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What a Startup Loan Can Do For Your Business

Everything you need to know about startup loans for your small business.

One of the biggest challenges you’ll face as a new startup is getting enough capital to get your business off the ground. Finding small business startup loans can often be a confusing and frustrating experience.

Thankfully, there are a lot of startup loan options that can fit your individual startup situation perfectly. Finding the right kind of business loan and finding the right lender with the best interest rate, that’s the hard part.

Loan Amount $500 - $750,000
Loan Term Most likely between 1 - 5 years
Interest Rate Prime+ to 17%
Payment Frequency Monthly
Time to Funds 14 - 60 days
Benefits
  • You're not giving up equity.
  • Helps you establish business credit.
  • You don't have to ask your friends and family for money.
Drawbacks
  • Has a higher interest rate than more established businesses.
  • It's going to be personally guaranteed, which means you're liable.
  • You may have to collateralize your equipment, house, etc.

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Business Credit Card Options from Our Partners

In many cases a business credit card is one of the best options for making large business purchases, tracking expenses, and establishing credit for a startup business. We recommend considering one of the OPEN cards available from our partners at American Express. Get The SimplyCash® Plus Business Credit Card to earn cash back on the category of your choice, a one-time $250 statement credit, and pay no annual fee. Click the card image below to start the application process.

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Qualifying

Typically, you’re going to need to show your past experience in a related field, you’re going to want to have a credit score of 680 and above, and two years of personal tax returns.

What is a Startup Loan?

There are multiple loan types that can work for your startup business. Some businesses would do better with a business credit card, while others who can qualify would do great with an SBA loan, it all depends on your situation.

One of the loan types business owners use for their startup isn’t technically a loan. Business credit cards can often be a great way to start your business, as long as you use them responsibly. The benefit lies in the fact that you have a set amount of credit, but you don’t necessarily have to use it all.

Another valuable loan product you can use is term loans from your bank. These are personally guaranteed with collateral such as your house. While these do require you to guarantee it with your personal belongings, you do get a much lower interest rate.

What Types of Businesses Is It Good For?

As a startup business, there’s two ways to raise the capital you need. You can find an investor and sell equity in your business, or you can find a loan. The question is, do you want to sell the equity and decision making power in your business? While investors can bring experience and insight, along with funds to the table, they can also take a lot of the decision making away.

If you want to maintain control of your company, small business loans are the way to go.

What Are The Minimum Requirements?

Generally, any startup business can qualify as long as they have a credit score of 680 or higher and can show that they have experience in their business. Business credit cards are usually just based off credit score, while term and SBA loans take your tax returns and other items into account.

How Much Will a Startup Loan Cost?

Loan Calculator

Startup business loan interest rates range from seven to thirty percent. SBA loans and term loans from your bank will have the lower interest rate, but will be harder to qualify for. Business credit cards and lines of credit will be in the higher interest rates, but are easier to get and generally more flexible.

The important thing to remember about startup loans is they are going to have to be personally guaranteed, meaning you are responsible for paying it back, not your business. Term loans from your bank are usually going to be backed up by your equipment, your house, or other forms of collateral.

Startup financing may also be available under the SBA 7(a) loan program. See our SBA 7(a) section for additional detail.

Why Use Lendio?

Lendio’s mission is to empower your business by making small business loans simple through options, speed, and trust. Whether you are looking for an acquisition loan or startup loan, Lendio offers hundreds of different loan products from a variety of lenders. Finding out which business loan is best for you is why we’re here.

Visit our Trust Pilot page to see what our borrowers think!

Sign up today and in minutes be matched with the perfect business loan.

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