Up to $50,000
8.00% to 13.00%
Up to 72 months
Startups needing a small loan can borrow up to $50,000 with an SBA microloan. Funds can be used for working capital, equipment, inventory or other common startup expenses. SBA microloans typically have more lenient credit requirements than other lenders, focusing on underserved business owners like minorities, women, veterans or low-income entrepreneurs.
Just as the name implies, these loans have small borrowing maximums — you might want to explore other options if you envision needing access to more funds for your business.
Learn more about SBA microloans.
In order to qualify, you’ll need to meet the SBA’s criteria of:
$5,000 to $50,000
Prime + 4.50%
60 months (no annual review)
Businesses less than two years old wanting a traditional bank experience may be able to access up to $50,000 with the Wells Fargo Small Business Advantage unsecured line of credit. With a business line of credit, you can withdraw what you need, whenever you need — only paying interest on the withdrawn amounts — up to your credit limit. With close to 7,000 physical branches nationwide, Wells Fargo offers a range of small business solutions, including business bank accounts, business credit cards, SBA loans and more.
Once your business has been up and running for two years, you can upgrade to the Wells Fargo BusinessLine line of credit to access up to $150,000 in revolving funds.
Read our Wells Fargo review.
In order to qualify, you’ll need to meet Wells Fargo’s criteria of:
$5,000 to $500,000
1.11 factor rate
4 to 24 months
National Funding offers unsecured business loans of up to $500,000 for startups with no collateral. You can use funds for working capital, marketing, business taxes, inventory and more. With a quick application process, you could receive funds as soon as 24 hours after approval.
Note that payments are required daily or weekly, which might be a strain on your business budget. Also, the factor rate can make it hard to compare against other business loan offers.
Read our National Funding review.
In order to qualify, you’ll need to meet National Funding’s criteria of:
Starting at $1,000; loan amount is equal to your cash deposit
Variable
12 months (with annual review)
Bank of America’s secured business line of credit can help budding entrepreneurs set aside money for expenses while building business credit. This cash-secured line of credit works a bit differently than other lines of credit. Here, you provide a cash deposit (starting at $1,000) and can then withdraw funds up to that amount as often as needed. After a year of making regular payments, you can get your security deposit back.
Once your business has been operating for at least two years and earns over $100,000 a year, you can upgrade to Bank of America’s unsecured line of credit, which is a more typical line of credit with funding starting at $10,000. Bank of America also offers rate discounts with its Preferred Rewards for Business program.
Read our Bank of America review.
In order to qualify, you’ll need to meet Bank of America’s criteria of:
Up to $150,000
12 or 24 weeks
4.66% for 12 weeks
8.99% for 24 weeks
A Fundbox business line of credit could fund up to $150,000 as soon as the next business day. Use what you need when you need it, only paying interest on the withdrawn amounts.
Your business must operate for at least six months with $100,000 or more in annual revenue to qualify. While Fundbox works with companies in all U.S. states and some territories, it doesn’t fund all types of industries.
Read our Fundbox review.
In order to qualify, you’ll need to meet Fundbox’s criteria of:
$5,000 to $250,000
27.30% (for at least 5% of customers)*
18 to 24 months
An OnDeck short-term business loan can cover various expenses, such as inventory, marketing campaigns, payroll services, equipment upgrades or consolidation of business debt. To qualify, you must meet their one-year time in business requirement and have an annual revenue of $100,000. You’ll need to make payments daily or weekly, with an average interest rate of 55.8% for term loans.
Note that OnDeck doesn’t serve all industries, namely excluding adult entertainment, loan brokers, firearms vendors and more from eligibility.
Read our OnDeck review.
In order to qualify, you’ll need to meet OnDeck’s criteria of:
Up to $50,000
Not disclosed
12 to 24 months
An unsecured business line of credit with Headway Capital can provide new entrepreneurs up to $50,000 in revolving funds, helping cover day-to-day expenses or seasonal dips in income. Collateral isn’t required and you only pay interest on the amount you use, although some states require a 2% draw fee. Once approved, you can expect to receive funds as quickly as the next business day.
If you desire a higher funding limit and can provide collateral, Headway Capital also offers secured business financing up to $100,000. Note that Headway Capital’s business loans aren’t available in all U.S. states.
Read our Headway Capital review.
In order to qualify, you’ll need to meet Headway Capital’s criteria of:
$5,000 to $1,500,000
Up to 18 months
1.10 factor rate
Fora Financial is one of our top picks for a bad credit business loan since it has a low minimum credit score requirement of 570 with no collateral required. Thanks to Fora Financial’s streamlined application process, you could receive funds as quickly as 24 to 72 hours after approval.
While certain lenders charge prepayment penalties on business loans, Fora Financial rewards you for paying off your debt early. However, Fora Financial doesn’t report payment to the business credit bureaus, meaning this loan won’t help build your business credit.
Read our Fora Financial review.
In order to qualify, you’ll need to meet Fora Financial’s criteria of:
$30,000 to $5,000,000
80% to 90%
1.5% to 4.5%
If your startup generates invoices and needs fast capital, altLINE can provide up to $5,000,000 with invoice factoring. Once approved, you can submit unpaid invoices to receive up to 90% of their face value, letting altLINE handle customer payments on your behalf.
Instead of interest rates, altLINE deducts a factor rate, or discount rate, from each invoice’s remaining balance. Low-credit borrowers can typically qualify since altLINE reviews your customers’ creditworthiness, invoices and payment due dates over your credit history.
Read more about altLINE.
In order to qualify, you’ll need to meet altLINE’s criteria of:
$500 to $2,000,000
4.99%
12 to 84 months
Taycor Financial offers financial solutions for entrepreneurs and brand-new companies with no minimum time in business requirement. You can borrow up to $2,000,000 with equipment financing or leasing, or explore other finance options like business lines of credit, commercial bridge loans and business term loans.
With a low minimum credit score requirement of only 550, low-credit borrowers can access the funds their business needs. Down payments aren’t required, but you might need to provide a personal guarantee.
Read our Taycor Financial review.
In order to qualify, you’ll need to meet Taycor Financial’s criteria of:
$5,000 to $250,000
8.49%
12 to 60 months
The Accion Opportunity Fund (AOF) is a nonprofit lender providing affordable loans of up to $250,000 to diverse businesses who struggle to qualify for traditional financing. Focused on minority entrepreneurs and women-owned businesses, the AOF offers educational classes, coaching and customer support in English and Spanish to help new companies launch, develop and strengthen their business ideas.
To qualify, you must own at least 20% of the business and be located in an eligible state within the U.S.
Read more about the Accion Opportunity Fund (AOF).
In order to qualify, you’ll need to meet AOF’s criteria of:
A startup business loan can help new companies get the capital they need to cover startup costs and grow their business. Startup loans typically have more lenient eligibility requirements, but may come with higher fees and shorter repayment terms than traditional small business loans.
You can use startup financing to cover supplies, equipment, office spaces, marketing campaigns, website design, inventory, payroll and more.
Note that the term “startup” doesn’t apply to only brand-new companies. In the lending industry, a startup business typically refers to a company that has been operating for less than one to two years.
Every lender will have its own application process, which might be listed on their website. Here are some general steps to take once you’re ready to apply for a startup business loan.
There are many types of business loans to consider based on your eligibility and immediate needs. Only you can decide how much you need and what’s right for your startup business.
Poor credit is one of the main reasons business loan applications get rejected. If you’re still working on building your business credit, lenders may weigh your personal credit score more heavily — so be sure to check your credit and take steps to improve your score before applying.
While getting a loan offer can be exciting, you should shop around to find the right loan with the best rates and fees. Read small business lender reviews in advance to see if a potential lender fits your company’s criteria and needs.
Some traditional banks offer startup financing to companies after six months of operation (like Bank of America, mentioned above). However, many banks prefer to work with well-established businesses that have been successfully turning a profit for at least two years.
If your business is less than two years old, you might have better luck using an alternative lender to secure capital for your new company. Online lenders typically have less strict requirements about time in business. However, be prepared to pay higher rates than traditional or credit union business loans.
That said, it’s still worth reaching out to your current bank to see what you need to qualify for small business financing. Having an established relationship with a bank can often help strengthen your business loan application.
Leading banks that offer loans for small companies include:
Business loan requirements vary by lender and loan type. Here are some standard documents you may need to provide when applying for a small business loan for your startup company:
You can usually apply for a new business loan online with a quick and streamlined process, although some traditional banks might require a phone call or in-person visit. Read the fine print before signing your business loan agreement to ensure you understand the terms, rates and additional fees.
Lenders often consider your time in business, annual revenue and credit score when providing a loan, so startups will often have a harder time securing small business financing compared to more established companies. That said, having collateral or applying for secured lines of credit can help improve your odds.
You can also consider adding a cosigner. Just make sure your cosigner understands the legal responsibility of cosigning a small business loan.
There’s no one-size-fits-all approach to finding the perfect funding solution for your business, especially since startup costs vary by industry.
Here are a few things to consider when picking the best small business startup loan for your needs:
Interest rate: Business loan interest rates vary by lender and loan type. Make sure to understand the difference between fixed versus variable interest rates. Shopping around can help you find the lowest rate on a loan that fits your needs. You typically have around 14 to 45 days to apply to multiple lenders without any further impact to your credit score (this is considered “rate shopping”).
Additional fees: Watch out for extra charges like origination fees, late charges or prepayment penalties — these can all make the loan cost higher than anticipated. Fortunately, the best startup lenders typically don’t charge these extra fees.
Repayment term: Loan repayment terms can range from a few months to 25 years. Most loans require daily, weekly or monthly payments over the loan term. However, some lenders may allow you to make interest-only payments during the startup phase and then principal plus interest payments later. Others might call for interest-only payments for the life of the loan with a balloon payment at the end of the loan term.
Time to fund: Some alternative lenders offer same-day business loans, while others typically approve and issue funds within one to three business days. In contrast, traditional lenders can take up to two weeks or longer to approve and process your loan, with SBA loans taking around 30 to 90 days.
Collateral required: Collateral is anything of value you own and put up as security for a loan, such as real estate, inventory, equipment, accounts receivable or other assets. The lender can seize the collateral if you default on the loan.
Loan purpose: Some lenders restrict how you spend the funds. For example, you can’t use an SBA microloan to pay off existing debt or purchase commercial real estate. If you want to cover the widest range of business expenses, consider a working capital business loan or working capital line of credit.
If your startup business loan application was denied, follow these steps to figure out how to move forward:
New businesses will need to rely on their personal finances when borrowing funds. As discussed above, you’ll likely need the following to qualify for startup financing:
Some small business loans may also require a down payment, collateral or a personal guarantee.
Yes, it’s possible to get a startup business loan without revenue or collateral. However, you’ll likely end up paying higher fees with shorter repayment terms, which could be a financial burden for your new company.
Boosting your credit score and saving for a down payment before applying can help unlock more competitive rates and terms.
The amount you can expect to receive from a startup loan will depend on multiple factors, such as your time in business, credit score, collateral and annual revenue. Small business loans can start at $500 and go as high as $15.5 million, depending on your business’s unique profile.
Newly established businesses should expect a much lower borrowing range with a first-time business loan. For example, the average SBA Microloan was $15,631 for fiscal year 2023.
Even if you get approved for a higher loan amount, it’s best to limit how much you borrow to ensure your business can repay the debt.
Lenders usually check an applicant’s personal credit score when deciding whether to approve a startup loan. However, some lenders will look at factors beyond credit history. For example, a lender may scour your bank statements, business plan and cash flow projections to get a clearer picture of your situation and your company’s potential. They may even ask for collateral to help secure the loan.
But be prepared: Most unsecured or bad-credit business loans typically have higher interest rates and less flexible terms, which can cost more over the long run.
Your lender may require a down payment to qualify for a startup business loan. For example, the Small Business Administration (SBA) typically requires a 10% to 30% down payment for SBA loans, depending on loan type and your qualifications.
However, equipment lenders often don’t require a down payment since the debt is secured by the equipment. For example, Taycor Financial provides 100% equipment funding for startups.
