| Loan amounts | Up to $50,000 |
| Interest rate | 8.00% to 13.00% |
| Term length | Up to 72 months |
| Minimum credit score | 620 |
| Minimum time in business | Not specified |
| Minimum annual revenue | Not specified |
| Pros | Cons |
|---|---|
Eligibility requirements tend to be less strict than other government loans Available in all states Funds can be used for a variety of startup expenses | May require collateral and/or a personal guarantee Smaller loan amounts compared to other financing options Can’t use funds to pay existing debt or to purchase real estate |
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 less-strict 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.
| Loan amounts | $5,000 to $50,000 |
| Starting interest rate | Prime + 4.50% |
| Term length | 60 months (no annual review) |
| Minimum credit score | 680 |
| Minimum time in business | Less than 24 months |
| Minimum annual revenue | Not disclosed |
| Pros | Cons |
|---|---|
Offers a range of small-business solutions No collateral or annual fee required Automatic enrollment in free rewards program | May have a longer funding time than online lenders Low credit limit Personal guarantee required |
Businesses less than two years old wanting a traditional bank experience can access up to $50,000 with the Wells Fargo Small Business Advantage unsecured line of credit. As a business line of credit, you can withdraw what you need, whenever you need — only paying interest on the withdrawn amounts. 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.
| Loan amounts | $5,000 to $500,000 |
| Starting interest rate | 1.11 factor rate |
| Term length | 4 to 18 months |
| Minimum credit score | 600 |
| Minimum time in business | 12 months |
| Minimum annual revenue | $250,000 |
| Pros | Cons |
|---|---|
Doesn’t require collateral or a down payment Next-day funding Early payoff discounts | Requires daily or weekly payments High annual revenue requirement Factor rates make it hard to compare with other offers |
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.
| Loan amounts | Starting at $1,000; Loan amount is equal to your cash deposit |
| Starting interest rate | Variable |
| Term length | 12 months (with annual review) |
| Minimum credit score | Not disclosed |
| Minimum time in business | Six months |
| Minimum annual revenue | $50,000 |
| Pros | Cons |
|---|---|
Cash-secured line of credit can help establish business credit history Rate discounts for Bank of America Preferred Rewards members Offers multiple small business products and solutions | Doesn’t list minimum credit score requirements Credit limit based on your security deposit Annual fee of $150 (waived the first year) |
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.
| Loan amounts | Up to $150,000 |
| Starting interest rate | 12 or 24 weeks |
| Term length | 4.66% for 12 weeks 8.99% for 24 weeks |
| Minimum credit score | 600 |
| Minimum time in business | 6 months |
| Minimum annual revenue | $100,000 |
| Pros | Cons |
|---|---|
Receive funds as soon as next business day after approval Low minimum credit score requirement Available in all U.S. states and many territories | High annual revenue requirement Weekly repayments with short terms Doesn’t fund all industries |
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.
| Loan amounts | $5,000 to $250,000 |
| Starting interest rate | 27.30% (for at least 5% of customers)* |
| Term length | 18 to 24 months |
| Minimum credit score | 625 |
| Minimum time in business | 12 months |
| Minimum annual revenue | $100,000 |
*Minimum APR offered to at least 5% of customers (not the lowest rate offered).
| Pros | Cons |
|---|---|
Offers same-day funding Fair to low credit accepted No prepayment penalty | High starting interest rate Loans not available in North Dakota Doesn’t fund all industries |
An OnDeck short-term business loan can cover various expenses, such as inventory, marketing campaigns, payroll services, equipment upgrades or consolidating business debt. To qualify, you must be in business for at least one year with 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.
| Loan amounts | Up to $50,000 |
| Starting interest rate | Not disclosed |
| Term length | 12 to 24 months |
| Minimum credit score | Not disclosed |
| Minimum time in business | 12 months |
| Minimum annual revenue | $50,000 |
| Pros | Cons |
|---|---|
No collateral required No early payoff penalties Can receive funds the next business day after approval | Not available in all states Might be subject to a 2% draw fee Doesn’t list minimum credit score requirements |
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.
| Loan amounts | $5,000 to $1,500,000 |
| Starting interest rate | Up to 18 months |
| Term length | 1.10 factor rate |
| Minimum credit score | 570 |
| Minimum time in business | 6 months |
| Minimum annual revenue | $180,000 |
| Pros | Cons |
|---|---|
Low minimum credit score requirement Offers prepayment discounts Quick funding times | Can’t have any open bankruptcies High minimum annual revenue requirement Doesn’t report payments to credit bureaus |
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.
| Funding amounts | $30,000 to $5,000,000 |
| Advance rate | 75% to 90% |
| Invoice factoring fees | 0.75% to 3.50% |
| Minimum credit score | Not required |
| Minimum time in business | Not required |
| Minimum annual revenue | Not required |
| Pros | Cons |
|---|---|
Works with startups and bad credit borrowers Funds available within 24 to 48 hours Collects outstanding customer invoices on your behalf | Includes origination and wire fees Requires your customers to have good credit Fees increase the longer an invoice is left unpaid |
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.
| Loan amounts | $500 to $2,000,000 |
| Starting interest rate | 4.99% |
| Invoice factoring fees | 12 to 84 months |
| Minimum credit score | 550 |
| Minimum time in business | Not required |
| Minimum annual revenue | No specific minimum |
| Pros | Cons |
|---|---|
No specified time-in-business requirement Can get approved within hours with minimal information required for application High funding amounts | Personal guarantee might be required Equipment refinance only available to businesses older than three years Requires documentation fee for equipment loans |
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.
| Loan amounts | $5,000 to $250,000 |
| Starting interest rate | 8.49% |
| Invoice factoring fees | 12 to 60 months |
| Minimum credit score | Not disclosed |
| Minimum time in business | 12 months |
| Minimum annual revenue | $50,000 |
| Pros | Cons |
|---|---|
Lends mostly to women, people of color and low-income entrepreneurs Offers business coaching and mentorship Flexible repayment terms | Not available in all states Company must be based in the U.S. Doesn’t list minimum credit score requirements |
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).
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.
1. Decide what type of financing you need.
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.
2. Check your personal and business credit scores.
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.
3. Research and compare lenders.
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:
4. Gather required documents.
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:
5. Apply and review.
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.
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 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 loan or working capital line of credit.
If your startup business loan application was denied, contact the lender to review the reasons for their decision. Next, take any necessary steps to address the issues, such as improving your credit score, paying down debt, boosting your business’s revenue or strengthening your business plan.
Alternatively, you can explore other options for startup financing for small businesses, as we outline below.
Lastly, be sure to re-evaluate your business’s most urgent needs. Do you need to upgrade your restaurant’s kitchen this year or can it wait? If possible, focus on the essentials while improving your business’s financial health.
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 $15,629 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.
