How much does it cost to start a new business?

8 common expenses to consider when budgeting for your startup.

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You need to spend money to make money — but just how much depends on the type of business you’re looking to start, on top of other factors. Estimating the different costs you might incur can help you apply for financing that truly meets your business’s needs.

How much does it cost to start a new business?

It costs around $31,000 to start a business, according to a 2009 survey by the Ewing Marion Kauffman Foundation. How much you actually pay depends on your business type, where you’re located and the equipment and supplies you’ll need to get up and running. For example, it will cost much more to start a new restaurant than it will to start a freelance photography business out of your home.

How to calculate startup costs for a small business

Calculating the cost for a startup is relatively simple — you just need to add your estimated expenses together to get a full picture of what your budget should look like. The Small Business Administration (SBA) has a helpful worksheet you can use to calculate the funds required to start your business.

8 common startup costs

While your specific costs will vary, these are the eight most common factors to consider when deciding how much you’ll need to borrow:

How can I finance initial startup costs?

While your options are limited compared to businesses that have been around for a while, you still have a few ways to finance your startup:

  • Equipment loans. If your business requires equipment to get up and running, equipment loans allow you to buy necessary machinery.
  • Business credit cards. To help build your business’s credit and finance smaller startups costs, you may want to compare small business credit cards. Some even offer 0% intro APRs for the first year — giving you some breathing room to pay off expenses slowly over several months.
  • Personal loans. Some banks and online lenders allow you to use a personal loan for business expenses. However, you’re typically limited to borrowing $50,000 or less.
  • SBA loans. If you’ve exhausted all other options, you might want to look into a government-backed loan from the SBA. These are small loans up to $350,000 with competitive rates and terms. The application process can be long and arduous, though, so expect this to take a few months from start to finish.

Compare your business loans options

Updated December 6th, 2019
Name Product Filter Values Min. Amount Max. Amount Requirements
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
Personal credit of 680+, no bankruptcies in the last 4 years.
Startups and newer businesses could qualify for loans and credit cards with a custom financing package.
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
6+ months in business, $100,000+ annual revenue, 600+ credit score, not based in North Dakota or South Dakota
Get a predictable business loan with a fixed weekly rate.
3+ months in business and $10,000+ monthly revenue or 6+ months in business and $3,000+ monthly revenue

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Bottom line

From equipment and inventory to payroll and office space, funding the cost of your startup can put a huge dent in your personal finances. Before you dig into your savings, compare business loan options that might work for your new company.

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