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Best loans for startups and new businesses

Compare top lenders willing to fund companies during those risky first years.

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By

Bethany Hickey

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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. Your options are even more limited during the first six months in business — or if you need seed money to get a new business off the ground.

That’s why startups may need to look beyond traditional bank loans when searching for funds. Online lenders, nontraditional financing companies and even personal loan providers could offer better options. To help you find the best choice, we break down the best financing companies for new businesses into nine categories. We also offer a list of alternatives if these top picks don’t fit your startup.

9 best loans for new businesses and startups

Best overall: Finance Factory

Finance Factory business loans

Finder Rating: 4.1 / 5 ★★★★★

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Finance Factory is a connection service that offers multiple financing options for startups. Rates and terms vary by lender, but its business express loans range from 5.99% to 8.75% APR and amounts from $5,000 to $500,000. The startup funding options are also available for borrowers with limited credit histories, coming in with 0% intro rates and a low credit score requirement of 600. You can also compare other business loan options like SBA loans, equipment financing and personal loans. Additionally, Finance Factory has been in business since 2011, is BBB-accredited and has stellar customer service reviews.

Best for comparing lenders quickly: Lendio

Lendio business loans

Finder Rating: 4.75 / 5 ★★★★★

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Lendio is a connection service for small businesses, and these services can help you save time by sifting through lenders for you that suit your situation. Lendio features a free application to compare lenders quickly with a soft credit check. It has over 75 lenders in its network, and you can search for 11 types of business financing such as a short term loan, lines of credit, SBA loans and startup loans. However, you'll need quite a bit of information on hand to complete its form.

Best for personal loans: Upgrade

Upgrade personal loans

Finder Rating: 4 / 5 ★★★★★

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If business financing isn't working out for your brand new business and your credit score isn't ideal, then Upgrade's personal loans may be for you. It offers personal loans from $1,000 to $50,000, and requires a low minimum credit score of 620 — and it accepts coappliants. But there are fees to watch out for, including an origination fee of 1.85% to 8.99%, which increases the cost of borrowing.
  • Not available in: Colorado, Iowa, Maryland, Vermont, West Virginia
Partner terms and conditions

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/.

Best for SBA loans: SmartBiz

SmartBiz business loans

Finder Rating: 4.5 / 5 ★★★★★

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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 loan options as well. Unlike other connection services, SmartBiz can help you navigate the lengthy process that comes with applying for an SBA loan, which can be very helpful if you're looking to launch your first-ever startup. Customers rave on 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, both capped at 2% of the loan amount.

Best for microloans: Kiva

Kiva business loans

Finder Rating: 3.7 / 5 ★★★★★

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Kiva is a microlender that specializes in small-dollar financing for underserved business owners — with no time-in-business requirements. Its crowdfunded loans come with 0% interest, making it one of the most competitive options on this list. It's also willing to work with entrepreneurs of all credit types. And you don't necessarily need to be a US citizen or permanent resident to qualify. However, raising funds can take longer than a month. These are microloans, starting at $25 and come with shorter terms than your usual unsecured loan.

Best for business line of credit: Bluevine

Bluevine business lines of credit

Finder Rating: 4.3 / 5 ★★★★★

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While Bluevine doesn't work with brand new businesses, you can qualify for its working capital line of credit after only six months. There are no maintenance, origination or draw fees and you can qualify with fair credit. After you make a withdrawal, it comes with weekly repayments. And while same-day funding is available, you'll have to pay an extra fee.

Best if you haven’t opened yet: Guidant Financial

Guidant Financial business loans

Finder Rating: 4 / 5 ★★★★★

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Guidant Financial is one of the few lenders that offers a line of credit for businesses that haven't yet opened their doors. To qualify, you'll need good personal credit, minimal inquiries and a credit utilization ratio under 50%. It even offers a 0% introductory rate for well-qualified applicants. After that, rates range from 12% to 18% APR — lower than typical business credit cards. But it comes with a high origination fee. And it's not the fastest option out there, as it can take up to a month to fund your line of credit.

Best for invoice financing: FundThrough

FundThrough Invoice Factoring and Financing

Finder Rating: 4.5 / 5 ★★★★★

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FundThrough doesn't have any fixed time in business requirements and is willing to fund businesses in the startup phase. It also offers invoice financing for invoices worth $15,000 and invoice factoring for invoices as high as $10,000,000. Fees are typical for an invoice factoring provider, ranging from 2.5% to 6% of your invoice's value, depending on how long it takes your client to pay. But unlike traditional invoice factoring companies, it's fully automated and you can receive your funds within 24 hours.

Best for emergency line of credit: OnDeck

OnDeck business lines of credit

Finder Rating: 4.7 / 5 ★★★★★

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OnDeck is known for very fast funding times, well-suited for emergencies. With OnDeck's lines of credit, you may be able to get funds up to $10,000 in a matter of minutes — and that includes nights and weekends. To qualify, your business must be at least one year old, have a personal credit score of at least 625 and at least $100,000 in annual revenue. While funding times are impressive, you'll have to watch out for high rates and a $20 monthly maintenance fee on the line of credit.

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 pay special attention to providers that accept businesses that have been around for less than a year, especially those with less stringent requirements around time in business and low rates. We also considered Better Business Bureau reviews and ratings, as well as customer reviews on Trustpilot.

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

How financing can benefit a new business

Startup business loans give you access to capital you might not otherwise have. With it, you’ll be able to 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?

Business loan requirements vary from lender to lender. However, most 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 looking at your credit score, startup lenders typically also 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 may only require around $10,000 in revenue a month to qualify, and others may require $100,000 per month or more.
  • 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.

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. Typically they offer small amounts of financing in exchange for taking 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.

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.

Alternatives to loans 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, you’ll be personally responsible for any money your business borrows and can’t repay.

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’re able to 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 it will likely need to be supplemented by other funding methods.
  • 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 have 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 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.

Recap: Best startup business loans of 2022

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.

  1. Business Employment Dynamics: Establishment Age and Survival Data, Bureau of Labor Statistics, 27 February 2023

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4 Responses

    Default Gravatar
    FaratziAugust 1, 2017

    How much can I borrow from a private lender? Until what amount he can give me with my house property as a collateral? Where can I find private lenders that give big amounts of money for business and for buying my instruments, an amount of 1 million with my house property as a collateral?? I want to find a real one because there are a lot of frauds. I am waiting for your urgent response. Thank you!

    Reply
      Default Gravatar
      DanielleAugust 2, 2017

      Hi Faratzi,

      Thank you for contacting Finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      Generally, large loan amounts usually have specific eligibility criteria which include a minimum income requirement as this is one way for lenders to make sure their borrowers have the capacity to repay their loan amount. Lenders will also take into consideration your credit standing, employment status, outstanding loan, and other liabilities in their decision-making.

      You can compare business loans for options that may suit your needs. You may review and compare the offers available on the table. Once you have selected one, you may proceed by clicking the green “Go to Site” button.

      I hope this helps.

      Cheers,
      Danielle

      Reply
    Default Gravatar
    LaurelJuly 13, 2017

    Currently I am on employed but intend to start my own online business as an affiliate marketer through a well established training program called Aspire. I have absolutely no personal funds to use to pay for their training program which costs $2000. Although they cannot guarantee instant income, their average affiliates start making $8000 per month in the first 90 days. Also, my credit rating is approximately 560 right now. Where can I possibly get a $2-3,000 start up business loan to start my business?

    Reply
      Avatarfinder Customer Care
      HaroldJuly 16, 2017Staff

      Hi Laurel,

      Thank you for your inquiry.

      Many business lenders require that your business has been established for at least six months and that it’s meeting certain revenue minimums. There are some lenders who may consider your business plan and personal credit profile in lieu of business experience to evaluate your loan application and assess risks. We do have a guide about startup loans that will help you understand how you can get a business loan in the early stages. You could also get a personal loan to start a new business.

      I hope this information has helped.

      Cheers,
      Harold

      Reply
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