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Best loans for startups and new businesses in 2024

Getting startup funding can be tricky — but these lenders are willing to work with new business owners.

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. But with the Federal Reserve’s decision to lower interest rates in 2024, borrowing should become less expensive, making it more affordable for startup businesses.

While traditional bank loans aren’t typically an option for new businesses, alternative online lenders and personal loan providers may be able to provide the startup capital you need.

Here’s a list of the eight best funding options for new businesses by category. We also offer a list of alternatives if these picks don’t fit your startup.

8 best loans for new businesses and startups

Why trust Finder

  • 35+ business loan lenders reviewed and rated by our team of experts
  • 12+ types of business loans analyzed
  • Evaluated under our unbiased rating system covering 10+ categories
  • 20+ years of combined experience covering financial topics

We're big on editorial independence. That means our content, reviews and ratings are fair, accurate and trustworthy. We don't let advertisers or partners sway our opinions. Our financial experts put in the hard work, spending hours researching and analyzing hundreds of products based on data-driven methodologies to find the best accounts and providers for you. Explore our editorial guidelines to see how we work.

Best overall

Lendio business loans

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Loan amount$1,000 – $10,000,000
APRVaries by lender
Min. Credit Score500

Best for microloans

Kiva business loans

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on Businessloans.com's secure site
Loan amount$1,000 – $15,000
APR0%

Best for invoice financing

FundThrough Invoice Factoring and Financing

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on Businessloans.com's secure site
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Loan Amount$500 to $10M
Fee for Terms2.75% to 8.25%

Best for equipment loans

National Funding business loans

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Loan amountUp to $150,000
APRNot stated
Min. Credit Score600

Best for personal loans

Finance Factory business loans

Loan amount$5,000 – $500,000
APR0% to 15%
Min. Credit Score700

Best for SBA loans

SmartBiz business loans

Loan amount$50,000 – $500,000
APRPrime Rate, plus 2.75% to 4.75%
Min. Credit Score650

Best for business line of credit

Bluevine business lines of credit

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Loan amountUp to $250,000
APRAs low as 7.8%
Min. Credit Score 625

Best if you haven’t opened yet

Guidant Financial business loans

Loan amount$10,000 – $150,000
APR12% to 18%
Min. Credit Score690

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 pick lenders that have relaxed time-in-business requirements, good customer service and competitive rates. We also review each company’s Better Business Bureau reviews and Trustpilot ratings.

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

What is a startup business loan

A startup business loan is a type of financing designed to help new businesses get off the ground. They provide capital to buy a new business or franchise, pay for equipment and fund the day-to-day operations and expansion of the business.

The most common types of startup and new business loans include SBA 7(a) loans, personal loans, equipment loans, lines of credit and business credit cards. There are also portfolio loans and ROBS (rollovers as business startups), which leverage your personal assets to fund a business.

How financing can benefit a new business

Startup business loans give you access to capital you might not otherwise have — you may even find a business loan without having any money. With it, you can 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
  • Builds business credit

How do I qualify for a business startup loan?

Business loan requirements vary by lender. However, those 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, although some lenders and loan options have more lenient credit requirements.
  • No recent bankruptcies. In addition to your credit score, startup lenders typically look at your credit history. 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 only require around $10,000 in monthly revenue to qualify, while others may require $100,000 or more per month.
  • 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.

Be wary of companies that push you to pay in advance to help you loan shop, require you to pay fees up front or seem to have unverifiable guaranteed approval. These “lenders” may actually be business loan scams. Learn the warning signs to identify a potential scammer as you shop around.

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 limited. You may have better luck considering other financing alternatives, such as rollover for business startups (ROBS) or crowdfunding, which 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. They typically offer small amounts of financing in exchange for a training course.

You might qualify for some term loans, alternate types of business loans or business loans that don’t require a credit check. But these loans come with a higher price tag — think APRs over 300%. And if you’re just starting, 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 extensive documentation, and SBA loans also require completing SBA-specific forms. While there are a few lenders with low or no required documents, they may not offer the best rates to new businesses.

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 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.

Is it possible to get a 0% interest business loan?

Yes, it’s possible to get a 0% interest business loan. Kiva, a lender on this list, offers a 0% interest small business loan of up to $15,000. Guidant Financial also offers unsecured loans with interest rates starting from 0% to 3% for qualified borrowers. However, these are not specifically startup loans.

You can also look into a 0% introductory rate business credit card to start a business, which may be easier to qualify for than other types of business funding. Other low-interest business loans can be found at banks, credit unions and online lenders — but you typically need good credit to qualify and startups may not be eligible.

More types of financing for new businesses and startups

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 you won’t have to pay back any of the money, but you could lose partial control of your company. You may want to keep a lawyer on retainer to 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 can get may be restricted based on the Securities and Exchange Commission (SEC) 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 you’ll likely need other funding methods to supplement it.
  • 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 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 the details.
  • Friend and family loans. 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.

How to crowdfund a startup

Some startups may choose to offer investors goods, services or equity in their company in exchange for funding. Crowdfunding also helps companies generate buzz and make connections with potential clients. You’ll have a few options:

  • Equity crowdfunding exchanges funds from investors for partial ownership of the company. You can raise up to $75 million, but fees can set you back as much as $100,000, and regulations are difficult to navigate.
  • Donation-based crowdfunding comes with few regulations and doesn’t require anything in return. Typically, the only cost is a platform fee.
  • Rewards-based crowdfunding works like donation-based crowdfunding — but contributors to your campaign receive a gift in exchange. Typically, you also have to pay a platform fee.

Recap: Best startup business loans

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.

Frequently asked questions

What type of loan is best for starting a business?

The best type of loan depends on your goals for your business and the loan purpose. For example, if you need vehicles or machinery to grow your business, an equipment loan might be a smart move. Equipment loans can be easier to get because the purchase secures the loan.

Is it difficult to get a business startup loan?

It can be harder to get a loan when you’re not an established business, but it’s not impossible. Many alternative and online lenders have more lenient requirements to qualify than traditional banks and are willing to work with newer businesses, although they may charge higher rates.

Can you get a business loan for startup costs?

If you’re just getting up and running, consider getting a personal loan to pay startup costs. Personal loans can be easier to qualify for, loan amounts can reach as high as $100,000 and interest rates usually range from 6% to 36%, with the best rates going to those with higher credit scores.

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To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.
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Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio

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Kat Aoki was a personal finance writer at Finder, specializing in consumer and business lending. She’s written thousands of articles to help consumers make better decisions on their home loans, bank accounts, credit cards, cryptocurrency and more. Kat is well versed in working with leading brands in the real estate, mortgage and personal finance industries, and her expertise has been featured on Forbes Advisor, Lifewire and financial comparison sites like iSelect and realestate.com.au. She holds a BS in business administration from California State University, Sacramento and enjoys hiking and yoga in her spare time. See full bio

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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!

      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

    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?

      AvatarFinder
      HaroldJuly 16, 2017Finder

      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

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