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. Investigate these lender types for startup loans you can use to finance your burgeoning business.

Online lenders

Alternative lenders, such as fintechs, tend to have more relaxed lending restrictions than traditional banks and credit unions. As of February 2023, alternative lenders — including online lenders — approved 27.9 percent of small business loans. That’s almost twice the rate of big banks’ approvals.

Applying for one of these startup loans is fairly straightforward and involves submitting information about you and your business through the lender’s website. Some online lenders will decide on your loan within a day; if approved, you’ll receive the money in a day or two.


  • 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

Who it’s best for

Online lenders are best for startup owners who are comfortable with an online-only lending experience. Prepare to deal with potentially higher interest rates or shorter repayment windows in exchange for quick access to financing.

The U.S. Small Business Administration

The Small Business Administration (SBA) backs small business loans  — known as SBA loans  — to help companies cover large purchases and expand their operations. Keep in mind, though, the SBA doesn’t lend directly to businesses. Instead, the loans are distributed by traditional and online lenders whose eligibility requirements can vary dramatically..

Qualifying for an SBA loan as a startup may be tricky because the lenders that offer them often require you to have a minimum amount of 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.


  • 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

Who it’s best for

SBA loans are best for entrepreneurs who are comfortable with completing an extensive application and waiting up to a few months to get funding in exchange for a loan with lower interest rates and fewer fees.


If you don’t want to borrow money from a financial institution, you can try crowdfunding, which involves raising money from people interested in supporting your company. There are many online crowdfunding platforms (like Kickstarter and Indiegogo), but they usually operate in a similar way. You’ll start by registering with one of these websites and setting 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 a sticker or t-shirt).

Alternatively, you can run a debt-based crowdfunding campaign, where you promise to repay your backers within a predetermined time frame. 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

Who it’s best for

Startup loans are best for entrepreneurs who can’t access traditional financing, are willing to invest in marketing for their fundraising campaign and have a strong business plan or product that people are eager to support.

Personal loans

If you have strong personal credit, you could use it to your advantage and take out a personal loan to fund your business. Exact requirements vary by lender, but you’ll usually need at least a fair credit score (above 580) to get a personal loan with a competitive interest rate. Other financial factors, including your income and debt-to-income ratio, will also influence your lender’s decision.

One important caveat: Some lenders won’t let you use personal loans for starting 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


  • Interest rates can be high if you have bad credit
  • If you can’t repay the loan, your credit score could drop, your future credit applications could be denied and you could even face legal action
  • Most personal loans only go up to $100,000, which might not be enough for your business needs

Who it’s best for

Personal loans are an option for borrowers with a solid financial profile who don’t mind putting their personal credit on the line for business funding.

What’s the best kind of lender for a startup loan?

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 you should choose one that offers enough capital to cover your expenses. Also, if you need money immediately, look for a loan that can be funded in days rather than weeks or months.
  2. Find out if you meet a lender’s criteria. Requirements vary by loan type and lender, but it’s common for lenders to set eligibility criteria around the length of time you’ve been in business, credit history and revenue.
  3. Consider what trade-offs you’re willing to make. Startup funding 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. When you have a short list of lenders, you can compare their interest rates, repayment periods and fees before deciding on which one is right for your startup.

The bottom line

While securing funding for a startup 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 toward getting a startup business loan, which includes comparing lenders, gathering documents and applying.