Key takeaways

  • Online lenders are more likely to have accessible loan requirements for startups
  • SBA loans are an option with the SBA approving thousands of startup business loans per year
  • If you can’t get a business loan, try alternatives like a business credit card or personal loan

In 2022, over 5 million new business applications were filed, according to the U.S. Census Bureau’s business formation data. While exciting, launching a startup can also be quite challenging  — especially when it’s time to secure funding for your new venture.

One reason is that many traditional lenders, like banks and credit unions, might not want to work with your company if you don’t have a track record of business success. Fortunately, there are other options to consider  — including online lenders, personal loans and crowdfunding.

Let’s compare your startup business loan options to find the best way to finance your new business.

Startup business loans from online lenders

Alternative lenders like fintechs tend to have more relaxed lending requirements than traditional banks and credit unions. That can boost your chance of getting a startup loan approved since you’re more likely to match the lender’s credit and experience requirements.

For example, online lenders at least partially approve around 71 percent of business loan applications compared to large banks, which partially approved 68 percent, according to the 2023 Federal Reserve’s employer firms report.

Applying for a small business startup loan is fairly straightforward and involves submitting an application online. Some online lenders will decide on your loan within a day; if approved, you’ll receive the money in a day or two. But prepare to deal with potentially higher interest rates or shorter repayment windows in exchange for quick access to financing.


  • Easier to qualify for than some other business loans
  • Offers fast access to cash
  • Simple to apply for and manage these loans online


  • Interest rates may be higher
  • Shorter repayment periods, which can mean higher payments
  • Can’t discuss loan options in-person at a physical branch

Can I get a startup business loan with bad credit?

Yes, you can get a startup business loan with bad credit — but only if you choose a bad credit lender. Online lenders and financing companies will have the most lenient requirements for any loan, but especially certain loans like:

  • Business line of credit
  • Merchant cash advances
  • Invoice financing

For example, the fintech Fundible grants loans to business owners with personal credit scores of 450. It’s one of the most accessible lenders available in that respect. Taycor Financial also stands out for its willingness to offer equipment business loans for startups. It caters to business owners with a 550 credit score and funds up to 100 percent of equipment costs.

SBA startup business loans

The Small Business Administration (SBA) backs small business loans  — known as SBA loans  — to help companies cover large purchases and expand their operations. The loans are distributed by SBA-approved traditional and online lenders.

Qualifying for an SBA loan as a startup can be tricky because lenders often require you to have a minimum time in business. If you’re running a brand-new company, you might consider the SBA microloan program, which provides small businesses with up to $50,000 to get off the ground.

These loans can take several months to get funding approved. But if you’re patient, you can secure competitive interest rates and repayment terms that you might not otherwise qualify for. The SBA caps interest rates lenders can charge and allows for long terms, like six years for microloans.


  • Lower, capped interest rates
  • Fewer fees than other loan types
  • Microloans can help young businesses launch and expand


  • Many lenders require at least two years of business history
  • Can take up to 90 days to receive funding
  • Some SBA loans require a down payment
Bankrate insight

Startup businesses make up a significant part of SBA loans granted. According to the SBA 7(a) summary report for 2022, SBA lenders approved $4.36 billion dollars in funding to businesses under two years old. Another 4.22 billion was granted to startups opening their doors.

Crowdfunding for startups

If you don’t qualify for traditional financing or want to engage the community, you can try crowdfunding. Crowdfunding involves raising money from people interested in supporting your company. You’ll start by registering with a crowdfunding site like Kickstarter or Indiegogo. Then, you’ll set up a fundraising campaign, which should include a target dollar amount and a deadline for donations.

It’s also common to incentivize your supporters for their financial support — either with equity (a small stake in your company) or a specific reward like the product you sell or swag.

Alternatively, you can run a debt-based crowdfunding campaign, where you essentially get a startup business loan from individual investors. Microlender Kiva uses this approach.


  • With equity- or reward-based crowdfunding, money doesn’t have to be paid back 
  • Gives you the opportunity to create early customers and fans of your brand
  • No credit check or collateral required


  • Some crowdfunding websites charge high fees
  • Platforms may not release the money unless you hit your fundraising goal
  • Can take significant time and effort to raise funds this way

Personal loans to start a business

If you have strong personal credit, you could use it to your advantage and take out a personal loan to fund your business. Financial factors, including your income and debt-to-income ratio, will influence your lender’s decision.

You’ll usually need at least a fair personal credit score (above 580) to get a personal loan, a low requirement compared to many business loans. Personal loans may also offer a low loan amount like $100,000 or less and limited repayment terms between one and five years.

One important caveat: Some lenders won’t let you use personal loans for starting a business or any other commercial purpose. Make sure to check the fine print on a loan’s conditions to see if there are any rules about this. If you have questions or doubts, ask the lender directly.


  • No business history required
  • Many lenders make it quick and easy to apply online
  • Money can be deposited into your bank account within days


  • Small loan amounts
  • Interest rates can be high if you have bad credit
  • If you can’t repay the personal loan, you could face legal action and be held personally liable

What’s the best kind of startup business lender?

Choosing the right kind of startup loan will depend on a few factors, including how long you’ve been in business and how quickly you need money. Here’s how to decide on a lender that fits your needs.

  1. Decide how much money you need  — and when. There’s a limit to how much you can borrow with each lender, so choose one that offers enough capital to cover your expenses. Use a startup business loan calculator to gauge the monthly payments that will fit in your budget. Also, if you need money immediately, look for a loan that can be funded in days rather than weeks or months.
  2. It’s common for lenders to set eligibility criteria around the length of time you’ve been in business, credit history and revenue. Make sure you meet the lender’s loan requirements.
  3. Consider what trade-offs you’re willing to make. Business loans for startups can be tough to find, so you may need to get creative when evaluating loan options. For example, a personal loan might work if you’re comfortable with putting your credit on the line. Or, if you’re happy to trade equity and rewards for funding, crowdfunding could be a good option.
  4. Compare your options. Create a pro-con list of each startup lender’s interest rates, repayment periods and fees before deciding on one.

Can I get a startup business loan with no money?

While it’s possible to get a startup business loan with no money, it’s rare to find a loan that doesn’t require a down payment or upfront fees. You’re more likely to qualify without cash on hand if you can offer the lender business or personal assets to secure the loan.

For that reason, equipment loans are easier to qualify for since lenders can use the equipment purchased as collateral. You can also use accounts receivable — revenue you expect but haven’t received yet — to get alternative forms of funding like invoice financing.

Another viable option is to get a business credit card, which gives you available credit up to a preset limit. You won’t need any money initially. Plus, as you spend on business expenses, the best business credit cards let you earn rewards that you can redeem later.

The bottom line

While getting approved for a startup business loan may be trickier than for more established businesses, it’s not impossible. You might have some success by exploring non-traditional options like online lenders and crowdfunding or considering startup-friendly programs like SBA microloans.

Once you’ve decided on a loan type, you can take the next steps to get a startup business loan, which includes comparing lenders, gathering documents and applying.

Frequently asked questions about where to get a startup business loan

  • Startup businesses can get an unsecured business loan, meaning you won’t have to provide collateral for the loan. But since collateral helps you negotiate terms, you may not qualify for high loan amounts or favorable interest rates in exchange. Lenders will also look more closely at your business’s overall financial picture, making sure you can handle the repayments.
  • While it’s difficult to get a business loan without a business track record, you do have options to fund starting your business. Options include: SBA startup loans, business lines of credit, equipment financing, merchant cash advances, asset-based financing, personal loans, crowdfunding or peer-to-peer lending or venture capital.
  • To get a business loan for a startup, you still need to meet the lender’s basic loan requirements. The lender will consider your time in business and any revenue you bring in. But establishing a banking relationship first or having a strong personal credit history or assets could give you a leg up in getting approved.