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When you’re starting a business, having a great idea is just the first step. You may also need funding to cover startup costs, rent office space or buy supplies to create your product.

However, funding can be a challenge for many startups. You might lack the credit or financial history for a strong loan application, making it harder for lenders to assess their risk. About 23% of new businesses fail within the first year, according to the Bureau of Labor Statistics — and for many of them, it’s due to a lack of cash.

But it is possible to get funding, even when your business is new. Here’s a rundown of our picks for best startup business loans.

Methodology



To determine the best lenders of new business loans, our editors carefully considered what startup owners and entrepreneurs would want from a financing product. We came up with 22 loan features, then judged nearly two dozen lenders on each of them. Finally, our data researchers helped us evaluate the lenders objectively, pumping out individual out-of-5 star ratings. Below are the 10 lenders with the best overall ratings, plus our complete methodology.

  • Number of companies reviewed: 23
  • Number of data points analyzed: 506
  • Number of features we considered: 22
  • Number of primary data sources used: 27

U.S. Small Business Administration

Best startup business loan

U.S. Small Business Administration

Why we picked it

Given that Small Business Administration (SBA) microloans are reliable, accessible, cost-effective for many and lent by nonprofit lenders, they top our list of the best business loans for startups. (Since they’re so unique, we elected not to rate SBA loans as part of our methodology.)
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The SBA’s microloans are designed for business owners who are traditionally underserved in the credit marketplace, so they’re a worthwhile option if you identify as low-income, a veteran, a woman or a minority.
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To apply, you’ll need to work with approved intermediary lenders, which are community-based financial institutions. These lenders may provide free mentoring, business training and educational resources in addition to the funds.
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With an SBA microloan, you can borrow up to $50,000, repay it over as much as six years and use the funds as working capital or to purchase materials, inventory, supplies and more. (You can’t use SBA microloans to pay off existing debts or to buy real estate.)
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As a downside, the average microloan is relatively small — in fiscal year 2023, it was $15,644. (For six-figure SBA loan amounts, consider whether your startup is mature enough to qualify for the administration’s 7(a) loans.) Microloan lenders also typically require borrowers to post collateral as well as a personal guarantee.

Pros

  • Flexible uses
  • Accessible for underserved borrowers
  • Competitive interest rates, low fees
  • Monthly payments for relatively longer terms
  • Lenders (including some nonprofits) may offer business mentoring, other resources
  • No prepayment penalty

Cons

  • Eligibility limited to select borrowers
  • Small average loan size
  • Borrowers may need to pledge collateral, a personal guarantee
  • Can’t use the funds to pay off existing debt, buy real estate

Who should consider it

Traditionally underserved borrowers who need to borrow a small amount for their new venture

Reliant Funding

Best for merchant cash advances

Reliant Funding

Why we picked it

Reliant Funding is a direct lender that offers merchant cash advances — a loan that you borrow against your projected sales — of up to $2 million for businesses that have been open at least six months.
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The lender accepts credit scores as low as 525, but a higher score may help you qualify for better loan terms. Reliant provides a pre-qualification tool to help you check your rate, and it uses a soft credit pull that won’t affect your credit score. (If you formally apply, you must provide three to four months’ worth of business bank account statements and agree to a hard credit check.)
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If your application is approved, your business instantly receives access to up to $400,000 and you’ll receive any remaining funds in as little as 24 hours. There are no restrictions on how you can use the startup loan funds.
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Despite its rating, Reliant isn’t a perfect lender. The company confirmed in January 2024 that it has limited lending to merchant cash advances (it previously offered additional products). Additionally, you may not qualify if your business has operated for fewer than seven months or if you have an open bankruptcy on your credit file.

Pros

  • Low minimum credit score
  • Pre-qualification with no credit impact
  • Funding within 24 hours

Cons

  • Requires at least six months in business
  • Only offers merchant cash advances
  • Website lacks transparency

Who should consider it

Business owners with lower credit scores who are interested in merchant cash advances
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*Rate as of Jan. 12, 2024

Finance Factory

Best for brand-new startups

Finance Factory

Why we picked it

Finance Factory is a placement agency, so it works to secure funding for your business through various partner lenders. Available loan types include startup funding, personal loans, retirement funding, SBA loans, business express loans, merchant cash advances, equipment financing and franchise funding.
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Finance Factory’s startup funding is an unsecured loan of $5,000 to $350,000 with loan terms up to seven years. The APR is set at 0% for up to 21 months and then ranges up to 15% after the introductory period ends.
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While Finance Funding doesn’t require any time in business to qualify, at least one guarantor (similar to a cosigner) will need personal credit scores of at least 700. (If your business is more established, you might gain approval with credit scores in the 600s.) The lender also says on its website that it prefers borrowing businesses to have a minimum account balance between $1,000 and $5,000.
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If your application is approved, you’ll receive funding within seven to 10 days — that’s a longer timeline than some other lenders, which may put it out of the running if you need financing quickly. Additionally, Finance Factory may charge you a fee equal to 7.9% of the amount borrowed in some cases.

Pros

  • 0% introductory rate
  • No time in business required
  • Various loan options
  • Long repayment term options
  • Low minimum loan amount
  • Pre-qualification with no credit impact

Cons

  • High interest rate (after introductory period)
  • Longer funding timeline
  • Lower maximum loan amount
  • Potential upfront fee

Who should consider it

Brand-new businesses with at least one guarantor who has strong credit
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*Rate as of Jan. 12, 2024

OnDeck

Best for year-old startups

OnDeck

Why we picked it

The lender’s term loan ranges from $5,000 to $250,000 with repayment terms up to 24 months. To qualify, you’ll need at least one year in business, a minimum of $100,000 in annual revenue, a business checking account and personal credit scores of at least 625.
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You may receive funds the same business day your application is approved. And because OnDeck reports to business credit bureaus, the loan options can help you build business credit, making it easier to qualify for credit in the future.
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You may also apply for an unsecured revolving line of credit of $6,000 to $100,000 with repayment terms of 12, 18 or 24 months. Approved applicants get instant access to the line, which works like a credit card: You withdraw the funds you need and pay interest only on what you take out. (Depending on the state where your business is located and the details in your application, you may need to withdraw at least $1,000 at origination.)
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OnDeck’s term loans have a few downsides to consider. You’ll need to provide a personal guarantee and authorize a general lien against your business assets. The term loans also come with origination fees of 0% to 4% of the amount borrowed, though you may receive a fee discount if you renew the loan.

Pros

  • Pre-qualification with no credit impact
  • Same-day funding possible
  • Reports to business credit bureaus
  • Line of credit is available instantly

Cons

  • Stiff eligibility requirements for true startups
  • Potential origination fee
  • Shorter repayment terms
  • Low maximum loan limits
  • Potential minimum withdrawal for line of credit

Who should consider it

More established startups that want to build business credit

Fundbox

Best line of credit for startups

Fundbox

Why we picked it

Fundbox offers a short-term line of credit of up to $150,000 with no application fees, origination fees or prepayment penalties. If approved, you’ll receive funds as soon as the next business day and make weekly repayments over a 12- or 24-week term.
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To qualify, you’ll need minimum personal credit scores of 600, at least $100,000 in annual revenue, a business checking account and at least six months in business.
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The main downside to Fundbox’s line of credit is that it charges fees that are amortized on a short repayment term, which typically translate into a high APR. This makes the lender an expensive option for most borrowers.

Pros

  • Accepts fair credit scores
  • No application fees, origination fees or prepayment penalties
  • Next-day funding

Cons

  • Strict eligibility requirements for new businesses
  • Weekly payments on very short repayment terms
  • High APRs
  • High annual revenue requirement

Who should consider it

Business owners with fair credit who don’t need to borrow a large amount

QuickBridge Funding

Best for multiple loan options

QuickBridge Funding

Why we picked it

QuickBridge offers multiple financing options including bridge loans, daily payment financing, unsecured loans, receivables financing, short-term loans and working capital loans. Loan amounts go up to $500,000 with repayment terms ranging from about six to 18 months, depending on the loan type.
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To qualify, you’ll need a business bank account, at least six months in business and $250,000 or more in annual sales. If you’re approved, QuickBridge sends you the funds within one business day and you can use the money for any (legal) purpose.
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QuickBridge’s main drawback is that its website lacks transparency. It’s difficult to find basic information about the lender’s loan fees and interest rate ranges without going through the preapproval process, which requires a hard credit inquiry.

Pros

  • High maximum loan amount
  • Multiple financing options
  • Next-day funding

Cons

  • Requires six months in business
  • High annual revenue requirement
  • Website lacks transparency

Who should consider it

Borrowers who want to compare several loan options and potentially borrow a large amount

Credibly

Credibly

Why we picked it

If you have poor credit or a thin credit history — but the makings of a strong business — Credibly’s worth considering. The lender accepts credit scores as low as 500, but you must be in business for at least six months and earn $180,000 or more in annual revenue to qualify.
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Credibly is also one of the more versatile lenders on our list. It offers multiple loan types, including working capital loans, merchant cash advances, long-term loans, business lines of credit, equipment financing, SBA loans and invoice factoring.
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Loan amounts range from $5,000 to $400,000. You can pre-qualify by entering details about your business on the lender’s website without impacting your credit. If you move forward with the full application, you could have the loan funds in your bank account the same business day.
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However, Credibly financing options may include monthly administrative fees, underwriting fees and origination fees that are taken from the loan proceeds.

Pros

  • Low minimum credit score requirement
  • Many loan types to choose from
  • Pre-qualification with no credit impact
  • Same-day funding possible

Cons

  • Charges multiple lender fees
  • Requires six months in business
  • High annual revenue requirement

Who should consider it

Established business owners who don’t have good credit and want fast funding
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*Rate as of Jan. 12, 2024

Biz2Credit

Best for revenue-based financing

Biz2Credit

Why we picked it

Biz2Credit is a funding platform that connects business owners with lenders. Its main offering for startups is revenue-based financing, which allows you to borrow anywhere from $25,000 to $2 million. (Revenue-based financing is similar to a merchant cash advance in that you’re borrowing against your business income.) Eligibility criteria for this product are strict but straightforward — you’ll need credit scores of at least 575 and annual revenue of $250,000 or more, plus at least six months in business.
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Because revenue-based financing isn’t structured like a typical loan, there’s no fixed term or interest rate. You repay the loan on a daily, weekly or bimonthly schedule. But the lender could be clearer on its APRs for this loan type.
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One of the lender’s other drawbacks is a lack of other options for new businesses. Besides revenue-based financing, you’ll need at least 18 months in business to qualify for the lender’s term and commercial real estate loans. Another downside of working with Biz2Credit is that you’ll pay a fee when your financing transaction closes, along with a potential fee to the direct lender, though the platform doesn’t specify the fee amounts.

Pros

  • Several repayment options
  • Large maximum loan amounts
  • Flexible repayment options
  • Relatively low credit score requirement

Cons

  • Demanding eligibility requirements for new businesses
  • APRs, fees could be more prominently shared
  • High minimum loan amount
  • Potential closing fees

Who should consider it

Borrowers interested in revenue-based financing and large loan amounts

Triton Capital

Triton Capital

Why we picked it

Triton Capital offers equipment loans of up to $250,000 with repayment terms ranging from 12 to 60 months. You can choose to pay monthly, quarterly, annually, semi-annually or seasonally, which offers flexibility for businesses with fluctuating revenue.
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Another offering is Triton’s working capital loan. You can borrow up to $250,000 with terms of six to 36 months and daily, weekly or monthly repayment schedules. The lender can provide lending decisions within a few hours and fund the loan within two business days. You can use the money for any business purpose.
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Triton also offers SBA loans, but you’ll need at least four years in business to qualify. Another downside to the business is its website, which lacks information about eligibility criteria, maximum APRs and a fee schedule.

Pros

  • Long repayment terms
  • Flexible repayment options
  • Multiple loan types
  • Low starting APR

Cons

  • Longer funding timeline than some competitors
  • Doesn’t disclose maximum APR, eligibility requirements

Who should consider it

Creditworthy borrowers seeking a low-rate equipment loan and flexible repayment options
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*Rate as of Jan. 12, 2024

Uplyft Capital

Best for renewable financing

Uplyft Capital

Why we picked it

Uplyft Capital provides direct merchant cash advances, plus a marketplace that connects you with lenders that offer lines of credit, term loans, SBA loans and more.
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Cash advances range from $5,000 to $500,000 with terms of two to 12 months, and all advances are renewable. The bar for qualifying is high but set clearly — Uplyft requires at least six months in business, $12,000 per month in revenue and credit scores of at least 500.

Pros

  • Low credit score requirement
  • Multiple financing options
  • High maximum loan amounts
  • Several repayment options

Cons

  • Stringent eligibility requirements for new businesses
  • Repayment terms limited to 12 months

Who should consider it

Business owners without the best credit who may need to renew a cash advance
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*Rate as of Jan. 12, 2024

American Express Business Blueprint

Best for low-revenue startups

American Express Business Blueprint

Why we picked it

American Express offers a business line of credit that ranges from $2,000 to $250,000. Its biggest draw is its low revenue requirement: You’ll need a minimum of just $36,000 a year (or $3,000 per month), putting this startup loan within reach for more business owners compared to others on this list. The line of credit also comes with no origination fees, annual fees, application fees or prepayment penalties.
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However, American Express requires a relatively high FICO credit score of 660, and you’ll pay a monthly fee of 3% to 27% for each month you have an outstanding balance. The fee percentage is based on your repayment term, which ranges from six to 24 months and applies only to funds you draw from the line.
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American Express also requires at least 12 months in business, which is twice as long as some others on this list require. And while you won’t need to pledge collateral, American Express will ask for a personal guarantee (a common business loan requirement).

Pros

  • Low annual revenue requirement
  • High maximum credit line
  • No origination, annual fees or prepayment penalties

Cons

  • Requires at least 12 months in business
  • Requires a personal guarantee
  • Potentially high monthly fee

Who should consider it

Creditworthy business owners with low revenue who can pay off their credit line every month to avoid possibly high interest charges
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*Rate as of Jan. 12, 2024

Our picks at a glance

Why get a startup business loan?

  • Start a business. Your startup may need funding to cover upfront costs or provide working capital for day-to-day expenses. On the flipside, overborrowing at the outset could overburden a fledgling business.
  • Expand operations. At some point, you may decide to grow your business by hiring more people, acquiring a second business or taking other steps to scale up and generate more revenue. Having a business plan can help you avoid overreaching — and strengthen your business loan application.
  • Buy or upgrade equipment. Some business loans are designed specifically to help you finance or upgrade your equipment, such as computers, furniture or machines that help you create your products. Others may help you secure commercial real estate.
  • Refinance business debt. If the lender allows it, you may be able to use a business loan to consolidate or refinance high-interest debt. Getting better loan terms may help cut your costs.

What are startup business loans?

A startup business loan typically refers to any type of financing that helps a newer business — one that’s been operating for months to perhaps two years — get off the ground or expand.

These loans may have extra requirements because startups present more risk for lenders. To compensate for that risk, lenders may set higher interest rates on new business loans and ask the business owner to pledge collateral or provide a personal guarantee, which means the lender can seize the owner’s personal assets in the event of a default.

Qualification requirements may include strong personal credit in lieu of an established business credit score. Other factors, such as annual revenue or recent bank statements, can help the lender assess the business’s financial health.

Types of business startup funding

  • SBA loan: These loans are backed by the U.S. Small Business Administration and come with affordable features, such as competitive interest rates and small down payments. Some SBA loans require your business to have been operational for several years, but startups may qualify for the SBA microloan, which typically has more flexible eligibility requirements.
  • Term loan: You’ll receive the funds upfront as a lump sum and repay it through installments over a set period (or term) with a fixed interest rate. Term loans may be a good option for funding large purchases, but keep in mind that new businesses may not qualify for high loan amounts.
  • Business line of credit: A credit line gives you access to a prespecified credit limit and you can draw cash from it as needed. This type of financing may be a good fit for new businesses that can’t qualify for a large term loan; the credit line replenishes as you pay down the balance, making it possible to borrow more money without applying for a new loan.
  • Invoice factoring: This type of financing allows you to sell the value of your invoices to a third party for cash. They’re generally easier to qualify for than conventional financing, making them a good option for newer businesses that routinely invoice for services provided.
  • Merchant cash advance: Advances are somewhat unique because the amount borrowed is based on your projected future sales, not past revenue. It could be a good fit for a newer business without a long track record.
  • Personal loans for business: Some lenders allow personal loans to be used to cover business expenses, though this is rare. Business owners who may not qualify for other forms of financing may find good options here.
  • Business credit cards: Like with a line of credit, you can borrow from the line up to a certain limit, then pay it down and borrow again. Some business cards come with benefits and rewards programs, too.

Pros and cons of startup business loans

The main benefit of a startup loan is that it can help get your business off the ground or fuel your expansion plans. You have several options, too, based on what your business needs. For instance, you may choose from a menu of term loans, lines of credit, revenue-based financing, invoice factoring and more. Lenders may also set flexible qualification criteria because of your status as a newer business.

However, you may need to pay higher interest rates, provide a personal guarantee or pledge collateral — all to reduce the lender’s risk. Plus, some lenders won’t provide funding unless you’ve been in business for at least six to 12 months or longer. So you may need to get pre-qualified with a few lenders and go through the application process before finding a loan that meets your needs.

Qualifying for an ‘entrepreneur loan’

When you apply for a startup business loan, sometimes called an entrepreneur loan, lenders typically look at the following factors to determine whether you qualify and the loan terms you’ll receive.

  1. Good credit: Some lenders accept credit scores in the 500s, but having stronger credit increases your approval chances and may help you receive a low interest rate. “Good credit” is generally a FICO credit score of around 660 and above.
  2. Minimum revenue: Lenders want to know how much your business typically brings in each month or year so they can assess whether you have enough cash flow to make loan payments. The revenue requirement varies by lender, and they’ll confirm it by combing through your financial and bank statements.
  3. Minimum time in business: Lenders commonly require businesses to have been active for at least two years to qualify for a business loan. But for startups, they may lower the requirement to six to 12 months. Better yet, some lenders don’t have a minimum at all, which can help if your business is brand new.
  4. Collateral: Your business equipment, cash savings and other assets may serve as collateral for a secured startup loan. But the lender can seize this collateral if you default on the loan payments.
  5. Personal guarantee: A personal guarantee is required on many business loans. It states that you’ll be personally responsible for the business’s debts if the loan goes into default. If your business doesn’t repay the loan as agreed, you’ll have to pay the lender with personal funds, and your home, savings and other personal assets can be at risk

Alternatives to startup business loans

Bootstrapping

What it is: Self-funding your business with your current resources, without formally borrowing
Best for: Owners who have money saved for the business, plus a separate emergency savings account

Crowdfunding

What it is: Raising money, usually online (think GoFundMe.com), from strangers
Best for: Startups that are less likely to qualify for traditional funding

Business grants

What it is: Funding that may have “strings attached” but generally doesn’t have to be repaid
Best for: Businesses that have the time to research grant options (including via Grants.gov and SAM.gov), submit applications and fulfill extra requirements once they secure the funds

Business credit card

What it is: Like the other plastic in your wallet, but specific to your business
Best for: Newer businesses that can’t qualify for other forms of business financing

Personal loan

What it is: An installment loan from banks, credit unions and online lenders
Best for: Creditworthy entrepreneurs that find personal loans for business uses

Peer-to-peer lending

What it is: Borrowing from individual investors via “P2P” online marketplaces
Best for: Businesses that don’t qualify for affordable loans and lines of credit elsewhere

6 steps to apply for startup funding

  1. Determine the type of loan you need. Some options include term loans, lines of credit, asset-based financing, SBA loans and no-doc loans. Each comes with its own pros and cons. And they all offer different loan amounts, payment structures and qualification requirements.
  2. Check your credit. It may take about six months to a year to build business credit, as long as the business makes payments to vendors and creditors, maintains a checking account and demonstrates responsible credit usage. If you haven’t had time to build a business credit score, focus on improving your personal credit to help you qualify for the business loan and receive good terms.
  3. Gather and prepare required documents. Contact the lender and ask which documents you’ll need to get a business loan. These may include tax returns, financial records and outstanding invoices, but brand-new businesses may be able to provide financial projections instead.
  4. Create a business plan. A strong business plan shows lenders that your business is financially stable and you understand your market. It can also signal that you’ve thought about how you’ll use the funds responsibly.
  5. Research and compare lenders. Check loan amounts, annual percentage rates (APRs), fees, qualification requirements and lender reputation.
  6. Submit your application. Once you’ve chosen a lender and a loan option, fill out and submit your application along with any required documents. You may receive a decision the same day, though some lenders have a longer timeline.

Methodology

If you’re an entrepreneur starting a new operation, you might not have access to the best and most cost-effective financing options right away. With a shorter track record, you might be more concerned about gaining loan approval for the amount you need. With that in mind, our editors heavily weighted eligibility factors as we aimed to determine the best lenders for new business loans. Here are all four categories of criteria we considered.

Rates (25%)

Cost still counts. In this category, we judged the low and high ends of each lender’s APRs; whether they use interest rates or factor rates; and whether they prominently display the true cost of their loans.

Loan details (25%)

Here, we rewarded lenders that offer products that fit startup borrowers. Those that scored highest are light on fees, offer low minimum and high maximum loan amounts and fund the proceeds faster than the industry average.

Eligibility (30%)

Even when a reputable lender offers a startup-styled loan, qualifying for it can be difficult. Lenders received higher ratings for accessible underwriting criteria — namely, relatively low requirements for minimum personal credit scores, gross monthly revenue and years in business.

Repayment experience (20%)

Startup founders and operators have a lot on their plate, so the less time they have to spend dealing with their debtors, the better. In this final category, we evaluated lenders on their repayment term options and flexibility as well as the availability and effectiveness of their customer support.

What didn’t make the cut

The best startup business loans overlap with the best small business loans — but they’re far from the same. Some lenders that made one list might not make the other.

Of the 23 under consideration for the best entrepreneur loans, here are popular options that didn’t quite pass muster:

  • Bluevine and Headway Capital require relatively high gross monthly revenues.
  • National Funding was held back by its inflexible repayment options.
  • Seek Business Capital and Wells Fargo have high credit score requirements.
  • Taycor Financial could improve its customer service track record.
  • Upwise Capital has a minimum time in business threshold that doesn’t suit startups.

Frequently asked questions (FAQs)

Many lenders require a time in business of six to 12 months to qualify for financing. Each lender has its own set of eligibility requirements, but generally, startup loans are designed for new businesses with low or inconsistent revenue and a small number of employees.

Yes, some startup loans are available without requiring collateral. For instance, SBA 7(a) small loans under $50,000 don’t require you to pledge assets.

Approval timelines can vary by lender, but you may receive a decision within a few hours of submitting an application on a business day.

Business owners commonly use startup loans to pay for getting the business off the ground. These startup costs may include marketing, advertising and purchasing inventory, equipment and office space. Depending on limits set by the lender, you might also use the funds for other expenses such as debt refinancing.