Best startup business loans of 2024

Most entrepreneurs use their personal savings or income for startup capital — only about 22% received outside funding, which was most often used to purchase equipment, according to a survey conducted by SCORE, a nonprofit business mentorship network. That may be because most small business loans are only available to startups that are already operational. But if you don’t have the cash to get your business up and running, you have other options, including a personal loan. 

Compare personal loan rates for business funding

Best startup business loans 

Small business loans, like those backed by the Small Business Administration (SBA), typically offer lower rates and higher borrowing limits than personal loans. But if your business isn’t eligible, a personal loan may be able to provide the startup funding you need. Just note that you’ll need to find a lender willing to provide a personal loan to use for business purposes (not all do). But if approved, the loan could be funded within days of your original application.

Methodology

We evaluated the best personal loan lenders for startups based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, whether cosigners are accepted, and whether business funding is allowed. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. 

Each data point was verified by a third party to make sure it was accurate and up to date. Read our full lender rating methodology for more information.

Startup business loan options

If you’re looking for a startup small business loan, there are several options worth considering, including:

SBA loans

The SBA guarantees loans offered by its lending partners, enabling some small business owners to get approved even when they don’t qualify for other funding. 

• 7(a) loans: SBA loans are primarily guaranteed through the 7(a) loan program, which provides loans up to $5 million for a variety of business purposes. To qualify, your business must currently be operating for profit. 
• SBA 504 loans: Businesses who qualify can use 504 loans to purchase assets. They are also only available to operational businesses. 
• SBA microloan: If your business isn’t up and running yet, you may be eligible for an SBA microloan up to $50,000. Microloan lenders typically require business owners to personally guarantee the loan and also offer an asset as collateral for the loan. 

State and local startup loan programs

A few states and municipalities offer startup loans to new businesses in partnership with local lenders. If you can’t qualify for an SBA loan, research programs for entrepreneurs in your state. Some of these programs don’t have business history or revenue requirements. Examples include the Colorado Startup Loan Fund and the Texas Small Business Credit Initiative.

Personal loans

If your business isn’t eligible for a small business loan, you may be able to qualify for a personal loan based on your personal income and credit score. A personal loan provides a lump sum of cash that you repay in fixed monthly installments over the course of a period of years, often between two and seven. 

Some personal loan lenders may restrict borrowers from using the funds for business purposes, so make sure to check with the lender before applying. Many online lenders offer loans up to $50,000, and some may offer greater amounts. For example, BHG Financial offers personal loans up to $200,000. You can typically get the funds within a few days of approval, or even the same day you apply, depending on the lender. 

Business credit cards

Many credit card issuers offer business credit cards to startups that haven’t earned revenue yet, as long as the business owner has another source of income for repayment. Some business credit cards even come with an introductory 0% APR offer, which would allow you to carry a balance interest-free for the duration of the promotional period, such as 12 months. 

Just make sure you can keep up with the minimum payments before applying and that you anticipate being able to pay it off or refinance credit card debt once the 0% APR adjusts to the card’s standard rate. 

Options for startups with 6+ months of business history

Once you have at least six months in business under your belt, you’ll have access to an expanded array of financing options. In addition to SBA loans, you may be eligible for a 

• Business line of credit: Similar to a credit card, a line of credit allows you to access up to your credit limit on a revolving basis. 
• Equipment financing: These are generally installment loans that are secured by the equipment being financed.
• Invoice factoring: Some lenders let you borrow money using unpaid invoices as collateral.

Other types of business financing may also be available from banks, credit unions, or online lenders. 

How to compare startup business loan options

As you research lenders and loan options, consider the following:

• Eligibility requirements: Lenders often have personal or business credit score requirements, business history and revenue requirements, collateral requirements, or down payment requirements. With a little research, you should be able to narrow down your options to startup business loans you can qualify for. 
• Flexibility of use: Consider whether the lender restricts how you can use the loan proceeds. If you’re just starting out, you may need to use the money for a variety of business expenses, like hiring employees, purchasing equipment, and buying inventory. When comparing lenders, consider how much flexibility they offer.
• Rates and fees: Lenders may have different methods of charging you for the privilege of borrowing, so make sure to calculate the total cost of borrowing the money over time, including the interest rate or factor rate and any upfront fees, like origination fees, as well as ongoing fees. 
• Repayment terms: Consider how long you’ll have to repay the loan and compare repayment terms offered with different loan options. It could make sense to choose a loan with a higher annual percentage rate (APR) and longer repayment term if you can more easily afford payments. 
• Lender reputation and customer satisfaction: Evaluate customer reviews on third-party websites like Trustpilot. You may also find expert reviews from networking organizations like the National Association of Women Business Owners. 

How to get a startup business loan

The application process for a startup business loan varies depending on which financing option and lender you choose. For example, you can apply for a personal loan by following these steps:

• Choose your top picks: Narrow down your options to a handful of lenders using the criteria above, or select from the list on this page. 
• Prequalify: Many personal loan lenders allow you to prequalify without hurting your credit. The process is quick and will provide you with a rate estimate you can use to compare your options. 
• Choose a loan offer: Pick the lender and repayment term that best meet your needs, and proceed with the loan application. This will trigger a hard credit check, which could have a small impact on your credit score for up to a year. 
• Submit the required documentation: Connect your bank account and upload any required documents, like your driver’s license, pay stubs, or tax returns. 
• Sign your loan documents: If you’re approved, review the loan agreement carefully before signing to accept the funds. 

How to get a startup business loan with no money

It’s possible to get a startup business loan with no revenue. Options to consider include:

• Personal loans
• SBA microloans
• Business credit cards

Bear in mind, the lender or credit card issuer may have other requirements for pre-revenue startup businesses. It may be especially difficult to get a loan with bad credit if your business isn’t yet profitable. 

Other startup business funding programs

There are a few ways you can fund a small startup without borrowing money. 

Borrowing from friends or family

More than 11% of entrepreneurs start their businesses with help from friends or family, according to SCORE. If you don’t want to accept a handout, treat your loved ones like regular investors: Show them a business plan and offer to repay them with interest. 

Crowdfunding

You can use crowdfunding to get support from your local community. Start a campaign on a platform like Kickstarter to allow individuals to make small contributions toward your funding goal. You can offer donors special perks, like goods or services from your business. 

Angel investors

If your business has growth potential, you might consider looking for an angel investor at a networking event or online. Angel investors are individuals or firms that provide funding to startups in exchange for shares of ownership in the business. 

Venture capital

Venture capital firms, like some angel investors, provide startup capital in exchange for shares of ownership. The general partners of the venture capital fund make investment decisions on behalf of a group of investors, pooling their money to fund your business. When your business earns a profit, the general partners and the investors take a cut based on their equity stake. 

Small business grants

Some government and nonprofit organizations offer grants to startup small businesses, which don’t need to be repaid. Each program has different requirements, but it’s worth applying to several if you qualify. Start your search at Grants.gov. 

FAQ

What are eligibility requirements for a startup business loan?

Qualification requirements for startup loans vary based on the type of financing you’re applying for and the lender you choose. Most business loans have revenue and time-in-business requirements. Business owners that don’t meet these requirements may be able qualify for a personal loan based on their income and credit score. Business credit cards may also be an option for businesses that aren’t yet operational. 

Can startups obtain loans without collateral?

While most lenders won’t offer a business loan to a startup without a track record or collateral, entrepreneurs can often get unsecured personal loans if their income and credit score meet the lender’s criteria. Startups with at least six months of business history can usually qualify for a variety of unsecured business financing options, including a business line of credit. 

What if I am denied a startup business loan?

If you are denied a startup business loan, you have options. You can apply for a government-backed loan program or grant, start a crowdfunding campaign, ask friends and family for help, or seek out an angel investor or venture capital firm. You can also dip into your personal savings or get a personal loan. 

Can I get a startup business loan with bad credit?

Getting a startup business loan with bad credit will be particularly challenging. If your business is operational, you may have luck applying for an SBA loan. If your business hasn’t started earning revenue, you can try applying for a personal loan from a bad credit lender, but you’ll pay a high interest rate. If you can improve your credit before starting your business, you’ll have more options. 

Devon Delfino contributed to the reporting of this article.