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 lot of credit history or a track record of business 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 a few things, including your personal credit history, lender type, industry and several other factors. Here’s what you should know when applying for a startup loan.

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. For this article, we’ll define startups as businesses that have been around for a year or less.

For lenders, these types of borrowers pose risks because they often haven’t yet delivered strong business results, haven’t built much business credit and don’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 at all. If they do, then the loan amount will likely be less than what a more established business would receive.

How much money does your startup qualify for?

According to Lendio, a lender marketplace, typical startup loans fall between $9,000 and $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. But startups aren’t usually strong in these areas. As a result, startup lenders may also consider the following factors when determining loan amounts:

  • 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 will be higher.
  • Industry experience: Having experience in your industry gives lenders more confidence that you’ll be able to repay your loan — and 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, 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.

But new business owners who need startup funding have other options. Note that startups don’t always qualify for the maximum amounts 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.

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 your money.

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.

One example of an online lender is Triton Capital, which provides startups with equipment loans that range between $10,000 and $500,000.

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 too.  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 would suggest, however, 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.

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 (including microloans), as well as 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.