Startups and newer businesses are seen as riskier for lenders than established businesses. Roughly half of small businesses fail within the first five years, according to the Bureau of Labor Statistics (BLS).
However, that doesn’t mean startups can’t get business loans. In fact, many lenders are willing to work with young businesses and offer multiple loan options that are easier to get approved for than traditional business loans.
Our team of business loan experts analyzes dozens of lenders offering multiple loan types available for startups and newer businesses. We ultimately chose lenders that offer more lenient requirements than more traditional business loans and are potentially willing to work with newer businesses and owners with lower credit scores and less revenue.
Some of the criteria we evaluate include:
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Consider several factors when choosing the right type of financing for your startup business.
A startup loan helps you start or grow your business or cover short-term cash flow needs. You can use the funds for payroll, inventory, hiring, expansion or equipment. Common options include short-term loans, invoice factoring or financing, equipment loans, merchant cash advances and microloans, which may be secured or unsecured.
Startup loans work like other business financing. You figure out how much funding you need, choose a loan type and apply with lenders that fit your situation. Lenders review your business, credit and revenue, then fund the loan if approved. You repay it with interest on a set schedule.
Some options, like invoice factoring and merchant cash advances, focus more on revenue than credit. These loans often come with less traditional repayment terms, including weekly or daily payments.
Consider the benefits and drawbacks of startup business loans before you apply.
To round out your research, consider these business loan lenders to see if they can meet your needs and budget.
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How we picked theseThe Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
Here are some of your options for the different types of loans for startup businesses.
| Type | Typical loan amounts | Typical term lengths | Best for |
|---|---|---|---|
| SBA | $13,000 to $5 million | Up to 25 years | Established businesses with decent credit that don’t qualify for other types of funding |
| Equipment financing | Up to 100% of the cost of the equipment | 3 to 10 years | Businesses that need heavy equipment or other expensive machinery |
| Term loans | Up to $2 million | 1 to 10 years | Businesses with good credit looking for large loan amounts and predictable monthly payments |
| Business lines of credit | $2,000 to $250,000 | 6 months to 5 years | Businesses looking for immediate short-term funding or want a renewable lending source |
| Microloans | $500 to $50,000 | Up to 6 years | Startup businesses or women- or minority-owned firms |
| Invoice factoring | 70% to 90% of unpaid invoices | 1 to 3 months | B2B companies with a lot of outstanding invoices |
| Invoice financing | 70% to 80% of unpaid invoices | 1 to 3 months | B2B companies with a lot of outstanding invoices |
| Merchant cash advance | $5,000 to $200,000 | 3 to 12 months | Retail businesses or others that have a lot of credit card sales |
The exact requirements to qualify for a startup business loan vary by lender and loan type, but here are some basic criteria you’ll likely need to meet:
Some lenders may also require collateral or a personal guarantee to qualify for a startup business loan.
Follow these steps to apply for a startup business loan:
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