Startup Business Loans: 17 Financing Options (2026)

The formula for taking your new business from startup to scale-up is simple: You need a good business idea, time, and money. But simple doesn’t necessarily mean easy. Securing a startup business loan for a new company is harder than borrowing for an established one, but it’s possible.

A standout trend is the rise in small-dollar loans. More than half of all Small Business Association (SBA) 7(a) loans approved in early 2025 were for amounts less than $150,000, and more than 80% were under $500,000. That suggests many founders are using practical financing to get started, cover working capital, or support early growth without taking on large debt. 

Ahead, learn about the top startup business loans and other financing options for funding your new business.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months, based on sales.

What is a startup business loan?

A startup business loan is any loan an entrepreneur uses to open a new business. Entrepreneurs can use the money to develop products or services, hire employees, lease space or equipment, establish a startup marketing strategy, and buy inventory.

Lenders don’t expect new companies to demonstrate business credit or high revenue, but they might look to owners’ personal credit and industry experience to determine loan eligibility and financing terms. 

Why should you get a loan for your business?

There are plenty of business costs you can cover with financing. Here are a handful of reasons to seek a loan: 

• Buying inventory. With a startup loan, you can keep bestsellers in stock, lock in bulk discounts, explore new product lines, and optimize your supply chain.
• Marketing. You can use a startup loan to invest in website development, search engine optimization (SEO), and paid search, collaborate with influencers, and launch a rewards or referral program.
• Product development. Develop prototypes, conduct market research, and launch new collections with a financial boost. 
• Talent acquisition. Onboard experts and contractors, compete for top candidates, promote your best employees, and foster your team’s professional growth.

What lenders look for in startup loan applications

• Credit requirements
• Time-in-business benchmarks
• Document requirements

Before you apply for a startup business loan, it’s helpful to understand how lenders evaluate new businesses. While requirements vary by lender and loan type, most look for a similar set of signals to assess risk, readiness, and your ability to repay. 

Here’s what lenders typically review when considering a startup loan application.

Credit requirements

Most startups don’t have a business credit score yet. Because of that, lenders usually review your personal credit score instead.

Your credit profile shows how you’ve handled debt in the past. Lenders use it to assess risk.

Requirements vary by lender and loan type. SBA-backed and traditional bank loans often expect stronger credit. 

Alternative lenders may be more flexible, but often charge higher interest rates in return.

Before you apply, check your credit report. Then compare lender requirements so you can focus on options you’re more likely to qualify for.

Time-in-business benchmarks

How long your business has existed plays a big role in which financing options are available.

• Zero to six months. Options are limited; Many founders rely on personal credit, startup loans, or alternative financing.
• Six to 12 months. Some online and alternative lenders may consider applications, especially with steady revenue.
• One to two years. More loan types open up, including select bank loans and SBA-backed options.
• Two or more years. Established operating history improves access to traditional bank loans and larger financing amounts.
  
  

These benchmarks vary by lender, but they’re a useful baseline for understanding what funding you can access at each stage.

Document requirements

When applying for a startup business loan, most lenders will ask for a mix of personal and business documents, such as:

• Personal and business identification
• Personal tax returns
• Business tax returns (if available)
• Bank statements
• Profit and loss statement
• Balance sheet
• Business plan or pitch deck
• Revenue projections or cash flow forecasts

Exact requirements vary by lender and loan type, but having these documents ready can speed up the application process and improve your chances of approval.

Startup business loans with no revenue

• Self-financing
• Financing from friends and family
• Crowdfunding
• Small business grants
• Microloans

Startup business loans usually don’t require much financial history or collateral. These business financing options work well for entrepreneurs starting with little or no business income: 

Self-financing

Many new small business owners take out personal loans or dip into their savings to finance their businesses. If you’re having trouble qualifying for a small business loan, alternatives may include an unsecured loan (borrowing without collateral), a second mortgage, or borrowing against retirement accounts.

These options can be helpful if you want to be the sole owner of your business rather than selling part of it to an investor. 

“I just risked my own capital because, one, I believed in the product, and two, I wanted people to know that I had skin in the game,” Marcus Milione, founder of athletic apparel brand Minted New York, says on an episode of the Shopify Masters podcast. 

However, going this route means you may also risk personal savings and assets since you—not your business—will be liable for the loan.

Financing from friends and family

When starting a business, you can get money from friends and family. In return, you can give them part ownership or shares in your company. Friends and family likely won’t ask to check your credit score and might offer you better loan terms than banks or other lenders.

However, these types of loans typically won’t help you build business credit. You should also think carefully about what might happen to your personal relationships if your business fails and you can’t pay them back.

Crowdfunding

You can use online crowdfunding websites to get money for your business. For example, Vicky Pasche used Kickstarter to raise money for gender-neutral clothing brand Dapper Boi. 

Pasche credits being able to connect with audiences and “solving a problem” to the campaign’s success; the founder aimed to raise $18,000 but ended up at $26,000. 

There are different types of crowdfunding, including:

• Donation crowdfunding. This type of fundraising, facilitated by sites like GoFundMe, doesn’t require you to offer financial rewards or incentives for backers. You also don’t need to repay donors. 
• Rewards-based crowdfunding. In this model popularized by Kickstarter, funders get rewards, like a thank you note, special merch, or discounts, in exchange for helping to fund your business. Apps like Crowdfunder combine the rewards-based model with preorder functionality, giving crowdfunders early access to new products.
• Equity crowdfunding. With this option, you give people a stake in your company in exchange for their money. Registered equity platforms include Fundable, StartEngine, and Crowdcube.

Crowdfunding is also a powerful way to test demand before fully launching a product.

You can see how people respond in real time. Strong backing signals market interest and can help validate your business idea early and determine product-market fit. Even smaller campaigns can provide useful feedback, early customers, and proof of traction.

Small business grants

You can get small business grants from companies, cities, states, and the federal government. You don’t have to pay this money back.

Getting a grant is competitive; you’ll need to apply and potentially align with a specific mission or goal. For example, a business might award grants to entrepreneurs who can show how their company is innovating in its field. 

The amount of money you can receive from grants varies widely. Sisters Niki and Ritika Shamdasani, cofounders of South Asian–inspired clothing company Sani, raised $110,000 through various grants.

“A portion of that $110,000 in non-dilutive funding was from an organization called NC IDEA, which helps fund North Carolina businesses,” says Niki on an episode of the Shopify Masters podcast. 

When searching for grants, focus on programs aligned with your business type, location, or founder profile. Start with federal opportunities on Grants.gov, then check state and city programs. 

Your local Small Business Development Center (SBDC) can also help identify grants and guide you through the application process.

Microloans

Microloans are small loans, often ranging from a few hundred dollars up to $50,000. They’re designed for early-stage businesses that may not qualify for traditional financing.

Many microloans are offered through nonprofit or mission-driven lenders. These organizations act as intermediaries, helping connect capital with founders who are just getting started or who may be underserved by banks. Along with funding, some also provide education, mentoring, or flexible repayment terms.

Because of that structure, microloans are often more accessible than other loan types. They can be a practical option for covering startup costs, purchasing equipment, or funding an initial product run.

Popular microloan providers include Accion Opportunity Fund, LiftFund, Kiva, and Grameen America.

Easy-approval startup loans

• Merchant cash advances
• Equipment loans
• Invoice financing
• Asset-based financing

Some startup loans have quick approval processes. These options usually rely less on lengthy credit reviews. Instead, they consider factors like collateral, cash flow, or future revenue. Lenders can make decisions quickly, often with minimal paperwork.

Because of the speed and flexibility, easy-approval loans can work well for startups that need funding right away. Just keep in mind that faster access often comes with higher costs or shorter repayment terms.

These funding sources are an option for startups that need financing right away:

Merchant cash advances

A merchant cash advance, (MCA), is a type of unsecured funding that gives you a lump sum of money upfront for expenses like salaries, rent, and inventory costs. In return, you agree to pay back the advance and fees by giving the provider a percentage of your daily credit or debit card sales.

Unlike traditional loans with fixed monthly payments, MCA payments adjust based on your sales volume. When business is slow, you pay less. When sales are strong, you pay more.

A few options to secure a merchant cash advance include Shopify Capital, Rapid Finance, and Reliant Funding. 

Equipment loans

Equipment financing is a loan that can help businesses acquire equipment or machinery. 

The lender typically provides funds to purchase equipment outright, which then serves as collateral for the loan. If the borrower defaults, the lender can seize the equipment to recoup its losses. This type of financing helps startups procure assets without tying up working capital. 

There are equipment finance companies like Taycor Financial, but you can also use banks for equipment loans. 

Invoice financing

Invoice financing, or accounts receivable financing, lets businesses access money quickly by leveraging their unpaid customer invoices. The lender advances a portion of the value of your outstanding invoices. When your customer pays their invoice, the lender releases the remaining balance minus their fees.

Invoice financing can help with cash flow issues. The repayment schedule usually depends on when your customers pay their invoices, though details can vary between lenders. 

Asset-based financing

You can use your business assets as collateral to get a loan. This type of loan is helpful when you don’t have strong financial records but own valuable fixed assets like property, unpaid customer invoices, or inventory.

The loan amount is usually a percentage of your assets’ worth. For example, a lender might offer 70% of your equipment’s value. 

SBA loans for startups

• SBA 7(a) loans
• SBA 504 loans
• SBA microloans

The US Small Business Administration (SBA) partially guarantees SBA loans from participating lenders. Loan types vary depending on your business and how you plan to use the funds. 

The application and approval process can be long, and you’ll need to meet SBA loan requirements, but the SBA guarantee can make it easier to secure a substantial loan on favorable terms, even if you don’t have great credit. 

The SBA also offers a lender matching tool you can use to find participating lenders and compare loan offers.

Here are a few different types of SBA loans to consider:

SBA 7(a) loans

The SBA 7(a) loan program is one of the most popular, offering up to $5 million in funding for working capital (for example, to purchase equipment) and other financial help to grow your business.

SBA 504 loans

The SBA 504 loan helps businesses purchase or expand fixed assets, such as buildings or land. The maximum loan amount is $5.5 million.

SBA microloans

SBA microloans offer a fixed sum at a specific interest rate over an agreed repayment period. You can typically use the funds on a broad range of expenses.

Business lines of credit

A business line of credit provides ongoing funding for your startup. Similar to a business credit card, you use money from your credit line—up to a maximum limit—whenever you need it. Unlike a small business loan, you don’t get all the money at once. 

This gives you more flexibility than a loan because you pay interest only on the amount you actually use, not on the total amount available to you. Some online lenders give lines of credit to startups that have been in business for as little as three months.

“If you’re bootstrapped, get a line of credit from your bank and work off of that working capital rather than seeking investment from the beginning,” Hillary Markenson, president of hair care brand Reverie, says on an episode of the Shopify Masters podcast. 

This strategy can help manage unexpected expenses while retaining your independence.

You can access a business line of credit through online lenders, banks and credit unions, and the SBA’s CAPLines program. 

Loans for established startups

• Local business financing
• Term loans
• Business credit card
• Peer-to-peer lending

These options can help more mature startups grow or cover day-to-day needs: 

Local business financing

Local credit unions, community banks, and nonprofit lenders often take a more relationship-based approach to financing. Instead of relying solely on automated criteria, they may spend more time understanding your background, experience, and business plans.

Interest rates, repayment terms, and requirements vary by lender. However, smaller institutions are often more willing than large banks or online lenders to consider your industry experience or local track record when reviewing an application. 

Some also participate in local or statewide loan guarantee programs, similar to SBA-backed loans, which can improve approval odds for small businesses.

For founders who value personal guidance and flexibility, local lenders can be a strong place to start.

Term loans

A term loan is a one-time lump sum of cash that you repay with interest over a set period of time or term. It works similarly to a mortgage and helps established businesses expand, buy additional inventory, or improve operations. 

There are short-term loans that take about a year, intermediate-term loans that take between one and three years, and long-term loans that take between three and 25 years. 

There are two types of lenders that provide term loans: banks and fintech companies and online lenders. Banks tend to have low interest rates but have more stringent requirements, like a high credit score and, sometimes, collateral. 

Fintech companies and online lenders are typically faster—some offer same-day or next-day approval—but they may have higher interest rates and fees and shorter repayment terms.

Business credit card

The main difference between personal and business credit cards is that business credit cards are for business use. Businesses can use pay-in-full cards—which require that you pay off your balance completely on or before the statement due date—to make purchases, track expenses, and cover cash flow gaps. Shopify Credit’s pay-in-full Visa also offers 3% cash back on eligible purchases. 

Peer-to-peer lending

Peer-to-peer (P2P) lending platforms connect you directly with individuals or companies who want to invest their money. It’s often faster than getting a bank loan because P2P platforms use automated systems to check your creditworthiness, financial statements, and business projections.

After you’re approved, multiple investors can each fund a portion of your loan until you get the full amount you need.

If you have good credit, P2P loans might offer competitive interest rates. However, if your business is very new or has an unstable financial history, you might face higher interest rates and lower maximum loan amounts. 

Popular P2P lending platforms include Prosper and Upstart. 

Interest rates and fees for startup business loans

• Origination fees
• Interest rates
• Prepayment penalties

Here are some of the typical rates and fees associated with business loans: 

Origination fees

Origination fees are one-time upfront fees lenders charge to process a loan application. These fees cover administrative tasks like evaluating eligibility, underwriting the loan agreement, and transferring funds.

Origination fees typically range from 0.5% to 8% of the loan total or principal and depend on factors like credit history. They are nonrefundable and typically deducted from the loan principal or paid at the time of issue.

Interest rates

Interest rates on small business loans vary widely. According to NerdWallet, the average annual percentage rate (APR) for a small business bank loan typically falls between 6.3% and 11.5%. Your actual rate depends on factors like your credit score, loan term, business history, and loan type.

As a general rule, loan types tend to fall into this rate hierarchy:

• Lowest rates. SBA loans and traditional bank financing.
• Mid-range rates. Business lines of credit, invoice financing, and equipment loans.
• Highest rates. Online term loans and merchant cash advances.
  

Here are NerdWallet’s reported APR ranges by loan type:

• Online term loans: 14% to 99%
• Business line of credit: 10% to 99%
• Merchant cash advance: 40% to 350%
• Invoice financing: 10% to 79%
• SBA variable loans: 9.75% to 13.25%
• SBA fixed loans: 11.75% to 14.75%
• Equipment financing: 4% to 45% APR
  

Lower-rate options often require stronger credit and longer approval timelines. Higher-rate loans usually trade cost for speed or flexibility. Understanding where each option falls can help you balance affordability with access when choosing financing.

Prepayment penalties

Paying off your loan early means paying less interest. Because lenders do not find this attractive, most add charges to prevent early payment and ensure their profit.

Some small business lenders will let you pay a small percentage of your loan back without penalties. For example, you may be able to pay up to 10% of the loan principal without penalties. Be sure you understand prepayment penalties and other terms before signing.

How to get a startup business loan

1. Calculate how much you need
2. Create a business plan
3. Evaluate your financial situation
4. Compare different types of loans
5. Apply for a startup loan

Whether you’re starting a new venture or trying to expand your existing business, you’ll generally follow the same steps to secure a startup business loan: 

1. Calculate how much you need

Start by using a business loan calculator to determine how much funding you need. First, identify what the loan will cover. For example, if you have a food business idea, you might seek funding for a commercial kitchen. 

Next, consider the costs beyond an initial investment. In the kitchen example, you would also factor in maintenance costs, commercial insurance, and utility costs. 

2. Create a business plan

Not every loan will require a business plan, a strategic document that outlines your company’s goals, strategies, and timelines for accomplishing them. But writing a business plan can show lenders you’ve considered the challenges and opportunities your business presents.

If you’ve already launched your business and made sales, show financial statements and future estimates and explain how you’ll use the extra money to run or grow your business. If you’re new, focus on market research, showing your business idea is profitable, and your plans to make money. Attach any proof that your idea has potential, such as user sign-ups or partnerships.

3. Evaluate your financial situation

Financial advisers can look at your business and personal finances to determine what hurdles you might face. They can also provide insight into the various financial institutions, their loan programs, and the necessary requirements. 

They should provide personalized advice on the best financing options for your business needs. Good financial advisers should even help you create a plan to repay any debt to support your long-term profitability. 

If speaking to a financial adviser is not within reach, take time to evaluate your personal credit, which may affect whether you qualify for financing, as well as the rates and terms you receive. Many apps and financial accounts let you check your credit score for free. 

If you spot inaccuracies or red flags on your credit report, take steps to correct them or mitigate their impact. Dispute errors, pay off debts, or negotiate settlements with creditors. If you’re not already in the practice of paying your bills on time, start now. You’ll also want to keep your credit card balances low, and avoid opening unnecessary credit accounts.

4. Compare different types of loans

Assess your funding options, paying special attention to repayment terms, external factors that might affect when and what you can pay (for example, seasonal lulls), and the advantages and disadvantages of each. 

For example, if you’re a small business without any revenue, tapping friends and family for financing can result in preferable terms, but it won’t help you build business credit.

Don’t be afraid to shop around and get quotes from various sources. You’re not locked into anything until you sign the paperwork. 

5. Apply for a startup loan

Once you’ve chosen a loan, it’s time to apply. Start by gathering key documents like financial statements, tax returns, and business licenses. Review each lender’s eligibility criteria, then apply to a few lenders or organizations to compare your options.

If you’re a new business, keep these additional factors in mind:

• Personal guarantees. Many lenders will ask you to promise they can take your personal property if your business can’t pay back the loan.
• Collateral. Offering something valuable that you own (like equipment, inventory, or property) can make your application stronger.
• Equity financing. Some business owners who don’t have income yet choose to sell a part of their company (to angel investors or venture capitalists) instead of taking a loan.
• Valuation. If you opt to raise funds by selling equity—whether to friends and family or angel investors, or through an equity crowdfunding platform—you’ll need to calculate your startup’s valuation.

Once you receive offers, compare them to determine which is best for your business. At this stage, you may be able to negotiate for better terms. 

If your application is denied, it’s not the end of the road. Start by asking the lender for feedback. In many cases, a rejection comes down to something specific, like limited credit history, not enough revenue yet, or missing paperwork.

That insight gives you a clear next step. You can strengthen your application, fill in gaps, or rethink the type of financing you’re pursuing. Sometimes the best move isn’t to reapply right away, but to look for a lender that’s a better fit for where your business is today, like a community bank or nonprofit lender.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.