Best Business Loans for Startups
Why Startups Struggle to Get Traditional Loans
Most bank loans and SBA 7(a) loans require at least two years of business operating history, documented annual revenue, and a demonstrated ability to make payments from business cash flow. A brand-new business cannot provide any of these things. Banks are not being unreasonable; they are following data. According to the Bureau of Labor Statistics, roughly 20% of new businesses fail in their first year and 50% fail within five years. Lenders who extend credit to very new businesses face significantly higher default rates.
This creates a real problem for entrepreneurs who have a viable business concept and a plan to execute it but need capital to get started. The strategies below represent the realistic options, ranked by cost (cheapest first) and accessibility.
SBA Microloans: Best Overall for New Businesses
SBA microloans provide up to $50,000 through nonprofit community lenders, with the average loan around $13,000. They are specifically designed for startups and very small businesses that cannot qualify for standard bank loans. Interest rates range from 8% to 13% with terms up to 6 years.
The key advantage for startups is that microloan providers evaluate your business plan, industry experience, and personal character alongside traditional credit metrics. A strong business plan with realistic financial projections and demonstrated industry knowledge can compensate for a short operating history. Many microlenders also provide mentoring, training, and business development support as part of the loan package.
To find SBA microloan providers in your area, search the SBA's microlender directory at sba.gov or contact your local Small Business Development Center (SBDC). Notable national microlenders include Accion Opportunity Fund (focuses on underserved communities), Grameen America (targets women-owned businesses), and LiftFund (serves the southern and southwestern United States). Our microloans guide lists providers by state and specialization.
Kiva: 0% Interest Crowdfunded Loans
Kiva offers 0% interest loans up to $15,000 with no fees and repayment terms up to 36 months. The catch is that Kiva uses a crowdfunding model. You create a loan profile explaining your business and funding needs, then recruit friends and family to contribute the initial 15% to 20% of your loan amount. Once you reach that threshold, Kiva's community of lenders funds the remaining amount, typically within 1 to 3 weeks.
Kiva does not check your credit score. They evaluate your social capital (the network willing to vouch for you), repayment ability, and business viability. For a startup owner who has a personal network willing to support them, Kiva provides the cheapest possible capital. The maximum $15,000 amount limits its utility for capital-intensive businesses, but for service-based businesses, ecommerce stores starting with a small product line, or businesses that need to supplement other funding sources, it works well.
Business Credit Cards: Accessible and Flexible
Business credit cards are the most accessible financing for startups because they are based primarily on the owner's personal credit score, not business revenue or history. With a personal score above 670, you can qualify for business credit cards with $5,000 to $50,000 in credit limits and 0% introductory APR periods lasting 9 to 15 months.
Cards with the best startup value include the Chase Ink Business Cash (0% intro APR for 12 months, 5% cash back on office supplies and internet), the American Express Blue Business Cash (0% intro APR for 12 months, 2% cash back on all purchases up to $50,000/year), and the Capital One Spark Classic (no annual fee, 1% cash back, designed for fair credit). The key is paying off the balance before the intro period ends, because standard rates jump to 18% to 27% APR.
Using business credit cards strategically builds your business credit profile. Cards from American Express, Capital One, and Chase report to commercial credit bureaus. Six months of on-time payments with responsible utilization (under 30% of your credit limit) starts establishing the credit history you need for larger loans later. See our business credit cards guide for the complete comparison.
Equipment Financing: For Asset-Heavy Startups
If your startup needs specific equipment (commercial kitchen equipment, manufacturing machinery, commercial vehicles, specialized computers, or camera gear), equipment financing uses the purchased equipment as collateral. Because the lender can repossess the equipment if you default, they take less risk, which translates to lower qualification requirements and interest rates.
Equipment financing is available to businesses with as little as one year in operation, and some lenders work with brand-new businesses if the equipment has strong resale value. Down payments range from 0% to 20% of the equipment cost. Interest rates run from 4% to 20% depending on your credit profile and the equipment type. Loan terms typically match the useful life of the equipment, 3 to 7 years for most business equipment.
Providers like Balboa Capital, National Funding, and Crest Capital specialize in startup equipment financing. The equipment itself serves as your collateral, so you do not need to pledge additional business or personal assets. Our equipment financing guide covers the full application process and provider comparison.
Online Lenders That Accept New Businesses
Several online lenders have lowered their time-in-business requirements below the traditional two-year threshold. These lenders use bank account data, payment processor records, and ecommerce platform analytics to assess your business viability, which lets them underwrite newer businesses.
Fundbox requires just 6 months in business and $100,000 in annual revenue (about $8,300/month). They provide lines of credit from $1,000 to $150,000 with 12 or 24-week terms. Rates start at 4.66% for the shorter term. The application connects to your business bank account and takes about 10 minutes. Decisions come within hours.
Bluevine requires 24 months in business for their line of credit product, but their invoice factoring service accepts businesses with just 6 months of B2B invoicing history. If your startup sells to other businesses on net terms, Bluevine can advance 85% to 90% of your outstanding invoices immediately.
OnDeck requires at least one year in business and $100,000 in annual revenue. Their term loans go up to $250,000 with rates starting at 29.9% APR. The application process is fast, typically same-day decisions with next-day funding.
The cost difference between online lenders and SBA loans is substantial. An SBA microloan at 10% APR costs $2,124 in interest over 2 years on a $20,000 loan. The same amount from an online lender at 35% APR costs $8,077 in interest over the same period. If you can qualify for SBA or bank financing, always choose that first. Online lenders fill the gap when speed or qualification issues make traditional options unavailable.
Revenue-Based Financing for Ecommerce Startups
If your startup is already generating online sales (even just a few months of revenue), revenue-based financing may be available. Providers like Clearco, Wayflyer, and Shopify Capital analyze your sales data and marketing metrics to make funding decisions based on your business trajectory rather than your operating history.
Clearco requires at least $10,000 per month in revenue and a connected ecommerce platform or payment processor. They provide funding from $10,000 to $20 million, repaid as a percentage of daily revenue. The total cost is a flat fee of 6% to 12% of the funded amount, with no interest and no personal guarantee. For an ecommerce startup that is generating revenue but has not been in business long enough for traditional lenders, Clearco represents one of the most accessible options.
Shopify Capital is invitation-only, but Shopify merchants with consistent sales history of even a few months sometimes receive offers. Amazon Lending similarly extends offers to sellers with short but consistent selling histories on the platform.
Bootstrapping as a Financing Strategy
For many startups, the most realistic financing strategy is starting with personal resources and reinvesting early revenue. This is not a consolation prize; it is a legitimate strategy that many successful businesses used in their early stages. Bootstrapping preserves full ownership, avoids debt obligations during the most uncertain period of your business, and forces financial discipline that serves you well as you grow.
The practical bootstrapping path for an ecommerce startup looks like this: use a free or low-cost platform (free Shopify trial, WooCommerce on budget hosting), start with a small product selection that requires minimal inventory investment, reinvest revenue into additional inventory and marketing, and apply for external financing once you have 6 to 12 months of proven sales data. At that point, you qualify for significantly better loan terms because you have revenue history, and you can make a data-driven borrowing decision based on actual business performance rather than projections.
Our bootstrapping vs funding guide and startup costs financing guide cover the full range of strategies for getting your business off the ground with limited capital.
What to Do If You Cannot Qualify Anywhere
If your personal credit is below 600, you have no revenue, and you do not have collateral for a secured loan, your immediate action items are building your qualification profile. Open a business bank account and start depositing revenue, even small amounts. Apply for a secured business credit card (Capital One Spark Secured requires a refundable deposit and has no minimum credit score) and use it for business expenses while paying the balance in full each month. Register for a free DUNS number and open Net 30 vendor accounts to start building business credit. Within 6 to 12 months of this activity, your profile will qualify for SBA microloans, Kiva, and entry-level online lenders.
Also explore non-loan funding sources. Small business grants from organizations like the Amber Grant ($10,000 monthly for women-owned businesses), NAACP Powershift Entrepreneur Grant, and state-specific economic development grants provide capital that does not need to be repaid. Our grants guide lists current opportunities by eligibility category.