A startup business loan is financing to pay for the needs of a new business. It can help you cover the initial costs needed to establish your new business, including things like working capital, real estate, equipment, supplies, and inventory.
Many consider the SBA loan programs to be the gold standard for startup business loans. They offer high funding amounts, long payback terms, and low rates, but often require six months to two years in business, and a 20% to 30% cash injection from the borrower. But the SBA is not the only path to success. There are other ways to get a startup business loan in case you don’t meet the SBA’s requirements.
Interviews with our category winners revealed that the average startup business funding amount is between $20,000 and $80,000 initially, whereas the average SBA loan is just over $350,000. We researched 15 lenders, most of which can fund startups through SBA loans and many other strategies. Check out our list of trusted, experienced, and innovative lenders that are helping thousands of Americans start businesses every year.
Best Startup Business Loans of 2021
Best for E-commerce
Best for Retail
Midwest Corporate Credit
Best for High-Growth Startups
Best for Long Repayment Terms
Best for Unpaid Invoices
Best Overall : Finance Factory
Best overall for startup funding, Finance Factory can get you funded with no business history or established revenue as long as you have just one of the three Cs: credit, cash flow, or collateral.
Available to new business owners
Offers a wide variety of funding products to support later stages of growth
Rate and term transparency
Funds in seven to 10 days on average
Free funding range report
Ideal credit score is at least 680
Business credit card option carries high interest rates when the 0% introductory period expires
If your startup doesn’t yet have cashflow or collateral, Finance Factory may still get you financed if you have a personal credit score in the high 600s. Add to that a streamlined application process with a personal contact, a free funding range report, and quick funding, and Finance Factory ranks as our best overall for startup business loans.
Founded in 2006, Finance Factory has been providing competitive business lending services through its online marketplace model. The company matches small businesses with lenders in all 50 states providing loans for all stages of growth.
Startup funding ranges:
- Loan amounts: $5,000 to $350,000
- Loan terms: zero to seven years
- Interest rates: 0% (for up to 21 months) to 15%
- Fees: 4.50% to 9.90%
- Process time: seven to 10 days on average
Startup funding from Finance Factory will take the form of business credit cards, personal loans, and lines of credit. In most cases, there will be no prepayment penalties, but since loans are tailored to your specific circumstances, this is a question you should verify when you receive approval.
For startup funding products, the company requires a credit score above 600, with an ideal score of at least 680. There are no annual revenue and time in business requirements. However, the company will look for a minimum account balance of $1,000 to $5,000 to cover your payments.
If you or your business has any reported collections, judgments, liens, late payments, or public records, you most likely will be disqualified.
The company has 4.6 out of five stars from LendingTree with excellent ratings specifically for their interest rates, fees, closing costs, responsiveness, and customer service.
Working with Finance Factory allows customers to explore several financing options in one place as their business grows, offering advantages to businesses with no history.
Best for E-commerce : Become.co
The best startup solution for e-commerce goes to a FinTech (financial technology) company called Become.co. Its LendingScore tool is a tailored dashboard that connects to your e-commerce platform and helps improve your fundability.
Lending Score: Tailored dashboard helping you improve your fundability
One online application
No charge to apply
Funds in as little as 24 hours
Limited funding amount of $100,000
Short loan terms of three to six months
Become.co’s proprietary data-driven tool, LendingScore, connects your online store to your marketing platforms, and creates a dashboard of your metrics so you can see how lenders see you. This special integration to your online store and marketing channels is what makes Become.co a standout winner for e-commerce businesses that need a startup loan.
Become.co is a loan marketplace headquartered in San Mateo, California. The company uses bank-level encryption for data security to protect borrowers’ and lenders’ information. With a single borrower application, it connects you to multiple loan offers from lenders in its platform that cover all 50 states.
- Loan amounts: Maximum of $100,000
- Loan terms: Three to six months
- Process time: Qualified loan applications could get funded in as little as 24 hours
Repayment is flexible and based on the monthly turnover. Other terms and conditions will be provided by the approving third-party lenders.
Customers that apply for business funding through Become.co must be in business for a minimum of three months. However, those who fail to qualify with this requirement will have free access to its LendingScore to help improve their funding odds.
As a funding solution marketplace, Become.co can match loans for businesses in all 50 states. They are limited to funding only for-profit businesses.
The company has 4.8 out of five stars on Trustpilot, with reviewers recognizing its simple and easy process and its excellent customer service.
The company uses revolutionary technology to present your business in the best light to lenders. While other lenders look at just your financial health, Become.co’s LendingScore shows lenders your marketing success and digital footprint, too, making them more comfortable with your business’s repayment capabilities.
Best for Retail : OnDeck
Our favorite for retailers, OnDeck provides a simple yet focused package consisting of a business line of credit and a short-term business loan that can help a store grow out of its infancy and into a noticeable startup, while adapting to the seasonality so common in retail.
Funding within three days
Requires low minimum credit score
Less paperwork than most lenders
SmartBox Capital Comparison Tool provides jargon-free cost transparency
Financing is not available in Nevada, North Dakota, and South Dakota
Not available to businesses in some industries (see list below)
One year in business required
Requires frequent (daily or weekly) repayments
Retail businesses can have seasonal fluctuations, but OnDeck’s short-term loan and line of credit provide flexible access to smaller amounts of money when it is needed, which keeps the borrower’s total interest expense low, making it our best retail startup lender.
Founded in 2007 and headquartered in New York City, OnDeck is an online small business lender. Currently, it is offering two types of business loans: short-term loans and revolving lines of credit. It was one of the first lenders to rely primarily on technology.
- Short-term loans: $5,000 to $250,000
- Revolving line of credit: From $6,000 up to $100,000
Loan Repayment Terms:
- Short-term loans: Repaid daily or weekly for three to 12 months
- Line of credit: Repaid weekly for up to 12 months
- Short-term loans as low as 11.89%
- Line of credit as low as 10.99%
The company doesn’t have prepayment penalties and can waive 100% of your remaining interest payments if you pay off your loan early.
For businesses to qualify, OnDeck requires at least a 600 personal credit score, one year in business, and $100,000 in business annual revenue.
The company is not accepting Paycheck Protection Program (PPP) loan applications but recommends customers apply with one of its trusted partners. OnDeck serves over 700 industries in 47 states with the following exceptions:
- Adult Entertainment / Materials
- Drug Dispensaries
- Firearms Vendors
- Government & Non-Profits, Public Administration
- Horoscope / Fortune Telling
- Lotteries / Casinos / Raffles / Gaming / Gambling
- Money Services Business
- Religious, Civic Organizations
- Rooming & Boarding Houses
- Vehicle Dealers / Used Good Dealers / Auction Houses
- North Dakota
- South Dakota
OnDeck is rated highly at Trustpilot with a rating of 4.9 out of five stars and has a 99% recommendation score from LendingTree. Reviewers report positive experiences with the company’s responsiveness and customer service.
With OnDeck, borrowers fill out a single application that can be used for every type of financing option it offers. Funds can be available as fast as the same business day.
Best for High-Growth Startups : Midwest Corporate Credit
If you run a startup that has proven high growth in its first two years of business, Midwest Corporate Credit’s business credit line would be the best tool to fuel you to the next stage. It funds up to $500,000 within 15 days of your completed application.
No collateral required
Rates start at prime + 1%
No upfront fees
Minimum 730 FICO
Two or more years in business
Must be able to demonstrate repayment ability from earnings
Personal guarantee required by all owners with more than 20% interest in the company
With a five-minute prequalification, high funding limit of $500,000, no collateral requirement, and rates as low as prime + 1%, Midwest Corporate Credit earns our nod for the best lender for high-growth startups.
Founded in 2010, Midwest Corporate Credit has made it to the prestigious Inc. 5000 list three times and has funded over $250 million in small business loans.
- Loan amounts: up to $500,000
- Interest rates: Prime + 1%
- Process time: Funding as soon as 15 days
- Revolving line with interest-only payments allowed
- Fees: None upfront. 10% success fee based on the amount you choose to borrow
- No early prepayment penalty
- Does not report to personal credit bureaus
Your startup business must be at least two years old and able to repay the loan from proven earnings. If your startup is pre-revenue, Midwest may be able to help you with its business credit card funding program. This program’s typical funding range is between $25,000 and $250,000. Interest rates will likely be 0% for six to 12 months, no upfront fees, with a 10% success fee paid from the proceeds of the approved funding amount.
While the credit card program will fund non-profits, the business line of credit (BLOC) will not. Other businesses ineligible for the BLOC include:
- Bail Bond Companies
- Direct Lenders
- Factoring Companies
- Gas Stations
- Investment Companies
- Life Insurance Companies (not independent agents)
- Tobacco-Related Businesses
The company has received positive reviews on Yelp, Birdeye, Bigger Pockets, and YouTube acknowledging its professionalism, impeccable funding knowledge, and work ethic.
In addition to funding, the company will also show you how to use its financial tools through its consultation service.
Best for Long Repayment Terms : Seek Capital
While many banks can provide an SBA loan, Seek Capital’s proprietary technology makes it easy for a startup to be considered by several lenders for the best rates and terms for loans that can extend as long as 25 years.
A wide network of third-party lenders that specialize in various financing solutions
Proprietary lender-matching technology
Long term and low rates with an SBA loan
Very high customer reviews
Backed by several major investment firms
Most SBA loans awarded to businesses that are at least six months old
20% to 30% capital contribution required by the applicant for a long-term SBA loan
Must show profit and loss statement, balance sheet, business plan
Seek Business Capital, LLC, can offer SBA loan products with repayment terms of up to 25 years with a streamlined application process and wide lender exposure, making it the best choice for long repayment terms.
Headquartered in Los Angeles, California, and founded in 2014, Seek Capital is not a direct lender but a digital lending platform that specializes in providing financial services for startups and small businesses through its partnerships with major banks. These partnerships allow it to lend in 50 states.
SBA Startup Loan Terms:
- Loan amounts: Up to $5 million (typically $25,000 to $350,000)
- Loan terms: Up to 25 years
- Interest rates: Prime rate plus 2.75% to 4.75%
- Process time: Three to six months
Most SBA applicants who qualify have at least a 680 credit score. Borrowers are generally required to make a 20% to 30% capital contribution to lower the lender’s, and the SBA’s, risk. Seek Business Capital will ask you to prove your time in business and produce a business plan with a financial forecast projecting between two and five years. In addition, your financial statements must show that your business earns enough to afford the loan payments.
For the SBA 7(a) Loan, an SBA loan type accessible to startups, there is a prepayment penalty for loans with terms of 15 years or more if they are paid off within the first three years of the loan. The prepayment penalty is 5% if the loan is paid off in the first year, 3% in year two, and 1% in year three.
There is a fairly extensive list of industries and businesses not eligible for an SBA loan. For example, many lending and investment businesses; gambling and pyramid sales companies; and charitable, religious, and government-owned corporations are not eligible.
Seek Capital has a 9.3 out of 10 on Trustpilot and a 4.9 out of five on Consumer Affairs, Facebook, and Google.
Most startup loans have short terms, ranging from months to just a few years. The SBA loan’s maturity of 15 to 25 years, therefore, it is highly sought after. It is a slow and paperwork-intensive process, so Seek Capital’s ability to turn that into a simple effort while maximizing your application’s exposure to many lenders is a tremendous benefit to busy business owners.
Best for Unpaid Invoices : Upwise Capital
If you want to explore funding your startup with your unpaid invoices, there is no company more transparent on the topic than Upwise Capital, our top choice for invoice financing.
Based on the credit of the invoiced business
Invoice is used as collateral
Can finance up to 100% of invoice and account receivables
Funding speed as fast as same day
Invoices must be from well-qualified customers
Online lender, no physical location to visit
Fees are based on the time it takes for the customer to pay the invoice
Not only does Upwise Capital provide up to 100% invoice financing with an efficient online application, but it also goes above and beyond by educating consumers on how the process works, why a business would want to use this tool, what the pros and cons are, and what it costs, with detailed examples and an online calculator. Business owners are best-served when there are few surprises, and Upwise Capital is the best at providing transparency on their unpaid invoice financing for startups.
Located in New York with clients like Domino’s, Subway, Five Guys, and The UPS Store, Upwise Capital provides flexible financing options for startups and established businesses. It offers more than a dozen financing products to more than a thousand industries.
Invoice Financing Terms:
- Loan amounts: Up to 100% of the invoice amount
- Loan terms: Varies based on when the customer pays the invoice, typically charges 1% for each month the invoice goes unpaid
- Factor rate: 8% to 30%
- Process time: As fast as same day
Because of the way unpaid invoice finance works, prepayment penalties don’t apply. It’s in the business owner’s best interest for their customer to pay their invoice as soon as possible. Rather than prepayment penalties, invoice financing lenders, called factors, charge additional fees to the business for each month the invoices remain open.
Most Upwise customers who qualify have annual revenue of over $150,000, a credit score of over 600+, more than one year in business, with invoices from credible clients. The company serves all 50 states, but the quality of the customer who owes on the unpaid invoice is highly vetted. The typical high-risk industries, such as gambling and financial services where the item in trade is money, won’t qualify.
Upwise Capital’s Trustpilot reviews are 4.5 out of five stars specifically noting the company’s professionalism, customer service, and funding success.
A great perk in working with Upwise Capital is the comfort in knowing that they have a broad suite of financial products that can help you in the many scenarios you’ll find your business in as it grows.
Startup business loans can be some of the most difficult types of loans to obtain. Not only do they usually require high levels of credit, cash injection from the owner, and collateral (three things many business owners don’t have when they are starting their first business), these loans can also be paperwork-intensive.
That’s why online lenders and financial technology companies are rising to the top. These types of companies have taken on a traditionally difficult challenge for the lender and the borrower and developed ways to reduce the risk and inconvenience for both parties.
Our best overall for startup business loans, Finance Factory, is an online lender that funds pre-revenue startups, publishes learning resources, and is transparent with their rates and fees.
|Company||Why We Picked It||Best Features|
|Finance Factory||Best Overall||Free funding range report; rate transparency|
|Become.co||Best for E-commerce||Make your business more fundable to lenders through its proprietary integration technology|
|OnDeck||Best for Retail||SmartBox Capital Comparison Tool; funds in three days|
|Midwest Corporate Credit||Best for High-Growth Startups||Consulting; no collateral requirements; low rates|
|Seek Capital||Best for Long Repayment Terms||SBA loan options up to 25 years with low rates|
|Upwise Capital||Best for Unpaid Invoices||Top-notch transparency; can finance up to 100% of invoice and account receivables; can fund in a day|
Frequently Asked Questions
How Do I Qualify for a Startup Business Loan?
To qualify for a startup business loan, most lender’s programs, including the SBA options, strongly prefer your startup to already earn revenue, have a base of customers, and provide annual financial reports covering six to 12 months.
There are some startup business loan types, like business credit cards, that can get some funding pre-revenue, if you have good personal credit. In short, to qualify for a startup business loan you must have good credit history, cash, or collateral.
Is It Hard to Get a Startup Business Loan?
In general, it is harder to qualify for a startup business loan because they require at least two to three years in business. If you choose the business credit card route, you’ll need a strong personal credit history to qualify. If you are two years into your startup phase and applying for a startup loan to fund your next level of growth, many lenders require your business to show annual revenue of at least $100,000. In the SBA loan category, you’ll also need to invest at least 20% of the loan amount as a down payment.
Do Banks Give Loans to Startups?
Yes, banks give loans to startups. Whether your startup is in its first week and has not earned its first dollar yet, or your company is in its fifth year borrowing for a new location or additional equipment, banks have programs for you. Most bank programs will require heavy documentation during the application process, and they could range from a business bank credit card to a business line of credit to a short-term or long-term loan.
Can I Get a Business Loan With No Money Down?
One way to get a business loan with no money down is through an equipment financing loan. There are lenders that will use the equipment itself as collateral, thus reducing risk and eliminating the need for a down payment. Some other ways to get a business loan with no money down are business credit cards, short-term loans, and lines of credit. Working capital bridge loans and merchant cash advances may also be options for your business to get a loan with no money down.
How We Chose the Best Startup Business Loans
We reviewed 15 lenders to find the best startup business loans on the market. We considered banks, private loan companies, and online lender platforms to find our favorite for each category.
Company history, reputation for service and success, and customer review scores served as the foundation for us to bring you winners that you can trust. Favorable rates, terms, and conditions, and qualifications that we thought were obtainable by many, helped slingshot candidates to the top of their category. Finally, innovations in technology, funding success, or a wide range of services inspired us to bring the best to light.