Skip to Main Content

Best startup business loans in February 2024

Dec 16, 2023
Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editoral integritythis post may contain references to products from our partners. Here's an explanation for how we make money.

Securing a startup business loan can help small businesses with little or no credit history access financing. But finding the right loan can be a challenge since there are so many lenders, rates and loan types. 

What’s more, few banks work with startups. Instead nontraditional lenders and even crowdfunding platforms typically offer startup business loans. Here you'll find our top picks for the best startup business loans along with advice to help you find the most affordable loan for your business. 

|

Filter results

Close X

Bankrate 2024 Awards Winner: Best small business loan for newer businesses

4.2

Loan amount
$10k- $1M
Term: 4 - 60 months
Interest rate
Factor rate from 1.10 - 1.36
Fastest funding
1 business day

4.4

Loan amount
$10k- $400K
Term: 4 - 18 months
Interest rate
Starting at 1.11 factor rate
Fastest funding
1 business day

Best for term loans

4.2

Loan amount
$10k- $500K
Term: 4 - 24 months
Interest rate
Varies
Fastest funding
1 business day

Best for fast funding

4.5

Loan amount
$1k- $150K
Term: 3 - 6 months
Interest rate
Starting at 4.66%
Fastest funding
1 business day

Best for community support

4.3

Loan amount
$1k–$15k
Term: 1 - 36 months
Interest rate
N/A
Fastest funding
5 business days

BEST FOR UNDERSERVED COMMUNITIES

4.2

Loan amount
$5k- $250K
Interest rate
7.49- 24.99%
Fastest funding
Not disclosed

4.1

Loan amount
$5k- $5M
Term: 3 - 15 months
Interest rate
1.1 - 1.5 factor rate
Fastest funding
1 business day

BEST FOR FAIR CREDIT

4.6

Loan amount
$6k- $100K
Term: 12 - 12 months
Interest rate
Starting at 29.90% APR
Fastest funding
1 business day

Compare the best startup business loans in February 2024

LENDER BEST FOR MIN. FICO CREDIT SCORE LOAN AMOUNT MIN. TIME IN BUSINESS
OnDeck Fair credit 625 $5,000 to $250,000 12 months
National Funding Flexible repayment terms 600 $10,000 to $400,000 6 months
Taycor Financial Large business loans 550 $10,000 to $2 million 3 months
Quickbridge Term loans 600 $10,000 to $500,000 6 months
Fundbox Fast funding 600 $1,000 to $150,000 6 months
Kiva Community support N/A $1,000 to $15,000 N/A
Accion Opportunity Fund Underserved communities 550 $5,000 to $250,000 N/A

A closer look at our top startup business loans

OnDeck business loans: Best for fair credit

Overview: OnDeck is a direct online lender for business lines of credit and term loans. Small business owners can access between $5,000 and $250,000 with terms between 12 and 24 months. You can receive loan proceeds as soon as one business day.  

Why OnDeck is the best for fair credit: You need a personal credit score of just 625 to qualify for business funding. The time in business and annual revenue requirements of one year and $100,000, respectively, are also relaxed compared to what you’ll find with traditional lenders. Plus, the maximum repayment period of 24 months is longer than you’ll find with many other online lenders that only go up to 18 months. 

Who OnDeck is good for: This lender is ideal for small business owners with fair credit scores who’ve been operable for at least one year. It’s also an attractive option if you seek a short-term financing solution with fast funding times. You'll need a business checking account to qualify for a loan or line of credit. 

National Funding working capital loans: Best for flexible repayment terms 

Overview: National Funding features working capital loans between $5,000 and $500,000. Its loans are ideal for newer startups, and you don’t need perfect credit to qualify for funding. The starting interest is also competitive, and you can get a discount if you repay the loan in full before the term ends. 

Why National Funding is the best for flexible repayment terms: Whether you want a short or extended loan term, National Funding is worth considering. You can repay the loan in just six months or opt for a more lengthy repayment period of 60 months to make the loan payments more affordable. Keep in mind that a longer term means you’ll pay more in interest over the life of the loan. 

Who National Funding is best for: Working capital loans from National Funding are a good fit for relatively new startups with $250,000 or more in annual revenue. It’s also ideal if you’ve faced challenges getting approved elsewhere due to past credit issues since the minimum personal credit score requirement is just 600 for equipment loans and 650 for working capital loans.

Taycor Financial equipment financing and working capital: Best for large business loans

Overview: A nationwide lender, Taycor Financial offers many business loan options, including equipment financing, term loans, lines of credit and working capital. The online lender also offers equipment leasing if you can’t buy equipment outright. Its online application is simple with no tax returns required to apply for loans under $400,000.

Why Taycor Financial is the best for large business loans: Taycor offers up to $5 million in funding for equipment loans and $2 million for working capital loans. Many online lenders only go as high as $500,000. You can get flexible payments either monthly, quarterly or semi-annually. And you won’t need to provide collateral for working capital loans up to $500,000.

Who Taycor Financial is good for: Startup businesses and businesses with lower credit scores that need a significant loan amount can consider Taycor Financial. The minimum personal credit score required is 550 for some products. It also has no time in business requirements for equipment financing and just three months for working capital. Those low limits aren’t a common sighting in the business loan world.

Quickbridge small business loans: Best for term loans

Overview: QuickBridge, which National Funding owns, was founded in 2011 to provide working capital to small businesses that can’t get approved by traditional lenders. QuickBridge offers term loans up to $500,000 that can be funded within 24 hours after application.

Why QuickBridge is the best for term loans: QuickBridge’s term loans provide funding from $10,000 to $500,000, helpful for businesses covering small-to-moderate expenses. You can make payment terms as short as four months all the way to 24 months. It also offers an early payoff discount that could help you save money if you repay your loan ahead of schedule. 

Who QuickBridge is good for: This online lender works well for startups that need fast cash for short-term expenses. The company advertises a particular specialty in funding startups in restaurant, healthcare, trucking and real estate industries.

Fundbox line of credit: Best for fast funding

Overview: Founded in 2013, Fundbox offers working capital for small businesses, with loan amounts ranging from $1,000 to $150,000. The company doesn’t use traditional interest rates but instead an amortized weekly fee of 4.66 percent to 8.99 percent.

Why Fundbox is the best for fast funding: This fintech lender can approve applications in as little as three minutes, making it ideal if you need a fast business loan. You can conveniently draw funds from Fundbox’s app or online dashboard and transfer them to your bank account. 

Who Fundbox is best for: Startups who need a small cash injection within a day or two could benefit from using Fundbox. It’s accepting of businesses with just six months’ experience and a fair 600 personal credit score. But it sticks with short payment terms of 12 or 24 weeks and raises the monthly fee with the longer term. You will need a business bank account to apply.

Kiva microloan: Best for community support

Overview: Kiva is an international nonprofit founded in 2005 in San Francisco. It’s on a mission to help entrepreneurs who normally don’t have access to loan opportunities. To serve those entrepreneurs, Kiva offers zero-interest loans for up to $15,000 and a unique crowdfunding model.

Why Kiva is the best for community support: Kiva states that 4.8 million people globally have raised nearly $2 billion on Kiva. After you apply and are approved, your first step is to invite people from your personal network to contribute for 15 days. Once you reach the required number, usually between five and 35 people, you can submit the loan to the broader platform for investors to continue funding.  

Who Kiva is best for: Kiva is a solid option for businesses with poor or limited credit history but high visibility and grassroots support. The platform requires no credit check, but you do need a support network of friends and family willing to help.

Accion Opportunity Fund business loans: Best for underserved communities

Overview: Operating as a nonprofit in conjunction with American Express, Accion Opportunity Fund prides itself on creating social equality in the lending space. Underserved small business owners can access microloans from $5,000 to $250,000, along with educational resources and mentoring services to help move their companies forward. You’ll get a loan term of 12, 24, 36 or 60 months.

Why Accion Opportunity Fund is best for underserved communities: Accion offers easy approval startup business loans, especially compared to other lenders. It does not impose minimum time in business or annual revenue requirements for prospective borrowers. You may qualify for funding with a personal credit score as low as 550, but it’s not the only factor Accion focuses on. It looks beyond your credit score to determine if you’re a good fit for a microloan.

Who Accion Opportunity is good for: Accion is good for minority and low– or moderate-income business owners who struggle to get approved elsewhere. The website states more than 90 percent of the clients the fund serves fall into these categories or are women-owned businesses.

What is a startup business loan?

A startup business loan helps newer businesses with little or no credit history access financing. The lenders who provide these loans may have lower credit rating requirements if they have credit requirements at all. Many look at financial health indicators beyond credit scores, such as gross sales or recent bank statements. 

Lenders may offset their risk by asking for a personal guarantee, which makes the business owner responsible for the debt if the business defaults. Lenders may also ask for higher interest rates on loans for startups. SBA loan rates can’t exceed a limit set by the government, but other loans don’t have the same ceiling.

How do startup business loans work?

Startup loans are like any other business loan — just made available to startups. You’ll apply, receive a lending decision, get your funds and repay them over time, plus interest.

One key difference is the amount of money you can receive. Due to the added risk startup businesses pose to lenders, maximum amounts tend to be smaller than they are for well-established businesses. Some businesses may only see business loan amounts of $100,000 or less. But don’t expect to qualify for the maximum advertised amount. According to lending marketplace Lendio, startup loan amounts often range between $9,000 and $20,000.

Funding timelines are similar to other business loans. SBA loans can take up to 90 days to receive because there is an additional underwriting process, but other loans may be funded in just a couple of days. 

In addition to the usual documentation, such as pay stubs, revenue reports and proof of financial stability, lenders may have additional documentation requirements for startup loans. Many lenders ask startups to provide a comprehensive business plan to explain how they will use the money.

Requirements for small business loans

The exact requirements for a startup business loan will vary depending on the lender, but most will require:

  • A minimum personal credit score (good or excellent credit will increase your chances of approval)
  • A minimum amount of annual revenue 
  • A minimum amount of time in business, often six months to a year 
  • A personal guarantee, collateral or cosigner to mitigate the risk to the lender
  • If you’re operating in a risky industry with a high failure rate, lenders are less likely to approve your loan

Secured vs. unsecured startup business loans

Startup businesses can more easily qualify for a secured loan over an unsecured one. The only difference is that a secured startup business loan is guaranteed by business assets. Lenders view secured loans as less risky since they can recoup the loan by selling assets if the startup fails to make payments.

But some startups may qualify for an unsecured business loan, especially those with several months in business or strong revenue from quick success. Unsecured loans don’t require you to pledge assets for the loan, which is a plus if you don’t yet have many assets.

Types of startup loans

Most types of business loans are available to startups, so long as you can find a lender that will work with you. Types of startup business loans that may particularly interest you include:

SBA loans

SBA loans are backed by the U.S. Small Business Administration and are a popular choice thanks to their low interest rates and favorable repayment terms. For startups, SBA loans come in various subtypes based on your needs, like microloans or real estate purchases. Their benefit is that the SBA sets interest rates that lenders are allowed to charge at a maximum. 

While it can be tough to qualify for these loans, the SBA weekly lending report shows that it's possible for startups to qualify for funding. For example, for the 2023 fiscal year, over $9 billion in SBA 7(a) loan funds have gone to startups — businesses that are new, younger than two years or businesses that have yet to open their business.

Term loans

Term loans can be a good choice for startup businesses needing larger purchases. These loans allow for borrowing a lump sum that can be paid back in installments over longer terms.

Working capital loans are another type of term loan available to startups. These loans are short-term and cover day-to-day operating expenses such as wages, inventory purchases and rent. 

Startups can often obtain term loans from traditional and online lenders. When using an online lender, the application process takes place entirely online and often has a faster funding timeline than with traditional lenders.

Microloans

Microloans are small loans meant to help a business get off the ground. Interest rates tend to be lower, but microloans might not be a good option if you need more than $50,000. These loans are usually thought of as SBA microloans. But nonprofits, alternative and traditional lenders may offer specialty loans or programs with small loans, typically to help disadvantaged businesses.

Business lines of credit

Business lines of credit include set credit limits and draw periods. You can borrow, pay back the loan and then borrow again during the draw period.

One plus: You can take out what you need in credit limits while only paying interest on what you borrow. It can also help businesses that make frequent purchases. 

Equipment financing

This is financing for any technology or equipment you may need. Equipment financing could be anything from a computer system to manufacturing equipment. These loans offer competitive interest rates, and the loan amount is set to cover the equipment you need.

However, they tend to be secured by the property you buy, so you could lose that property if you default on the loan.     

Invoice factoring or financing

Invoice factoring is a short-term alternative financing option for businesses that send customer invoices. This typically involves selling outstanding invoices to the factoring company, which pays most of the value of the invoice upfront. The factoring company then takes over the responsibility of collecting the balance due on the invoice from your client. 

The benefit of this form of borrowing is that it allows you to receive money from invoices upfront, quicker than waiting the typical 30 to 90 day timeline.

Invoice financing works more like a traditional loan. In this case, the invoices serve as collateral for a traditional loan.

Crowdfunding

Crowdfunding campaigns don’t have to be repaid, so they are popular among many startups. This type of funding involves obtaining business capital by gathering small contributions from many different backers through an online crowdfunding platform. 

While these contributions are sometimes donated, contributors may also offer their investments in exchange for company equity or other rewards. This is different than a loan from Kiva, which must be repaid.

Pros and cons of startup loans

There are benefits and potential pitfalls to using startup loans to fund business operations. 

 

Pros

  • Fast cash: Many online lenders have quick online applications and fast turnaround times for receiving cash. 
  • Business growth: Startup loans can provide much needed capital to buy equipment or fund payroll to get a business off the ground without having to give up equity. 
  • Credit building: Startups begin with little to no business credit score. A successful startup loan may make it easier to get additional funding later by establishing business credit.
 

Cons

  • Can be costly: Some startup loans have higher than average interest rates. Additionally, making daily, monthly or weekly payments on a loan can strain a startup's already-stretched finances.
  • Personal risk: Startup loans almost always ask for a personal guarantee, so new business owners are putting personal assets on the line.
  • Strict eligibility requirements: Finding the right lender may be difficult for startup businesses, as lenders typically have strict eligibility requirements and favor established businesses that are less risky to lend to.

Alternatives to startup loans

If a startup loan is not the right fit, there are other ways to get a cash injection as a new business. 

Where to get a startup loan

You have a few options for getting startup loans.

  • Traditional banks: Banks are the most traditional lenders. They typically have more stringent requirements, including higher credit scores or time in business requirements. Building a relationship with a bank in advance — like opening a business checking account — may increase your odds of approval.
  • Online lenders: Online lenders are typically fin-tech companies. They are known for offering mobile or web applications for managing your loans. They also advertise easy applications and fast approvals, making online lenders a better option for small businesses and startups.
  • SBA lenders: Banks, credit unions and other lenders can offer SBA loans. If your lender isn't on the SBA's Preferred Lenders list, it can take longer for approval. SBA loans backed by the Small Business Administration, such as term loans or lines of credit.
  • Community Development Financial Institution: A community development financial institution (CDFI) is an organization that focuses on providing financial services to low-income and underserved communities. CDFIs provide lending for those with poor or limited credit histories.
  • Minority Depository Institutions: A Minority Depository Institution is a financial institution where designated minorities own 51 percent or more of the voting stock or a majority of the institution’s board of directors are minorities. In addition, the community the institution serves is also predominantly minority. This could include Black-owned, Hispanic-owned or Indigenous-owned banks, for example.

To decide which type of lender holds the most promise, consider:

  • Your company’s time in business
  • Your credit score
  • How fast your company needs money

How to manage a startup business loan

To put your best foot forward in building credit and your reputation with your lender, you’ll want to carefully manage your startup loan payments. Keep tabs on where the loan payments fit into your business budget, adjusting other expenses based on the actual revenue coming in. Since your revenue may be less predictable than established businesses, take the chance to pay down debt or save for future payments when you have strong revenue months. 

Also, make sure to keep in touch with your lender, especially if you might miss a payment. Many lenders are open to working with you on an ideal payment plan or delaying payments if your financial situation changes.

Lightbulb

Bankrate Insight

When looking for a startup loan, look out for the following red flags:

  • Early payoff charges: You don’t want to be penalized for having the ability to pay off a loan sooner than expected. 
  • Unresolved negative reviews: Investigate the lender’s reputation through the Consumer Financial Protection Bureau, Trustpilot and Better Business Bureau. If you see repeated gripes about some aspect of the lenders’ service, be cautious.
  • Unsecured website: If you don’t see a lock icon in your browser’s navigation bar next to the lender’s URL, they may not be able to store and transfer your sensitive information securely.

Who should get a startup loan?

Businesses that are ready to scale up can often benefit from startup business loans. These loans can allow a company to hire more employees, buy equipment or ramp up manufacturing.

A startup business that doesn’t have an established business model or any revenue is probably not ready to take on this kind of debt. A business owner who can’t cover losses, like a business loan default, with personal assets should also be wary.

Frequently asked questions about startup business loans

Methodology

Clock Wait
47
years in business
Credit Card Search
30+
lenders reviewed
Loan
22
loan features weighed
Rates
770+
data points collected
To choose the best startup business loans, we ensured all loans featured are broadly available across the United States and have a time in business requirement of six months or less. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, credit score requirements, minimum annual revenue and fees. 
 

Lenders are evaluated using a 22-point scale that measures quality in five key areas: Accessibility, affordability, transparency, customer service and flexibility. Based on the results, lenders are given a rating between 1 and 5:

  • 4.5 or higher: Outstanding
  • 4 to 4.5: Excellent
  • 3.5 to 4: Good
  • 3.5 and under: Average