Office of a startup

Loans for startups

Learn how to apply for a startup loan to get your business plan going.

If you’re thinking about starting a new business, you’re not alone. In the US, around 500,000 new small businesses begin operations every month. However, around half of them shut shop by the fifth year. One of the biggest problem startups tend to face is not having access to adequate funds for their business plans.

You can get funding for a startup in different ways, and picking the right kind of loan to get your business going can be a daunting process. This guide gives you insight into your options, helping you to pick the best one for your requirements.

Able Lending Business Loan

Able Lending Business Loan

Incorporates traditional lending with crowdfunding for small businesses that require more capital to grow.

  • Recommended Credit Score: 600 or higher
  • Maximum Loan Amount: $1,000,000
  • Minimum Loan Amount: $25,000
  • Interest Rate: 8 to 25
  • Maximum Loan Term: 5 years
  • Minimum Loan Term: 1 year
  • Instant preapproval. Find out in minutes if you're qualified for the loan.
  • Fast funding turnaround time. Loans are typically funded within a week.

    Compare business loan lenders who may offer funding for startups

    Rates last updated June 22nd, 2017
    Min Loan Amount Maximum Loan Amount APR Requirements
    Kabbage Small Business Cash Loan
    Kabbage Small Business Cash Loan
    $2,000 $150,000 From (variable) Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months. Go to site More
    Able Lending Business Loan
    Able Lending Business Loan
    $25,000 $1,000,000 From 8 to 25% (fixed) Business must be in operation for at least one year, bring in at least $50,000 in annual revenue, must have a personal credit score of 600 or higher, no personal bankruptcy in the past 12 months. Go to site More
    Lending Club Business Loans
    Lending Club Business Loans
    $5,000 $300,000 From 7.77% (fixed) 2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit Go to site More
    OnDeck Small Business Loans
    OnDeck Small Business Loans
    $5,000 $500,000 From 5.99% (fixed) Your business needs to have made at least 100,000 (annual revenue), and have a personal score of at least 500. Your business needs to have been in operation for at least one year. Go to site More
    National Business Capital Business Loans
    National Business Capital Business Loans
    None $2,000,000 From (fixed) Your company must have been in business for at least 3 months or have monthly gross sales of at least $10,000. Go to site More
    SmartBiz SBA Loans
    SmartBiz SBA Loans
    $30,000 $5,000,000 From 5.85% (fixed) Must have personal credit score of 600 or higher; Business must be 2+ years old; Annual revenue of $50,000 or more; No outstanding tax liens and no bankruptcies or foreclosures in the past 3 years Go to site More
    Wise Business Loans
    Wise Business Loans
    $10,000 $2,000,000 From (fixed) You must have been in business for at least a year with annual revenue of at least $100,000 in the past 12 months. You must also have a personal credit score of 500+. Go to site More
    FastPay Business Loans
    FastPay Business Loans
    $5,000 $100,000 From (fixed) Must have a company in the digital media industry. Go to site More
    Bitbond Small Business Loans
    Bitbond Small Business Loans
    $1,000 $25,000 From 7.7% (fixed) Bitbond reviews your application along with your connected business accounts — like eBay, Amazon and PayPal to determine your risk rating. Go to site More
    Biz2Credit Small Business Loan
    Biz2Credit Small Business Loan
    $5,000 $5,000,000 From (fixed) Varies by lender. Typically, lenders seek companies that have been in business for at least two years, are profitable and have a good credit history. Some lenders may offer startup loans to new entrepreneurs. More

    Have we missed anything in the comparison table? Tell us

    • If the provider quotes a different rate to the one above please let us know

    How does a startup loan work?

    While the product details will differ, startup loans have some common features and eligibility criteria that must be met upon application.

    For instance, most providers of startup loans require applicants to have good creditworthiness. The application may require you to submit a detailed business plan.

    Depending on the kind of credit you seek, you may also have to provide collateral. While applying for a startup loan does not take much time, it can take up to a month or more for the lender to process your application and disburse approved funds.

    Features to consider when comparing startup loans

    • Interest rate. Even a seemingly small difference in percentage can have a big effect on how much you end up paying as interest, especially if you borrow a large sum over a considerable period of time. The government-backed Small Business Administration (SBA) 7(A) loan for startups offers a very competitive interest rate. However, qualifying for one is not easy.
    • Eligibility criteria. Not all providers of business loans for startups have the same eligibility requirements. For example, to qualify for an SBA 7(A) loan you would have to provide 10% as down payment, you’ll have to personally guarantee the loan if you have more than 20% ownership and you’ll have to provide some kind of collateral to secure the loan.
    • Turnaround time. Startup loans typically take longer to process than consumer loans, with some lenders taking up to a month or even more. If you need money in a hurry, you may need to broaden your options and consider other forms of credit, such as a private personal loan.
    • Collateral. Many startup loans require you to provide some form of collateral. This can be through equity in your home or in the equipment or vehicles you own as part of your business. You can even get a business loan to purchase new equipment where the equipment itself acts as collateral.

    Benefits and drawbacks of startup loans

    • Hold on to equity. When you get the right kind of startup loan you don’t have to give up equity in your business. After you repay the loan completely, you retain complete ownership of your company.
    • Establish business credit. By getting a business loan and repaying it in a timely manner you build a positive credit history for your business, which will improve your ability to get future credit at more advantageous rates.
    • Traditional loans available. As long as you have good creditworthiness you will have various traditional business loan options to choose from. Traditional loans can be appealing because they tend to offer competitive interest rates.
    • Can take a long time to process. The time that startup loans take to process can vary from lender to lender, from two weeks to two months. Generally, business loans take more time to process when compared to personal consumer loans.
    • Need good creditworthiness. You will generally require good creditworthiness to apply for a startup loan. The main exception is if you’re securing the loan using suitable collateral.

    Things to avoid when looking into startup loans

    Steer clear of startup loans until you have a well-thought-out business plan in place. Even the best ideas require careful implementation. If you, at any point, feel that you may have trouble repaying the loan on time, seriously reconsider taking it in the first place.

    Avoid loans with very high interest rates as this will increase the cost of the loan significantly.

    Make sure you go through the loan contract carefully before signing it and ensure you understand all associated fees and charges.

    Frequently asked questions about startup loans

    Yes, you can. There have been instances of startups successfully raising funds through crowdfunding campaigns. However, the success of your efforts will depend on the how many people view your idea as viable.

    This depends on multiple factors such as the lender you choose, the deposit you provide, your business plan and your creditworthiness. Through an SBA 7(A) loan, you can borrow up to $5 million.

    The loan term of startup loans typically varies from two to seven years.

    You may be able to still get a line of credit or a loan with poor credit. If you do secure one, it will most likely be at a higher rate, so it’s important to plan for the loan and make sure you can afford timely repayments.

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