New companies can have a hard time getting a loan. That’s because lenders see startups as risky: About half of small businesses fail during the first five years, according to the Bureau of Labor Statistics. And with the Federal Reserve’s decision to maintain interest rates at a 22-year high in the fourth quarter of 2023, borrowing money remains expensive, causing some lenders to tighten their belts.
While traditional bank loans aren’t an option for new businesses, alternative online lenders and personal loan providers may be able to provide the startup capital you need. Here’s a list of the eight best funding options for new businesses by category. We also offer a list of alternatives if these picks don’t fit your startup.
8 best loans for new businesses and startups
- Best overall: Lendio
- Best for microloans: Kiva
- Best for invoice financing: FundThrough
- Best for personal loans: Finance Factory
- Best for SBA loans: SmartBiz
- Best for lines of credit: Bluevine
- Best if you haven’t opened yet: Guidant Financial
- Best for equipment loans: National Funding
Best overall
Lendio business loans
4.8
★★★★★
Finder score
Lendio is a highly-rated loan marketplace that lets you compare different funding options for startups and newer businesses, including business credit cards, short-term loans, SBA loans, equipment financing, lines of credit and more.
Lendio's free application lets you compare lenders quickly with just a soft credit check. It has over 75 lenders in its network and comes highly rated by thousands of customers on Trustpilot. And unlike other marketplaces, Lendio never charges the borrower for its loan services.
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Pros
- Compare lenders in minutes
- Free to use with soft credit check
- Search for 11 types of business financing
- Most customer reviews positive
Cons
- Fees and rates vary by lender
- Requires more info than other connection services
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Loan amount $1,000 – $5,000,000 APR Starting at 3% Min. Credit Score 500 Loan term 3 months to 25 years Requirements Operate business in US or Canada for 6 months or more, have a business bank account, minimum 500 personal credit score, at least $50,000 in annual revenue
| Loan amount | $1,000 – $5,000,000 |
|---|---|
| APR | Starting at 3% |
| Min. Credit Score | 500 |
Best for microloans
Kiva business loans
3.7
★★★★★
Finder score
Kiva is a microlender that specializes in small-dollar financing for underserved business owners — with no time-in-business requirements. Its crowdfunded loans up to $15,000 come with 0% interest, making it one of the most competitive options for small dollar loans on this list.
However, raising funds can take longer than a month, so it's not the quickest option for funding. But you don't necessarily need to be a US citizen or permanent resident to qualify, and It's willing to work with entrepreneurs of all credit types.
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Pros
- No interest or fees
- All credit types welcome
- No residency requirements
Cons
- Relies on your social network for crowdfunding
- Can take up to 45 days to raise funds
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Loan amount $1,000 – $15,000 APR 0% Loan term 6 months to 3 years Requirements Have at least ten friends and family members willing to contribute to your loan, live in the US, ages 18+, not in bankruptcy or foreclosure, not under any liens, not engaged in: multi-level marketing, direct sales, pure financial investing or illegal activities
| Loan amount | $1,000 – $15,000 |
|---|---|
| APR | 0% |
Best for invoice financing
FundThrough Invoice Factoring and Financing
4.5
★★★★★
Finder score
FundThrough offers no-paperwork invoice factoring and financing. It doesn't have any fixed time in business requirements and is willing to fund businesses in the startup phase. And it's fully automated: You can connect to your business bank account and accounting software instead of submitting bank statements.
FundThrough is also one of the few companies that offer up to 100% advance rates and works with accounts receivables that have minimum outstanding invoice amount of at least $100,000 in accounts receivables or invoices to one customer. Fees are typical for an invoice factoring provider, ranging from 2.75% to 8.25% of your invoice's value.
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Pros
- Fully online application
- Fast turnaround for invoice factoring company
- No time-in-business requirements
Cons
- More expensive than typical term loan
- Cost depends on how fast client repays
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Loan amount $500 – $10,000,000 APR Not applicable Min. Credit Score 500 Loan term 1 to 3 months Requirements At least $100k in accounts receivable to one customer, invoice B2B or government agencies, invoices are for completed work, no construction or real estate, no explicit liens on receivables
| Loan amount | $500 – $10,000,000 |
|---|---|
| APR | Not applicable |
| Min. Credit Score | 500 |
Best for personal loans
Finance Factory business loans
4.1
★★★★★
Finder score
Finance Factory is a connection service that offers multiple financing options for startups, including business credit cards, personal loans and lines of credit. To qualify for these options, Finance Factory looks at your personal credit history, tax returns and financial statements — not your time in business.
You'll fare better at qualifying if your credit score is 700 to 800 and you have a minimum account balance of $1,000 to $5,000 in monthly cash flow. And while you could snag an unsecured personal loan here, the company charges a service fee of 9.9% on all funded loans, except for commercial real estate loans.
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Pros
- Multiple options for startups
- SBA options available
- Low credit score requirement for startup funding
- Award-winning customer service and positive reviews
Cons
- High origination fee
- Loan details vary by lender
- Good credit may be required for some loans
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Loan amount $5,000 – $350,000 APR 0% to 15% Min. Credit Score 700 Loan term Up to 7 years Requirements 600 to 800 credit score, no required years in business or monthly cashflow, though $1,000 to $5,000 monthly is preferred
| Loan amount | $5,000 – $350,000 |
|---|---|
| APR | 0% to 15% |
| Min. Credit Score | 700 |
Best for SBA loans
SmartBiz business loans
4.5
★★★★★
Finder score
SmartBiz is a connection service that works with banks and preferred lenders (SBA's Preferred Lender Program) to issue SBA loans, and there are other startup loan options as well. Unlike other services, SmartBiz can help you navigate the lengthy process of applying for an SBA loan, which can be helpful for new businesses.
Customers rave about how easy and seamless the service is, citing knowledgeable and thorough representatives. But on the downside, SmartBiz isn't free — there's both a referral fee and packaging fee which are deducted from your loan proceeds, both capped at 2% of the loan amount.
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Pros
- Get matched with SBA providers
- Partnered with banks and preferred SBA lenders
- Assistance in applying for SBA loan
- Excellent customer service reviews
Cons
- Fees to use the service
- SBA loans can have strict requirements
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Loan amount $30,000 – $500,000 APR Prime Rate, plus 2.75% to 3.75% Min. Credit Score 650 Loan term 10 years Requirements 650+ credit score, 2+ years in business, $50,000+ in annual revenue, no bankruptcies or foreclosures in past 3 years
| Loan amount | $30,000 – $500,000 |
|---|---|
| APR | Prime Rate, plus 2.75% to 3.75% |
| Min. Credit Score | 650 |
Best for business line of credit
Bluevine business lines of credit
4.3
★★★★★
Finder score
If you're looking for a line of credit, Bluevine works with businesses that have been operating for at least six months and have fair credit, but you need to have at least $40,000 in monthly revenue to qualify. But it has some of the most competitive APRs out there, and it doesn't charge any maintenance, origination or draw fees.
Its lines of credit are revolving, so you can borrow and repay as needed. Repayments are typically weekly for new businesses. But once your business reaches $80,000 a month in revenue, payments can be monthly. And while same-day funding is available, you'll have to pay an extra fee for this.
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Pros
- Rates start at a low 6.2%
- Fair credit OK
- Low time-in-business requirement
Cons
- Fee for same-day funding
- Weekly repayments
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Loan amount $5,000 – $250,000 APR Starting at 6.2% Min. Credit Score 625 Loan term 6 to 12 months Requirements 24+ months in business, $40,000+ in monthly revenue, 625+ credit score
| Loan amount | $5,000 – $250,000 |
|---|---|
| APR | Starting at 6.2% |
| Min. Credit Score | 625 |
Best if you haven’t opened yet
Guidant Financial business loans
4
★★★★★
Finder score
Guidant Financial offers a wide range of funding for new businesses, including SBA loans, franchise financing and unsecured loans with no personal collateral requirement. To qualify, you'll need a minimum credit score of 690, plus a good credit history.
It also offers loans backed by personal collateral, including 401(k) business financing (Rollovers for Business Startups, aka ROBS). It also has portfolio loans which are backed by securities and work like a revolving line of credit. Portfolio loans let you borrow against your assets at a low interest rate.
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Pros
- Businesses in the planning stage OK
- Interest-free promotional period
- Lower rates than typical business credit cards
Cons
- High origination fee of 9%
- Personal credit score of 690 or higher required
- Can take three to four weeks to fund your LOC
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Loan amount $10,000 – $150,000 APR 12% to 18% Min. Credit Score 690 Requirements 690+ credit score, less than 50% credit utilization ratio, few credit inquires, no recent negative lines on credit report
| Loan amount | $10,000 – $150,000 |
|---|---|
| APR | 12% to 18% |
| Min. Credit Score | 690 |
Best for equipment loans
National Funding business loans
4.6
★★★★★
Finder score
If you're looking to finance equipment and don't want to tie up your credit lines and other loans — National Funding offers customized loans directly and with its lending partners, and you only need to be in business for six months to qualify.
It offers equipment financing and leasing of up to $150,000 for new or used equipment. It also guarantees you won't find a lower monthly payment elsewhere or it pays $1,000 toward the equipment lease. And there's no down payment requirement.
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Pros
- Quick turnaround funding
- Early payment discounts
- Highly rated by customers and BBB
Cons
- Low maximum loan amount
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Loan amount $5,000 to $150,000 APR 6% - 14% Min. Credit Score 600 Requirements 6 months in business and $250,000 in annual sales, business bank account
| Loan amount | $5,000 to $150,000 |
|---|---|
| APR | 6% - 14% |
| Min. Credit Score | 600 |
Methodology: How we choose the best startup lenders
Finder’s editorial experts review over 200 business loan providers before selecting the best lenders for new businesses. We pick lenders that have relaxed time in business requirements, good customer service and competitive rates. We also review each company’s Better Business Bureau reviews and Trustpilot ratings.
We weigh lenders and financing companies against these factors:
- Time in business requirements
- Annual revenue requirements
- Willingness to work with new or risky industries
- APRs
- Fees, such as origination fees
- Loan amounts
- Repayment terms
- Credit score requirements
- Turnaround time
- State availability
- Application process
- Lender reputation and customer reviews
What is a startup business loan
A startup business loan is a type of financing designed to help new businesses get off the ground. They provide capital that can be used to buy a new business or franchise, pay for equipment and provide working capital to fund the day-to-day operations and expansion of the business.
The most common types of startup and new business loans include SBA 7(a) loans, personal loans, equipment loans, lines of credit and business credit cards. There are also portfolio loans and ROBS (rollovers as business startups), which leverage your personal assets to fund a business.
How financing can benefit a new business
Startup business loans give you access to capital you might not otherwise have. With it, you can fund your expenses without selling equity — all while improving your business’s positive payment history and building a relationship with a lender.
- Speeds up growth
- Funds initial expenses
- No equity requirement
- Build business credit
How do I qualify for a business startup loan?
Watch our 60-second video!
Business loan requirements vary from lender to lender. However, those available to new businesses focus on the entrepreneur’s history of paying off personal debt rather than the business itself. You’ll have the most options if you meet the following criteria.
- Good credit. Many business startup loan providers ask for a 670 credit score or higher.
- No recent bankruptcies. In addition to your credit score, startup lenders typically look at your credit report. Bankruptcies stay on your report for seven to 10 years, depending on how you file.
- No recent delinquencies. If you’ve been late paying off debt, that could also hurt your chances of getting a startup loan.
- A strong business plan. Since your business doesn’t have a track record to back itself up, your business plan is often the only place where you get to make a case for yourself.
- Enough revenue. Some lenders only require around $10,000 in monthly revenue to qualify, while others may require $100,000 or more per month.
- Time in business. Many business loan providers have a minimum time-in-business requirement. For startups, that could be anywhere from six months to one year.
Be wary of companies that push you to pay in advance to help you loan shop, require you to pay fees upfront or seem to have unverifiable guaranteed approval. These “lenders” may actually be business loan scams. Learn the warning signs to identify a potential scammer as you shop around.
Can I get a startup business loan with bad credit?
It’s possible to get a business loan with bad credit, but your options are extremely limited. You may have better luck considering other financing alternatives, such as rollover for business startups (ROBS) or crowdfunding — that don’t necessarily rely on your credit score. Microlenders and Community Development Financial Institutions (CDFIs) are also your friend: Many have programs designed to support local entrepreneurs. They typically offer small amounts of financing in exchange for a training course.
You may be able to qualify for some term loans or alternate types of business loans. But be aware that these come with a higher price tag — think APRs over 300%. And if you’re just starting out, it may be worth improving your personal credit score before borrowing for your business.
How to apply for a loan as a new business
Once you know how much you need to borrow and compare lenders, you’re ready to apply. Applying for a business loan may require a lot of documentation, and SBA loans also require completing SBA-specific forms. While there are a few lenders with low or no required documents, they may not offer the best rates to new businesses.
Documentation to prepare can include:
- Growth and revenue forecasts.
- Recent personal and business tax returns.
- Bank statements.
- Financial projections.
- Owner financial statements and resumes.
- Business plan and business history.
Once you’ve followed the lender’s application process and submitted all the requested documents, you’ll receive a credit decision (approval or denial letter). If you choose to accept the loan, you’ll complete the application and wait for your funds, which may take a week or longer, depending on the financing you’re applying for.
Here’s our more detailed guide on applying for a business loan.
Is it possible to get a 0% interest business loan?
Yes, it’s possible to get a 0% interest business loan. Kiva, a lender on this list, offers a 0% interest small business loan of up to $15,000. Guidant Financial also offers unsecured loans with interest rates starting from 0% to 3% for qualified borrowers. However, these are not specifically startup loans.
You can also look into a 0% introductory rate business credit card to start a business, which may be easier to qualify for than other types of business funding. Other low-interest business loans can be found at banks, credit unions and online lenders — but you typically need good credit to qualify and startups may not be eligible.
More types of financing for new businesses and startups
Borrowing isn’t always the best idea when you’re just getting started. Not only will it be potentially more expensive and more difficult to qualify for, but you’ll also be personally responsible for any money your business borrows and can’t repay. Women-owned businesses and entrepreneurs from historically marginalized groups can also have a harder time getting their foot through the door, thanks to human bias and structural barriers to getting a loan.
Some other ways to finance a startup include:
- Equity investments — Small businesses may be able to get an equity investment through a venture capital firm or an angel investor. There’s no limit to how much money you can raise through this method. And while you won’t have to pay back any of the money you receive from an investor, you could lose partial control of your company. You may want to keep a lawyer on retainer for this sort of funding, though. They’ll help you navigate securities laws so your business can avoid legal issues down the road.
- Home equity loans or HELOCs — If you own a home with at least 20% of equity, you could borrow against your home to help fund your startup, aka a second mortgage. Home equity loans or HELOCs tend to come with lower interest rates than other unsecured borrowing methods. But your home is collateral on the loan, so tread carefully.
- Crowdfunding — With equity crowdfunding, your company starts an online campaign to receive funding from multiple investors in exchange for partial ownership. With rewards-based crowdfunding, your business offers prizes in exchange for donations. The amount of funding you can get may be restricted based on the Securities and Exchange Commission’s rulings.
- Business grants — Startups with a mission, especially nonprofits, might want to look into business grants to get off the ground. Like an investment, you don’t have to repay a grant. However, they can be highly competitive and require a lot of work. They also typically don’t get much higher than around $15,000, so you’ll likely need other funding methods to supplement it.
- Credit cards — A credit card can be a great way to cover smaller expenses and manage your company’s spending since multiple people can have cards from the same account. Some of the top startup-friendly business credit cards have a 0% APR promotional period, making it a viable option for businesses that expect to be able to pay off what they spend within the first year.
- Rollover for business startups (ROBS) — If you’re willing to borrow from your retirement plan, a ROBS might be a worthwhile investment for your startup. It involves taking advantage of a tax loophole that allows your business to access these funds without paying a penalty if it’s the right type of corporation. You need to at least $50,000 in your retirement account to qualify and could face heavy fines, so many business owners opt to hire a third party to handle the details.
- Friend and family loans — Initial financing to get a startup off the ground. Borrowing from your friends and family is sometimes the easiest way to get a good deal on startup funding — and there’s a chance you might not have to pay interest or sell any equity. Want to make it official? Use a service like LoanWell to whip together a legally binding contract with interest fees and late penalties.
How to crowdfund a startup
Some startups may choose to offer investors goods, services or equity in their company in exchange for funding. Crowdfunding also helps companies generate buzz and make connections with potential clients.
There are a few types of crowdfunding available. The right one for your business depends on your particular needs.
- Equity crowdfunding exchanges funds from investors for partial ownership of the company. You can raise up to $75 million, but fees can set you back as much as $100,000, and regulations are difficult to navigate.
- Donation-based crowdfunding comes with few regulations and doesn’t require anything in return. Typically, the only cost is a platform fee.
- Rewards-based crowdfunding works like donation-based crowdfunding — but contributors to your campaign receive a gift in exchange. Typically, you also have to pay a platform fee.
Recap: Best startup business loans
- Best overall for startups: Finance Factory
- Best for comparing lenders quickly: Lendio
- Best for personal loans: Upgrade
- Best for SBA loans: SmartBiz
- Best for microloans: Kiva
- Best for lines of credit: Bluevine
- Best if you haven’t opened yet: Guidant Financial
- Best for invoice financing: FundThrough
- Best for emergency line of credit: OnDeck
And remember, there are plenty of options at every stage of the business process. Read our guide to the best business loans for more options.
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