Best startup business loans in November 2024

Written by
Lara Vukelich
Edited by
Rob Watts
Reviewed by
Kenneth Chavis IV
Nov 13, 2024
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Securing a startup business loan can help small businesses with little or no credit history access financing. But finding the right loan can be a challenge since there are so many lenders, rates and loan types. 

What’s more, few banks work with startups. Instead nontraditional lenders and even crowdfunding platforms typically offer small business startup loans. Here you'll find our top picks for the best startup business loans along with advice to help you find the most affordable loan for your business. 

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Bankrate 2024 Awards Winner: Best small business loan for newer businesses

4.2

Bankrate Review
Loan amount
$500- $5M
Term: 4 - 60 months
Interest rate
Factor rate from 1.10 - 1.36
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

Best for fast funding

4.5

Bankrate Review
Loan amount
$1k- $150K
Term: 3 - 6 months
Interest rate
Starting at 4.66%
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

Best for community support

4.3

Bankrate Review
Loan amount
$1k–$15k
Term: 1 - 36 months
Interest rate
N/A
Fastest funding
5 business days

BEST FOR UNDERSERVED COMMUNITIES

4.2

Bankrate Review
Loan amount
$5k- $250K
Term: 12 - 60 months
Interest rate
8.49- 24.99%
Fastest funding
Not disclosed

Best for loan variety

4.1

Bankrate Review
Loan amount
$5k- $5M
Term: 3 - 15 months
Interest rate
1.1 - 1.5 factor rate
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

Best for fair credit

4.6

Bankrate Review
Loan amount
$5k- $250K
Term: 3 - 24 months
Interest rate
Starting at 29.90% APR
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

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Compare the best startup business loans in November 2024

LENDER BEST FOR MIN. FICO CREDIT SCORE LOAN AMOUNT MIN. TIME IN BUSINESS
Large business loans 550 $500 to $5 million 3 months
Fast funding 600 Up to $150,000 6 months
Loan variety 550 $5,000 to $5 million 6 months
Fair credit 625 $5,000 to $250,000 12 months
Community support N/A Up $15,000 N/A
Underserved communities Not disclosed $5,000 to $250,000 12 months

A closer look at our top startup business loans

Taycor Financial: Best for large business loans

Overview: A nationwide lender, Taycor Financial offers many business loan options, including equipment financing, term loans, lines of credit and working capital. The online lender also offers equipment leasing if you can’t buy equipment outright. Its online application is simple with no tax returns required to apply for loans under $400,000.

Fundbox: Best for fast funding

Overview: Fundbox is a fintech lender that focuses solely on business lines of credit up to $150,000. You can draw from your credit line at any time through your online account or its handy app. But keep its fees in mind — it charges an amortized weekly fee of 4.66 percent to 8.99 percent, depending on whether it’s a 12- or 24-week term. You will also need a business bank account to apply.

Lendzi: Best for loan variety

Overview:  Lendzi helps small businesses find traditional and alternative financing by matching you with lenders from its pool of 60 lending partners. You can apply with Lendzi through a single application and see which lenders provide you with the best loan terms. Plus, you won’t take a hit to your credit score, making the initial process a no-brainer.

OnDeck: Best for fair credit

Overview: OnDeck is a direct online lender specializing in business lines of credit and term loans. Small business owners can access between $5,000 and $250,000 for term loans with repayment terms of up to 24 months. If you apply for term loans early in the day, you may be eligible to receive same-day funding. OnDeck’s lines of credit offer $6,000 to $100,000 with repayment terms of 12, 18 or 24 months. Once you open a line of credit, you can draw from it and receive funding instantly.

Kiva microloan: Best for community support

Overview: Kiva is an international nonprofit on a mission to help entrepreneurs who normally don’t have access to loan opportunities. To serve those entrepreneurs, Kiva offers zero-interest loans for up to $15,000 and a unique crowdfunding model. It also requires no credit check, helping people who either have no credit or impaired credit get a business loan. Kiva states that 5.1 million people globally have raised over $2 billion on the platform.

Accion Opportunity Fund business loans: Best for underserved communities

Overview: Operating as a nonprofit in conjunction with American Express, Accion Opportunity Fund prides itself on creating social equality in the lending space. Underserved small business owners can access working capital and equipment loans from $5,000 to $250,000, along with educational resources and mentoring services to move their companies forward. You’ll get a loan term between 12 and 60 months.

What is a startup business loan?

A startup business loan helps newer businesses with little or no credit history access financing. The lenders who provide these loans may have lower credit rating requirements if they have credit requirements at all. Many look at financial health indicators beyond credit scores, such as gross sales or recent bank statements. 

Lenders may offset their risk by asking for a personal guarantee, which makes the business owner responsible for the debt if the business defaults. Lenders may also ask for higher interest rates on small business startup loans. If you go with an SBA startup loan, you typically get favorable rates and terms compared to traditional loans. SBA loan rates can’t exceed a limit set by the government, while other loans don’t have the same ceiling.

How do startup business loans work?

Small business startup loans are like any other business loan — just made available to startups. You’ll apply, receive a lending decision, get your funds and repay them over time, plus interest.

One key difference is the amount of money you can receive. Due to the added risk startup businesses pose to lenders, maximum amounts tend to be smaller than they are for well-established businesses. Some businesses may only see business loan amounts of $100,000 or less. But don’t expect to qualify for the maximum advertised amount. According to lending marketplace Lendio, startup loan amounts often range between $9,000 and $20,000.

Funding timelines are similar to other business loans, usually a few days to a few weeks depending on the lender. SBA loans can take up to 90 days to receive because there is an additional underwriting process. 

In addition to the usual documentation, such as pay stubs, revenue reports and proof of financial stability, lenders may have additional documentation requirements for startup loans. Many lenders ask startups to provide a comprehensive business plan to explain how they will use the money and to assess how much revenue the business expects to bring in.

Requirements for small business loans

The exact requirements for a startup business loan will vary depending on the lender, but most will require:

  • A minimum personal credit score (good or excellent credit will increase your chances of approval): 600 to 700
  • A minimum amount of annual revenue: $50,000 to $100,000
  • A minimum amount of time in business: often six months to a year 
  • A personal guarantee, collateral or cosigner to mitigate the risk to the lender
  • If you’re operating in a risky industry with a high failure rate, lenders are less likely to approve your loan

Secured vs. unsecured startup business loans

Startup businesses can more easily qualify for a secured loan over an unsecured one. The only difference is that a secured startup business loan is guaranteed by business assets. Lenders view secured loans as less risky since they can recoup the loan by selling assets if the startup fails to make payments.

But some startups may qualify for an unsecured business loan, especially those with several months in business or strong revenue from quick success. Unsecured loans don’t require you to pledge assets for the loan, which is a plus if you don’t yet have many assets.

Types of startup loans

Most types of business loans are available to startups, so long as you can find a lender that will work with you. Types of startup business loans that may particularly interest you include:

SBA loans

SBA loans are backed by the U.S. Small Business Administration and are a popular choice thanks to their low interest rates and favorable repayment terms. For startups, SBA loans come in various subtypes based on your needs, like microloans or real estate purchases. Their benefit is that the SBA sets interest rates that lenders are allowed to charge at a maximum. 

While it can be tough to qualify for these loans, the SBA weekly lending report shows that it's possible for startups to qualify for funding. For example, for the 2024 fiscal year, $9.9 billion in SBA 7(a) loan funds have gone to startups — businesses that are new, younger than two years or businesses that have yet to open their business.

Term loans

Term loans can be a good choice for startup businesses needing larger purchases. These loans allow for borrowing a lump sum that can be paid back in installments over longer terms.

Working capital loans are another type of business startup loan. These loans are short-term and cover day-to-day operating expenses such as wages, inventory purchases and rent. 

Startups can often obtain term loans from traditional and online lenders. When using an online lender, the application process takes place entirely online and often has a faster funding timeline than with traditional lenders.

Microloans

Microloans are small loans meant to help a business get off the ground. Interest rates tend to be lower, but microloans might not be a good option if you need more than $50,000. These loans are usually thought of as SBA microloans. But nonprofits, alternative and traditional lenders may offer specialty loans or programs with small loans, typically to help disadvantaged businesses.

Business lines of credit

Business lines of credit include set credit limits and draw periods. You can borrow, pay back the loan and then borrow again during the draw period.

One plus: You can receive a higher credit limit than you need while only paying interest on what you borrow. It can also help businesses that make frequent purchases since you can borrow from the credit line repeatedly up to the credit limit. 

Equipment financing

This is financing for any technology or equipment you may need. Equipment financing could help you buy anything from a computer system to manufacturing equipment. These loans are secured by the equipment as collateral, making it a less risky type of loan for the lender. In return, lenders tend to offer competitive interest rates. However, you could lose that property if you default on the loan.

Invoice factoring or financing

Invoice factoring is a short-term alternative financing option for businesses that send customer invoices. This typically involves selling outstanding invoices to the factoring company, which pays up to 90 percent of the value of the invoice upfront. The factoring company then takes over the responsibility of collecting the balance due on the invoice from your client. 

The benefit of this form of borrowing is that it allows you to receive money from invoices upfront, quicker than waiting the typical 30 to 90 day timeline.

On the other hand, invoice financing works more like a traditional loan. In this case, the invoices serve as collateral for a traditional loan. You collect the invoices and pay back the lender fees once you receive payment from your clients.

Pros and cons of startup loans

There are benefits and potential pitfalls to using small business startup loans to fund business operations. 

 

Pros

  • Fast cash: Many online lenders have quick online applications and fast turnaround times for receiving cash. 
  • Business growth: Startup loans can provide much needed capital to buy equipment or fund payroll to get a business off the ground without having to give up equity. 
  • Credit building: Startups begin with little to no business credit score. A successful startup loan may make it easier to get additional funding later by establishing business credit.
 

Cons

  • Can be costly: Some startup loans have higher than average interest rates. Additionally, making daily, monthly or weekly payments on a loan can strain a startup's already-stretched finances.
  • Personal risk: Startup loans almost always ask for a personal guarantee, so new business owners are putting personal assets on the line.
  • Limited options: Finding the right lender may be difficult for startup businesses, as lenders typically have strict eligibility requirements and favor established businesses that are less risky to lend to.

Alternatives to startup loans

If a startup loan is not the right fit, there are other ways to get a cash injection as a new business. 

Where to get a startup loan

You have a few options for getting business startup loans. When deciding which lender holds the most promise, consider the lender’s criteria for your business such as your credit score and time in business as well as other features the lender offers. For example, you may want to go with an online lender if you need fast funding. 

Lenders to choose from include:

  • Traditional banks: Banks are the most traditional lenders. They typically have more stringent requirements, including higher credit scores or time in business requirements. Building a relationship with a bank in advance — like opening a business checking account — may increase your odds of approval.
  • Online lenders: Online lenders are typically fin-tech companies. They are known for offering mobile or web applications for managing your loans. They also advertise easy applications and fast approvals, making online lenders a better option for small businesses and startups.
  • SBA lenders: Banks, credit unions and other lenders can offer SBA loans, which are loans backed by the U.S. Small Business Administration. If your lender isn't on the SBA's Preferred Lenders list, it can take longer for approval, such as 30 to 90 days. But SBA loans tend to offer low interest rates and long repayment terms, making them a favorable startup business loan option.
  • Community Development Financial Institution: A community development financial institution (CDFI) is an organization that focuses on providing financial services to low-income and underserved communities. CDFIs provide lending for those with poor or limited credit histories.
  • Minority Depository Institutions: A Minority Depository Institution is a financial institution where designated minorities own 51 percent or more of the voting stock or a majority of the institution’s board of directors are minorities. In addition, the community the institution serves is also predominantly minority. This could include Black-owned, Hispanic-owned or Indigenous-owned banks, for example.

To decide which type of lender holds the most promise, consider:

  • Your company’s time in business
  • Your credit score
  • How fast your company needs money

How to manage a startup business loan

To put your best foot forward in building credit and your reputation with your lender, you’ll want to carefully manage your startup loan payments. Keep tabs on where the loan payments fit into your business budget, adjusting other expenses based on the actual revenue coming in. Since your revenue may be less predictable than established businesses, take the chance to pay down debt or save for future payments when you have strong revenue months. 

Also, make sure to keep in touch with your lender, especially if you might miss a payment. Many lenders are open to working with you on an ideal payment plan or delaying payments if your financial situation changes.

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Bankrate Insight

When looking for a startup loan, look out for the following red flags:

  • Early payoff charges: You don’t want to be penalized for having the ability to pay off a loan sooner than expected. 
  • Unresolved negative reviews: Investigate the lender’s reputation through the Consumer Financial Protection Bureau, Trustpilot and Better Business Bureau. If you see repeated gripes about some aspect of the lenders’ service, be cautious.
  • Unsecured website: If you don’t see a lock icon in your browser’s navigation bar next to the lender’s URL, they may not be able to store and transfer your sensitive information securely.

Who should get a startup loan?

Businesses that are ready to scale up can often benefit from startup business loans. These loans can allow a company to hire more employees, buy equipment or ramp up manufacturing.

A startup business that doesn’t have an established business model or any revenue is probably not ready to take on this kind of debt. A business owner who can’t cover losses, like a business loan default, with personal assets should also be wary.

Frequently asked questions about startup business loans

How to choose the best startup business loan lenders

Bankrate's trusted small business loan industry expertise

Read our full methodology

57

years in business

30

lenders reviewed

22

loan features weighed

770

data points collected

To choose the best startup business loans, we ensured all loans featured are broadly available across the United States and have a time in business requirement of six months or less. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, credit score requirements, minimum annual revenue and fees. 
 
When evaluating lenders, we use a 22-point scale to measure quality in five key areas: