Small Business Startup Loans: Options and Requirements

If your business has little to no credit or financial history, you can often still secure startup funding through a Small Business Administration (SBA) loan, grant, business credit card, invoice financing or equipment financing. You could also pursue alternative funding options, like crowdfunding, bootstrapping or a personal loan in your name.

This guide covers how to get a small business startup loan, with insights into the types of small business loans, the application process and ways to increase your odds of approval.

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Key Takeaways

• You can get small business startup loans even with little or no credit history. Common paths include SBA loans, microloans, equipment financing and business credit cards. Most require a personal guarantee from the owner.

• Most lenders want a personal credit score of about 600 or higher. Time in business requirements run from zero to two years, depending on the loan type. Approval isn't guaranteed.

• SBA microloans cap at $50,000 while standard 7(a) loans reach $5 million. Microloans average around $13,000 and suit first-time or underserved owners. SBA funding can take 30 to 90 days.

• Personal loans and business credit cards are often easiest to qualify for. They can fund in one to five days but carry higher rates and put your personal finances at risk. Borrow only what you can repay.

Summary generated by AI, verified by MoneyLion editors

What Is a Startup Business Loan?

A startup business loan is financing designed to help early-stage businesses cover expenses before they’ve become profitable or established a sound financial track record.

Startup business loans:

• Consider the owner’s credit and finances, absent or in addition to an established business credit, tax returns or annual financial statements

• Have lower minimum “time in business requirements,” usually between zero and two years, depending on loan type

• Range from $500 to $5 million, depending on lender and program

• Usually require a personal guarantee, meaning the owner assumes personal responsibility for the loan

• Sometimes require collateral, like equipment, real estate, accounts receivable or inventory, for approval or more favorable terms

• Include SBA loans, microloans, bank loans, invoice financing, equipment financing and business credit cards

What Are the Requirements for a Startup Loan?

New entrepreneurs will encounter different requirements at different lenders. However, in general, you should expect to prepare the following to secure a small business loan for your startup.

What Are Your Options for Startup Funding?

This chart compares the most common types of funding for startup businesses, along with their typical terms and conditions.

SBA Loans

SBA loans are government-backed loans featuring low interest rates, high funding amounts, favorable terms and inherent flexibility. Most SBA loans are intended for established businesses, but you can find options for small business startup loans as well.

Despite their benefits, SBA loans can sometimes be difficult to qualify for. You can apply for SBA loans through participating lenders. 

Personal Business Loans 

Many entrepreneurs turn to personal loans when they can’t get approved for a business loan. Personal loans can be more accessible, especially if you have a steady income stream and good credit.

The downside to personal loans is that you’ll be assuming all the risk. If your business plans turn sour, you’ll be personally responsible for repaying the funds to the lender.

Invoice Financing

Invoice financing is a way to exchange your unpaid invoices for cash. It’s also fairly accessible to startups and new businesses. 

Invoice financing allows businesses to convert unpaid invoices into immediate cash, providing much-needed liquidity to fund operations and seize growth opportunities.

By accelerating the collection of receivables, startups can avoid delays in paying suppliers and employees, maintain positive cash flow and improve their overall financial health.

Microloans

Microloans can be a great option as a startup loan for a small business, especially because they’re more accessible than traditional loans.

The downside is that funding amounts with these loans typically do not exceed $50,000. This may not be enough capital for your new business, depending on your plans.

Bank Loans

Banks are notoriously hesitant to approve younger businesses without a proven track record. If you are able to secure a bank loan, you’ll likely have to back it up with a personal guarantee or some type of collateral.

Nevertheless, bank loans are highly coveted because they typically offer low interest rates and favorable terms.  

Equipment Financing

Equipment financing is designed to help you cover the costs of the equipment you need to conduct business operations. Funding can go toward vehicles, machinery, hardware, software, manufacturing tools and more.

Equipment financing is typically secured by the equipment you're buying, which can help lower interest rates and make funding more accessible, especially to startups. Just keep in mind that if you don’t make your payments, your lender can seize the equipment.

Grants

Grants can be a great starting point for new businesses, because they’re essentially free money that doesn’t need to be repaid. You can find grants through entrepreneurial competitions, government agencies, business development organizations and more.

The downside to grants is that they’re typically for low funding amounts and are hard to qualify for.

Crowdfunding

Crowdfunding is a fairly new way for businesses to raise much-needed capital from the public at large. Top crowdfunding sites like Kickstarter and SeedInvest help startups and young businesses connect with individual backers willing to purchase shares based on an idea or proof of concept.

While investment-based crowdfunding can be an accessible and fairly quick way to access capital, it does require you to relinquish shares in your company, which can create ownership issues down the line.

Personal Financing

Many entrepreneurs rely on their personal finances — a process known as bootstrapping — to power through their business’s early stages. Bootstrapping can include your savings, home equity, personal credit cards or even help from family. 

While using your own finances can be a fast option that won’t result in interest or fees, you could risk your personal savings or even retirement.

Business Credit Cards

Business credit cards aren’t technically a loan, but they can help you with startup costs nonetheless. They’re more accessible than traditional startup loans and can be a seemingly convenient way to cover your initial expenses.

Unfortunately, business credit cards tend to have high interest rates, meaning you can rack up debt quickly if you’re not careful.

How Much Can You Borrow?

Lenders may provide startup owners with anywhere from $500 to $500,000 in financing, with some government-backed programs offering up to $5.5 million.

However, how much you can — or should — borrow depends on how much you can realistically repay.

Lenders may look at:

• Your business revenue and cash flow

• Your personal income

• Your credit score

• Existing debt obligations

• Time in business

If your business has an operating history, lenders may evaluate its debt service coverage ratio (DSCR), which compares net operating income to total debt payments.

Many lenders prefer a DSCR of at least 1.25, indicating the business generates 25% more income than needed to cover its repayment obligations.

For startups without revenue or financial records, lenders often rely more heavily on the owner's:

• Personal income

• Credit score

• Existing debts

Quick Tip

Before applying, use an online loan calculator to estimate monthly payments based on the loan amount, interest rate and repayment terms. This can help you determine how you can realistically afford to borrow.   

How To Apply for a Startup Business Loan

Applying for a startup loan generally entails these steps:

1. Check your credit: You can pull your personal credit reports from AnnualCreditReport.com and see a free version of your credit score through the MoneyLion app. You can see if you have a business credit score through the business credit bureau Dun & Bradstreet.

2. Draft a business plan: Most traditional lenders require one as part of their application and underwriting process.

3. Gather your financial documents: At a minimum, you’ll likely have to furnish business formation documents, your employer identification number (EIN), two years of personal tax returns and business bank statements (if available).

4. Choose your loan type: Take the time to compare top lenders in the category. You might be able to pre-qualify for offers to see rates without a hard credit inquiry.

5. Submit your full loan application: Provide any additional documentation the lender asks for to secure or expedite approval.

6. Review your full offer: Pay close attention to the interest rates, fees, monthly payments and total borrowing costs. Once you sign your loan contract, the lender will disburse the funds through your agreed-upon method, like direct deposit.

Which Loan Is Right for Your Business?

Not sure which type of financing is right for your startup? This quick decision list can help you narrow your options.

• Choose an SBA loan → If you need a large loan, want competitive rates and can wait for financing.

• Choose a bank loan → If you have good credit, established business finances or a pre-existing relationship with a competitive financial institution.

• Choose a personal loan → If you have low-to-no business revenue, strong personal credit and fast funding needs.

• Choose a business credit card → If you need flexible financing for short-term or modest startup expenses. 

• Choose equipment financing → If you primarily need to buy equipment, vehicles or machinery.

• Choose invoice financing → If you have outstanding customer invoices and need better cash flow.   

• Choose grants → If you want to avoid debt and fit the target demographic of a number of local or federal programs.

• Choose crowdfunding → If your business has a compelling product, service or mission that can attract individual investor interest.  

• Choose personal financing → If you want to avoid debt and can bootstrap without draining savings or putting yourself at other financial risk.

Where To Find Startup Business Loans 

These steps may help find and secure a startup business loan:

• Use the SBA’s Match Tool to identify agency-approved lenders in your area.

• Contact your local Small Business Development Center (SBDC) for lender referrals and application assistance. 

• Search the Community Development Financial Institutions (CDFI) Fund database for lenders that specialize in new businesses or underserved borrowers.

• Ask local banks or credit unions about their business lending programs.

• Request and compare offers from online fintechs known for fast funding and less stringent borrowing requirements for startup owners. 

• Research nonprofit or mission-driven microloan programs that provide small-dollar financing and business support to new entrepreneurs. 

• Browse Grants.gov and your state’s economic development agency’s website for free or low-cost funding opportunities.

• Apply for a top business credit card, which can provide accessible startup capital to qualified cardholders. 

Your Next Steps

Before applying for a startup business loan, make sure you've covered the following:

• Calculate your startup funding needs.

• Determine an affordable monthly payment.

• Develop a business plan to support your loan request.

• Choose a loan type.

• Research and compare offers from top lenders.

• Have a firm repayment plan.

FAQs

Can you get a business loan with no money or revenue?

You can get a loan to start a business without any money, but it is difficult. You may be able to get a certain type of SBA loan, equipment loan, personal loan or another funding solution.

What credit score do I need for a startup business loan?

You usually need a personal credit score of at least 600 to qualify for a startup business loan, though some online lenders are sometimes willing to lend to owners with less stellar credit. Of course, the higher your credit, the better your odds of approval.

What's the easiest startup loan to get approved for?

Business credit cards, personal loans, microloans and certain equipment financing are generally easier to qualify for than traditional loans. Invoice financing largely requires access to outstanding customer invoices.

Can I use a personal loan to start a business?

Yes. In fact, using a personal loan is a common funding strategy among startup entrepreneurs with no business credit or operating history.

Does applying for a startup loan hurt my credit score?

Applying for a startup loan can hurt your credit score if it generates a hard inquiry on your personal credit report. However, the effects should be minimal, particularly if you group applications in a short time period.

What documents do I need to apply for a startup loan?

For startup loans, lenders generally request government-issued identification, business formation documentation, an EIN, business financial statements and a business plan. Absent a business history, they may require the owner’s bank statement or tax returns.

Key Terms

• Personal guarantee: A promise that makes the business owner personally responsible for repaying the loan if the business can't.

• SBA loan: Government-backed financing issued through approved lenders, with the standard 7(a) program reaching $5 million.

• Microloan: A smaller loan of up to $50,000, often aimed at startups and underserved entrepreneurs.

• Invoice financing: Borrowing against unpaid customer invoices to free up cash, typically worth 80% to 95% of the invoice value.

• Equipment financing: A loan secured by the equipment you buy, which the lender can repossess if you stop paying.

• Debt service coverage ratio (DSCR): A figure comparing income to debt payments. Many lenders prefer at least 1.25, meaning the business earns 25% more than it owes.

• Soft inquiry: A credit check, such as viewing your own report, that doesn't affect your credit score.

Summary generated by AI, verified by MoneyLion editors

Sources

• SmartBiz. 2026. "Collateral Requirements for SBA Loans."

• Fundbox. "Types of Small Business Loans."

• Customers Bank. "Equipment Financing for Startups."

• U.S. Small Business Administration. "Terms, conditions, and eligibility."

• Brex. "The 5 best startup business credit cards with no personal credit check of 2026."

• U.S. Small Business Administration. "Microloans."

• Crestmont Capital. 2026. "Invoice Financing: The Complete Guide for Small Business Owners."

• GrantWatch. 2025. "How Long Does It Take to Get a Grant?"

• Grand View Research. "Crowdfunding Market (2025 - 2030)."

• U.S. Small Business Administration. "Loans."

Jacinta Majauskas contributed to the reporting for this article.