ventures. In contrast, if you’re in a niche field deemed as high risk, crowdfunding might be the best option. A broker can be a great way to identify and close the right deal.

    • How to request a startup business loan - A startup loan for new business projects requires a combination of personal details and business data. In general, you’ll need to meet the criteria outlined below to submit an application.

    1. In many situations, you’ll need to have a credit score of 600+; although, there are a growing number of platforms that will take a risk on those with lower credit.
    2. Many lenders require you to have at least three to six months of business experience. Along that scale, the less experience you have, the higher your credit score will need to be.

    How to Get a Startup Business Loan?

    When you apply for startup business loan offers, there are certain pieces of information you’ll need to provide. In practice, each lender has its own requirements. However, if you intend to apply for a small business loan startup deal, you’ll need to do the following:

    1. Explore the different types of funding on offer. There’s a wide range of lending types out there now and if you’re not eligible for one, you may be for another
    2. Review the terms and conditions attached to the loan you’re applying for to see if it’s the right fit for you
    3. Complete an initial form of interest
    4. When invited to, provide detailed information about you and your business, including your name, address, business plan, bank statements/cashflow statement, personal financial information, employment history

    Assuming you meet the entry requirements, you’ll be offered a startup loan. If you’re happy with the interest rate and terms, you can accept and grow your business.

    Conclusion

    While getting a startup business up and running is a task, several online lenders have good loan offerings for startups that can provide you with the backing you need to get started. Online lenders often provide a better funding option than traditional banks with more lenient conditions and repayment terms, especially for startups and small business entrepreneurs.

    Frequently Asked Questions (FAQ)

    Do Banks Give Loans to Startups?
    Yes, banks give loans to startups. However, banks usually require collateral that matches the loan amount so that if you default on your loan, the bank will be covered.
    Can I Get a Business Loan With No Money Down?
    Yes, getting a business loan with no money down is possible. The lenders that provide loans with no money down usually require collateral that matches the loan amount. However, if you apply for a business loan with no money down, your interest rates will likely be higher.
    Can I Get a Startup Loan With Bad Credit?
    Yes, it is possible to get a startup loan, even if you have bad credit. Some things to consider first include the higher interest rates, the lower loan amounts, and more stringent repayment terms. You should aim to raise your personal credit score, which is possible with timely and complete payments of your outstanding debts.
    How a Startup Business Loan Can Grow Your Small Business?
    Young businesses often struggle with finances, as many of the profits go back into the businesses’ growth and development. A startup loan can help boost the company’s growth, sustainability and support expansion. A startup loan can also help grow a small business concerning marketing and promotion, developing new products, and in some cases, help with working capital.

    Related Loan Picks

    About the Author

    Allison Bethell

    Real Estate Expert

    Allison Bethell is a content writer, real estate investor, small business owner, and consultant. She has a B.A. from Villanova University in Sociology and Business. She also holds several graduate certificates in early childhood development, screenwriting, and contract law.

    More about me