The Best Startup Business Loans for 2022
Starting a new business is like having a baby. The labor pains may not be included, but the late nights, anxiety, unpredictability, and most of all the endless expenses are all there. But if you apply the right nurturing principles, both can become something truly awe-inspiring.
Securing the proper funding can often mean the difference between success and failure in such situations. Seeing as the stakes are that high, we thought we’d assist you with our list of companies that provide the best start-up business loans.
6 Best Loans for Startups
Since its founding in 2011, Lendio has funded more than 216,000 small business loans. The marketplace includes loan options from reputable partners such as Bank of America, Headway Capital, American Express, and many others. Lendio’s new business loans are perfect for ambitious entrepreneurs who know how to plan ahead. Read Review
- •Large loan amounts
- •Simple application process
- •Long-term financing available
Fundera was established in 2013, and since then, it has helped hundreds of people find, choose, and secure the best startup business financing available to them. It’s a free-to-use platform that business owners can employ to analyze various loan products. Read Review
- •Numerous guides and resources
- •No hidden fees
- •Variety of loan options
American Express Business BlueprintTM
American Express Business BlueprintTM is an online lender that offers direct funding to its clients, primarily through lines of credit. Read Review
- •Easy-to-use mobile app
- •Straightforward funding process
- •No application fees
Fundbox is an AI-powered financial platform that was founded in 2013. It’s a great option if you’re worried that your less-than-perfect credit history might prevent you from obtaining a business startup loan since Fundbox accepts applicants with very low credit scores. Read Review
- •Lenient approval requirements
- •Few fees
- •No collateral needed
OnDeck is an online loan company that delivered $13 billion to businesses all over the world. The company offers perks to repeat borrowers, so those that fear that they might need several small business startup loans should definitely consider it. Read Review
- •Prepayment benefits
- •Credit reporting
- •First-loan interest waived for repeat borrowers
If you’re struggling to cover short-term operating expenses then BlueVine is the place for you. Its services are fast and you won’t be charged any account closure fees. BlueVine is great for those looking to get funding for a startup of a relatively small size. Read Review
- •No termination penalty
- •Low interest rates
- •Fast application process
Our Methodology for Reviewing Business Loans for Startups
Building something from the ground up is extremely difficult, especially when that something is as fickle as a startup business. The main problem that these kinds of companies face is running out of funds before they start turning a profit, which is why we recommend looking into startup business loans, among other options. To give you a hand with that, we’ve written down the criteria we used for rating the loans featured on our list.
Calculating how much money you need and determining the amount you can pay back are the first things any borrower should consider, which is why we kicked off our research by locating companies that offer a wide range of loan amounts.
The ways in which people choose to run their businesses can be as different as the people themselves, so providing you with a list of nearly identical business startup loans just didn’t seem right to us.
That’s why we did our best to present you with loan options that involve various funding arrangements. After all, while some prefer one large payment, others may be more comfortable with several smaller ones.
Speed of Service
When obtaining a loan, there are two things you don’t want to drag out. The first is the application process. Filling out endless forms and sending in piles of documents can be extremely frustrating. What’s more, getting rejected means that all your efforts are wasted. Our goal is to find loan companies with a fast and simple application process.
The second time-sensitive service that plays a vital part in our examination of startup business loans is the speed at which borrowers receive their funds. Even if you’re not in a rush, sooner is always better when it comes to getting money.
Experienced entrepreneurs know that planning ahead is one of the key aspects of managing a successful business. However, deciphering what the future holds for a startup can be quite difficult, which is why we sought out lenders that offer a certain amount of flexibility with the repayment period.
Rates and Fees
Whether you’re looking at loans to start a business, advance it, or get it out of a rough spot, your main concern should be affordability. But while reasonable APRs and low fees are important, you shouldn’t be too surprised to see slightly higher-than-average rates on loans extended to startups.
This is because newly formed businesses are risky investments, and lenders need to protect themselves by making sure that they get back at least as much as they had invested.
Business Loan Requirements
It may seem impossible to get a loan for a startup business since it lacks the history and credit that many traditional banks use to estimate its creditworthiness. Fortunately, there are companies out there willing to take a chance on startups.
Although lenders usually require a credit score of 700 or higher in order to fund a new business, we don’t want to add that to the list of obstacles. Therefore, we offer options that you can access even if your credit history isn't perfect.
Aside from that, we also pay attention to the criteria regarding the minimum years in business as well as the minimum annual revenue that you have to meet to qualify for a quality startup business loan. We found loans that you can apply for even if you’ve only been in business for a few months or have a relatively small annual revenue.
The loan companies on our list offer the most suitable loan product for startups. But we also examined some of their other services seeing as it's often much easier to receive all of your financial support in one place. This can be especially beneficial with lenders that offer perks for existing customers.
Top 6 Business Loans for Startups:
- Lendio - Best overall
- Fundera - Best for financial advice
- American Express Business BlueprintTM - Best for flexible funding
- Fundbox - Best for bad credit
- OnDeck - Best for repeat borrowers
- BlueVine - Best for short-term financing
The Best Small Business Loans for Startups: Reviews
Lendio’s CEO Brock Blake originally set up a lending company called FundingUtah in 2006, which later became FundingUniverse. In 2011, he decided to start over and launched Lendio. Today, this online marketplace offers several great funding options for startups, has a network of more than 75 lenders, and has funded over 300,000 loans.
Typically, loans intended for newly formed businesses range between $9,000 and $20,000 with interest rates that go as high as 28%. Lendio, on the other hand, takes a different approach. It connects you to lenders that offer loans for amounts as low as $500 and as high as $750,000 with interest rates that don’t exceed 17%.
Seeing as you’ll have plenty of startup loans to choose from, you’ll also encounter a number of term lengths. The options range from a single year to 25 years.
Perhaps the best part about using Lendio to obtain business capital is that it’s free. But while Lendio doesn’t charge an application fee, many individual lenders do, so make sure you’re familiar with these expenses before starting the paperwork.
Application Process and Funding Speed
As a Lendio customer, you won’t have to go through a long application process - finding the right new business loan is stressful enough as it is.
All you have to do is create an account and fill out a single online form after which Lendio will perform a soft credit check, which won’t impact your credit score. The whole process shouldn’t take longer than 15 minutes.
You’ll probably start to receive offers within 72 hours, and once you’ve made your decision, it’ll take around two to four weeks for the funds to be credited to your account.
Through Lendio, you can acquire either a secured or unsecured business loan for your startup. Which one you get depends on your level of creditworthiness.
The majority of Lendio’s partners have a credit score requirement of 680, which unfortunately might be too high for some. On the plus side, you only need to be in business for six months in order to qualify. Certain lenders will also want to know if you’ve had any prior experience with setting up or running a startup.
Lendio specializes in providing its clients with a wide selection of financial products, but instead of listing them all, we’d like to direct your attention to a loan that is similar to loans for a startup business.
If your startup is in need of new software, cooking appliances, vehicles, or any other supplies, you should consider an equipment financing loan. Although you can use a startup loan to buy these things, equipment financing has its own perks.
In just 24 hours, you can have anywhere between $5,000 and $5,000,000. The loan terms range from one to five years, and your loan rate can be as low as 7.5%. All in all, you’ll have a hard time finding better equipment financing for startups anywhere else.
Reasons to choose Lendio:
- Free service
- Soft credit check
- Many loan types
Unlike the other companies on our list, Fundera doesn’t originate any loans itself. Instead, it acts as a matchmaking service that connects you with the funding sources you are eligible for.
At Fundera’s platform, not only will you be able to compare several business loans for startups, but you’ll receive some very useful advice as well. This makes it a great starting point for those overwhelmed by the number of options available to them.
Fundera offers a variety of products, including SBA microloans, business credit cards, asset-based loans, and many others. Since its partners are responsible for funding the loans, there are no specific sum ranges or loan terms we can give you.
What we can tell you is that while other platforms of this kind tend to partner up with as many funders as they can, Fundera takes a different approach. It chooses quality over quantity, so you can rest assured knowing that every startup funding option you come across here is safe and fair.
Whenever someone takes out a loan through Fundera, it charges the lender a fee equal to a small percentage of the loan amount, which is how the company makes money.
This means that borrowers can use this website for free. However, Fundera can’t guarantee that its partners won’t pass some of the costs they have to pay onto you. In such scenarios, your loan might end up being a bit more expensive than if you had gone to the lender directly.
Application Process and Funding Speed
Applying for startup business grants or loans through Fundera is extremely simple. After you create an account and answer a few questions about your business, credit score, and the amount of funding you need, you’ll be presented with all the loan products that you may be able to qualify for.
What’s more, one of Fundera’s lending experts will contact you and go through each of these products with you and help you pick the one that’s best for your business.
The documents you’ll be required to provide and the speed at which you’ll get your money will vary depending on your chosen lender.
The qualification requirements for startup financing are yet another variable at Fundera. But although they differ from funder to funder, most of the time, you’ll need a score of at least 550 to be eligible for the most lenient of funding solutions, which are short-term financing and merchant cash advances.
As we’ve already mentioned, in addition to helping you compare and find loans, Fundera also provides you with a lending specialist. Once the specialist assists you with choosing your first loan, they’ll continue to work on your case and develop a plan to get you an even better startup business funding offer in the future. On top of that, the Fundera website is filled with helpful guides and resources, which are regularly updated.
Reasons to choose Fundera:
- Lending advice
- Loan product comparisons
- Free to use
American Express Business BlueprintTM Review
American Express Business BlueprintTM is an online lending platform that was acquired by American Express in 2020. It offers loans to small businesses with a 640 FICO score or higher and is known for its streamlined application process where borrowers can connect their business checking accounts and, usually, receive a decision within minutes.
With American Express Business BlueprintTM, you can qualify for a line of credit ranging from $2,000 to $250,000 and six, 12-, or 18-month terms. However, American Express Business BlueprintTM’s interest rate structure is a bit more complicated:
- 2-9% for 6-month loans
- 7.5-18% for 12-months loans
- 15.75-27% for 18-month loans
Since January 1, 2021, clients can pay just 2.9% + $0.25 per transaction through the use of American Express Business BlueprintTM Payments.
There’s also a late fee you should be aware of, which varies based on your outstanding account balance. If the balance due is less than $100, the fee is $10. For amounts between $100 and $5,000, you’ll need to pay $35, and for any unsettled debt over $5,000, you’ll be charged $100. The fee is applied if your payment is more than four days late.
Application Process and Funding Speed
American Express Business BlueprintTM’s application process for startup business loans is similar to that of Fundbox. After you’ve connected your checking account, bookkeeping software, or payment platform, it may take a few days for your line of credit to be funded if you are approved.
Through the American Express® Business Line of Credit dashboard or mobile app, you can withdraw as little as $500. Withdrawals can be made whenever you like, and the money is deposited into your account in under 10 minutes.
American Express Business BlueprintTM is one of the best startup business loans options with no collateral since the company’s qualification criteria aren’t very demanding. You'll need to have a credit score of at least 640 and your business will need to be at least 12 months old and make $3,000 in monthly revenue. For the full list of the criteria click here.
Reasons to choose American Express Business BlueprintTM:
- Small minimum withdrawal limit
- Streamlined funding process
- Extremely flexible funding
Fundbox is an online platform where you can obtain some of the best startup business loans currently available. Although the company was established in 2013, it began offering lines of credit just four years ago. Since then, hundreds of thousands of entrepreneurs have turned to Fundbox for their business financing needs.
Fundbox is an excellent choice if you need to borrow a small amount to plug up a few holes in your startup. The maximum amount you can borrow is $150,000, and you can choose to repay your debt in 12 or 24 weeks. Fundbox will auto debit your payments from your bank account. Once you’ve paid back what you owe, your approved amount will be available to you again.
To get a startup loan for a new business through Fundbox, you won’t have to pay an application fee, but once you’re approved for funding, you’ll be obligated to settle a borrowing fee every time you draw funds. The fee may vary from one consumer to another and change over time. It’ll be around 4.66% for a 12-week term and 8.99% for a 24-week term.
Application Process and Funding Speed
One of the best things about Fundbox is that it has a unique approach to loan applications – there is no paperwork. To establish an account you just need to connect your accounting software or bank account to the Fundbox platform. You’ll get a decision regarding your small business startup loan in a matter of minutes thanks to the platform’s data analytics tools.
Once you’ve made a withdrawal request, the money will be deposited directly into your account within 24 to 48 hours.
You’ll have a hard time finding a loan company with fewer eligibility requirements than Fundbox. Aside from a credit score of at least 500, it’s preferable that you have two or more months of activity recorded on your accounting software or three months of transactions on your business bank account.
Although Fundbox doesn’t have any strict minimum annual revenue stipulation, it does suggest that earnings of approximately $100,000 would increase your chances of approval.
Aside from enabling customers to obtain start-up business loans with bad credit, Fundbox offers invoice financing and a Paycheck Protection Program. Invoice financing allows you to get money before your customers pay, while Paycheck Protection lets you borrow up to $2 million at a 1% interest rate.
The PPP is part of the coronavirus relief program, and the loans are 100% forgivable as long as you use 60% of the money for payroll costs within a period of eight or 24 weeks.
Reasons to choose Fundbox:
- Fast credit decisions
- Paycheck Protection Program
- Invoice financing
OnDeck is headquartered in New York, but it also has offices in Virginia, Colorado, Canada’s Toronto, and Montreal as well as Sydney, Australia. In July 2020, OnDeck was acquired by Enova. Nevertheless, all of its services and products have remained the same. This global loan company is best suited for borrowers that can anticipate needing a second small business loan for their startup.
The maximum amount you can get with an OnDeck term loan is $250,000, and the minimum is $5,000. This might be too much money for some borrowers, but remember that you can get up to 18 months to repay the loan. You’ll be able to choose between paying back the loan in daily or weekly installments.
The SMART Box Capital Comparison tool will enable you to see a detailed overview of your business financing. For example, if you borrow $75,000 with a 12-month term and weekly payments, your origination fee will be $1,875 with an APR of 24.20%.
You can pay off OnDeck’s online business loans for startups early and have the rest of the interest waived. Moreover, you can do it without incurring any penalties.
Application Process and Funding Speed
Whether you choose to apply over the phone or by filling out an online form, you won’t need more than a few minutes to complete the process. The company will ask you for your Business Tax ID number, Social Security number, estimated annual gross revenue, and average bank balance. Those eligible for an OnDeck loan will receive their funds on the same day they apply.
To get unsecured startup business loans from OnDeck, your business needs to be 12 months old with annual revenue of $100.000, while your personal FICO score should be no less than 600. This loan company doesn’t offer its services to a number of industries including adult entertainment, drug dispensing, firearms vendors, vehicle dealers, and gambling.
If your first OnDeck lending experience was satisfactory and you realize that you could use a few more dollars, we suggest that you go back to this same lender because returning customers are entitled to generous benefits.
After you take out a second small business loan for startup financing, the remaining interest on your current loan will be removed, and the origination fee on your next loan could be as low as 0%.
OnDeck’s revolving startup business credit line is another excellent loan option you should consider. It allows you to borrow anywhere from $6,000 to $100,000. The funding is instant, and the 12-month repayment term resets after every single withdrawal.
Another advantage to choosing OnDeck as your lender is that it reports your payment history to credit bureaus. It may not seem like much, but if you’re diligent in repaying your unsecured small business startup loans on time, you could see a notable credit score increase.
Reasons to choose OnDeck:
- Highly transparent pricing
- 0% origination fee for repeat borrowers
- Repayment term resent for credit lines
BlueVine is a California-based fintech company started by three entrepreneurs – Eyal Lifshitz, Nir Klar, and Moti Shatner.
Lifshitz was the one that came up with the idea of offering small business banking and financing when he saw how hard it was for his father to maintain cash flow while running his small business.
Funding a startup day in and day out is made easy with BlueVine’s line of credit, which comes with a draw limit of $5,000 to $250,000. Through the lender’s online dashboard, you can request funds whenever your business needs them.
You’ll have 6 or 12 months to repay each sum that you withdraw and you’ll also be able to choose between making fixed weekly or monthly payments. With every amount of money that you return, your available credit will be automatically replenished.
The only costs associated with this type of new business funding from BlueVine are the interest rate and the potential bank wire fee. The interest rates start as low as 4.8% but to get the best rates, you’ll need a very good credit score.
To avoid the bank wire fee of $15 you can opt for the free ACH transfer option.
Application Process and Funding Speed
BlueVine focuses on convenience and speed, which is why its application process doesn’t take longer than 2 minutes.
While filling out the online form, you’ll be asked to provide some basic information about your business, yourself, and either your bank statements for the last 3 months or a read-only connection to your company’s bank account.
You can expect to have your application for startup business financing approved within 5 minutes. After that, once you access the online dashboard and request your loan, you should receive your funds within a few hours.
To get the startup business credit line from BlueVine, you need to have a credit score of at least 600, a business that’s 6 months old or more and generates $10,000 in monthly income. Keep in mind that, due to regulations, this service isn’t available to citizens of North and South Dakota, as well as any US Territories.
There are many different ways to get funds for a startup business. One such method involves taking advantage of BlueVine’s invoice factoring. It should be considered by those that may need more than the $250,000 offered by the credit line since the company’s factoring lines can go up to $5 million.
Once you’re approved for invoice factoring, BlueVine will provide you with a cash advance equal to 85%-90% of your submitted invoice value and you’ll get the rest of the money minus BlueVine’s fees after the invoice has been paid.
The minimum qualification conditions for this kind of funding for startups are a credit score of just 530, 3 months in business, $10,000 in monthly revenue, and your business should be in the B”B industry.
Reasons to choose BlueVine:
- Low credit score requirements
- ACH payments
- Cash advance with invoice factoring
Guide to Startup Business Loans
Starting a small business is challenging, and although we can’t really help you with every step of the process, we can offer some useful recommendations and explanations. In addition to providing our list of high-quality funding options for startup businesses, we’ll briefly go over the main details regarding the most popular ones.
Before we dive deeper into our topic, let’s first clarify exactly what business loans for startups are. This is a form of business financing intended for startups that have been in business for less than 24 months. These loans are usually unsecured but can be secured as well.
It’s important to note that loans for financing startups can come in all shapes and sizes, so even if a company doesn’t necessarily have the word “startup” in the name of their loan product, it doesn’t mean that it can’t be used for new businesses.
There’s a very simple explanation for this – sometimes lenders may offer several business loans for startup companies and are simply trying to avoid confusion by not referring to all of them by the same name. In most cases, the loan can be used to fund both young and mature businesses.
A typical startup loan is often just a term loan, which is repaid through regular payments stretched out over a previously agreed-upon time period. You’ll usually be offered either a weekly or monthly repayment schedule. Term loans can last anywhere from one year to 30 years, depending on the lender.
The key benefit to selecting a term loan as your business loan for a startup company is that most come with low-interest rates and high loan amounts. Unfortunately, they might be hard to qualify for and include a number of fees.
Line of Credit
Some businesses need quick responses. As such, a term loan would be far too slow a solution for them. This is where lines of credit come in. They offer entrepreneurs flexibility, and the possibility of seizing a business opportunity as soon as it presents itself. However, the amounts that you can withdraw are relatively small.
Despite the conveniences, not many people consider lines of credit when they think of a loan for a new business. This is often the result of banks not advertising lines of credit because they earn more from long-term lending options.
Many small businesses just need to buy a few pieces of equipment to keep their operation running smoothly, and that’s exactly where equipment financing loans come in. While interest rates on equipment financing loans tend to be costlier than those on standard term loans, they are easier to apply for and obtain. That’s because they are, by nature, secured loans since the items you’re purchasing are the collateral.
Equipment loans for startup business financing can be quite useful for keeping up with the latest technology in your industry. The extra funds can also enable you to expand your business venture.
Invoice financing is a form of asset-based financing, but instead of handing over a car or a piece of real estate, you put up the amount due by your customers as collateral. It enables you to maintain a steady cash flow, and what’s more, it can be obtained quickly and with a low credit score.
Keep in mind that this is only a temporary solution and that you need to get to the root of the problem for your business to succeed. Even the best startup funding options can’t help you if your clients don’t pay you.
Is it hard to get a startup business loan?
There are various kinds of loans that can be used to finance a startup, but your ability to secure one depends on the credit score and annual revenue of your business. Online loan companies tend to give out more loans to startups than banks and have fewer requirements.
Can you get an SBA loan to start a business?
Yes, you can get help with starting a small business through the SBA. To qualify, your business has to be officially registered as a for-profit business, and as its owner, you can’t be on parole. In addition, you can have up to 500 employees, and your annual revenue for the past three years can’t exceed $7.5 million.
What is the best loan to start a business?
SBA loans are great for starting a business as the government usually finances a portion of the loan. This makes SBA loans less risky for lenders, which translates into lower interest rates.
How do I get a start-up business loan?
Start-up business loans are hard to get with banks, so we suggest that you look at online lenders and lending platforms instead. But before you start browsing the internet, make sure you know how much money you need and how fast because it’ll help you with narrowing down your options and prevent you from getting overwhelmed with all the different choices.