Although the average small business loan amount is $663,000, startup loans are generally far less than this. That’s because, unlike more established small businesses, startup companies usually don’t have a strong credit history or a record of success to share with lenders.

If you have a new business, you might be wondering, “How much can I get with a startup loan?” Your loan amount will depend on the lender you work with and factors like your personal credit history, industry and the type of loan your business needs.

Key takeaways

  • Startups are unlikely to meet minimum revenue and time in business requirements
  • Alternative lenders, microloans and SBA loans are common options for startups
  • Startup loans may have higher interest rates and shorter repayment terms

Why startup loans tend to be smaller

Startups are new companies with ambitious growth plans and unique products or services that tap into a specific gap in the market. In general, startups are defined as businesses that have been around for a year or less.

A startup carries more risk for lenders because it often hasn’t delivered strong business results yet, hasn’t built much business credit and doesn’t have many business assets. Plus, if a startup fails, there’s a risk that the loan might not get repaid.

Because of this, lenders may hesitate to fund startups. If they do, the loan amount will likely be less than a more established business would receive. Further proof? The 2022 Small Business Credit Survey found that 80 percent of startup business funding comes from owners’ personal savings.

Lightbulb
Bankrate insight
Lenders prioritize business age and revenue. Since startups tend to have lower revenue — and do not meet minimum time in business requirements — it can be more difficult to qualify. The 2022 Small Business Credit Survey found that 34 percent of businesses younger than two years were declined when they applied for funding.

How much money does your startup qualify for?

According to Lendio, a lender marketplace, typical startup loans fall between $9,000 to $20,000. But lenders may approve you for more — even up to six figures.

For most small business loans, lenders set amounts based on factors like the company’s time in business, revenue and credit history.

Since startups aren’t usually strong in these areas, lenders may also consider additional factors when determining your loan amount, including:

  • Industry: Lenders may consider a startup’s industry when making a loan decision, offering more money to companies in profitable and stable industries. 
  • Personal credit: As a startup loan applicant, you’ll need a strong personal credit score and history to receive funding. If your credit isn’t great, you might still be able to find a lender who will work with you, but the cost of borrowing may be higher.
  • Industry experience: Having experience in your industry gives lenders more confidence that you’ll be able to repay your loan. In turn, they may offer you a larger amount of money.
  • Collateral: If you can offset the lender’s risk by securing your loan with valuable collateral or another asset, the lender may approve you for a larger loan.

Startup loan sizes by lender type

Not all lenders provide startup loans. You may not have much success with traditional lenders, such as banks and credit unions, though a few do work with new businesses.

New business owners who need startup funding have other options. However, startups don’t always qualify for the maximum amount offered by lenders.

SBA loans

Backed by the U.S. Small Business Administration, SBA loans for startups are designed to help business owners grow their companies and cover expenses like equipment and payroll. There are several types of these loans, with maximum amounts ranging from $50,000 to $5 million. And out of the 40,000 approved loans as of July 2023, nearly 40 percent has been a new business or a startup, according to the weekly report published by the SBA.

SBA startup loans are known for their low interest rates and generous repayment periods, which is great if you’re still trying to get your business off the ground. The downside is that the application process is fairly involved, and it can take weeks or months to get approved and receive funding.

Online lenders

Online and alternative lenders are popular options for startup owners in search of capital, supplying everything from working capital loans to lines of credit to invoice factoring.

These companies and their offerings can vary wildly. Some are known for having more flexible terms and better rates than traditional lenders (like banks), while others specialize in helping business owners with poor credit.

In fact, 71 percent of applicants were at least partially approved by online lenders in 2022 — and 90 were approved by online lenders for loans under $1 million, according to Findings from the 2022 Small Business Credit Survey.

However, borrowers have a lower satisfaction rating when working with online lenders. They cite common challenges like high interest rates and unfavorable repayment terms as problems with their borrowing experience. So while an online lender is more flexible, be prepared to pay more over a shorter timespan when you borrow a business loan.

Lightbulb
Bankrate insight
Online lenders have much more lenient criteria than traditional lenders.

 

  • Triton Capital provides startups with equipment loans between $10,000 and $500,000.
  • Fundbox has short terms ranging from three to six months, but its rates start at a low 4.66 percent.

Some lenders even offer alternatives to loans that rely on your revenue rather than your business’s age, including:

 

Microloans

Microloans are a type of small loan often funded through nonprofit community organizations. The SBA has a microloan program, though other microloan programs exist.  They can be used for business expenses like inventory and supplies and are often aimed at small businesses led by people from underserved groups, such as women and veterans.

As the name suggests, they aren’t as substantial as some other small business loans. Typically, the most you can borrow with a microloan is $50,000. According to the SBA, the average microloan is $13,000.

Lightbulb
Bankrate insight
In addition to microloans, there are grants for businesses that are in their startup phase. Many grants are targeted to underserved groups, including:

 

The bottom line

Applying for a startup loan is a common way to secure funding for a newly-established business, but traditional lenders — like banks and credit unions — are often wary of giving large sums to companies without much credit history or business success.

If you’re trying to borrow money for your new venture, look into SBA loans for startups and loans from online lenders. You might also consider other small business funding sources, like crowdfunding, using a business credit card or borrowing from friends and family.

Frequently asked questions

  • Because the amount your business is approved for will vary based on your personal finances, industry and other factors, there is no set average. However, as of July 2023, 50 percent of SBA loans have been under $150,000 in 2023 — and other startup business loans are also likely to be on the smaller side.
  • Unfortunately, it can be difficult for a startup to meet a bank’s requirements. Many banks require a minimum revenue and a minimum time in business to qualify. However, you may be able to find a local bank or credit union with more lenient requirements.
  • It depends on the type of loan and lender. Online lenders can often process applications within a day or two and fund loans within a matter of weeks. Banks and credit unions — and applications for SBA loans — may take weeks to months to process and fund.