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Best Startup Business Loans for May 2024

A startup business loan is financing to pay for the needs of a new business. It can help you cover the  initial costs  needed to establish your business, including things like working capital, real estate, equipment, supplies, and inventory.

Many consider the  Small Business Administration (SBA) loan programs  to be the gold standard for startup business loans. They offer high funding amounts, long payback terms, and low rates, but often require six months to two years in business and a 20% to 30% cash injection from the borrower. Luckily, there are other ways to get a startup business loan if you don’t meet the SBA’s requirements. Check out our list of the best startup business loans.

• Best Overall: Finance Factory
• Best for E-commerce: Become.co
• Best for Retail: OnDeck
• Best for High-Growth Startups: Midwest Corporate Credit
• Best for Long Repayment Terms: Seek Business Capital
• Best for Unpaid Invoices: Upwise Capital

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• Our Top Picks
• Finance Factory
• Midwest Corporate Credit
• Seek Business Capital
• Upwise Capital
• See More (3)

The Bottom Line

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• How to Choose

Why You Should Trust Us

Best overall : finance factory.

 Finance Factory

• Loan Amounts: $5,000 to $350,000
• Loan Terms: 0 to seven years
• Interest Rates: 0% (for up to 21 months) to 15%
• Fees: 4.50% to 9.90%
• Process Time: Seven to 10 days on average

Best overall for startup funding , Finance Factory can get you funded with no business history or established revenue as long as you have just one of the three Cs: credit, cash flow, or collateral. Working with Finance Factory allows customers to explore several financing options in one place as their business grows, offering advantages to businesses with no history.

Available to new business owners

Offers a wide variety of funding products to support later stages of growth

Rate and term transparency

Funds in seven to 10 days on average

Free funding range report

Ideal credit score is at least 700

Business credit card option carries high interest rates when the 0% introductory period expires

If your startup doesn’t yet have cash flow or collateral, Finance Factory may still get you financed based on your credit score. Add to that a streamlined application process with a personal contact, a free funding range report, and quick funding, and Finance Factory ranks as our best overall for startup business loans. 

Founded in 2006, Finance Factory has been providing competitive business lending services through its online marketplace model. The company matches small businesses with lenders in all 50 states providing loans for all stages of growth.

Startup funding from Finance Factory will take the form of business credit cards , personal loans , and lines of credit. In most cases, there will be no prepayment penalties, but because loans are tailored to your specific circumstances, this is a question you should verify when you receive approval.

The company requires a credit score above 680, with an ideal score of at least 700. There are no annual revenue and time in business requirements but you should have a minimum account balance of $1,000 to $5,000 to cover your payments. You'll probably be disqualified if you or your business has any reported collections, judgments, liens , late payments, or public records.

Finance Factory received a rating of 4.7 out of five from Trustpilot.

Best for E-commerce : Become.co

• Loan Amounts: Maximum of $500,000
• Loan Terms: Three to 36 months
• Process Time: Qualified loan applications can get funding in as little as three hours

The best startup solution for e-commerce goes to a financial technology (fintech) company called Become. Its LendingScore tool is a tailored dashboard that connects to your platform and helps improve your ability to be funded.

Become uses a proprietary data-driven tool called LendingScore that connects your online store to your marketing platforms and creates a dashboard of your metrics . This lets you see how lenders see you. This special integration into your online store and marketing channels is what makes Become a standout winner for e-commerce businesses that need a startup loan. 

LendingScore is tailored dashboard helping you improve your fundability

One online application

No charge to apply

Funds in as little as three hours

Limited funding amount of $500,000

Short loan terms of three to six months

Become is a loan marketplace that is based in San Mateo, California. The company uses bank-level encryption for data security to protect borrowers’ and lenders’ information. With a single borrower application, it connects you to multiple loan offers from lenders in its platform that cover all 50 states.

Repayment is flexible and based on the monthly turnover. The approving third-party lenders provide other terms and conditions. Customers who apply for business funding must be in business for a minimum of three months. Those who don't qualify using this requirement will have free access to its LendingScore to help improve their funding odds.

As a funding solution marketplace, Become can match loans for businesses in all 50 states. They are limited to funding only for-profit businesses. It uses revolutionary technology to present your business in the best light to lenders. Unlike other lenders, Become’s LendingScore shows lenders your marketing success and digital footprint, too, making them more comfortable with your business’s repayment capabilities.

The company has 4.7 out of 5 stars on Trustpilot, with reviewers recognizing its simple and easy process and its excellent customer service.

Best for Retail : OnDeck

• Short-Term Loans: $5,000 to $250,000, repaid daily or weekly for three to 24 months
• Revolving Line of Credit: $6,000 up to $100,000, repaid weekly for up to 12 months
• APR: Short-term loans start at 29.9%, lines of credit start at 48.9%

Retail businesses can fluctuate by season, which is why OnDeck is our favorite for these types of businesses. OnDeck provides a simple yet focused package consisting of a business line of credit (LOC) and a short-term business loan.

The flexibility of its credit packages can help a store grow out of its infancy and into a noticeable startup while adapting to the seasonality so common in retail. They also give business owners access to smaller amounts of money, which keeps the borrower’s total interest expense low and makes it our best retail startup lender.

Funding within three days

Requires low minimum credit score

Less paperwork than most lenders

SMART Box capital comparison tool provides jargon-free cost transparency

Financing is not available in North Dakota

Not available to businesses in some industries (see list below)

One year in business required

Requires frequent (daily or weekly) repayments

Founded in 2006 and headquartered in New York City, OnDeck is an online small business lender. It offers two types of business loans: short-term loans and revolving lines of credit. It was one of the first lenders to rely primarily on technology.

Borrowers fill out a single application that works for every type of financing option it offers. Funds are available as fast as the same business day. The company doesn’t have prepayment penalties and can waive 100% of your remaining interest payments if you pay off your loan early. But there are origination fees of 0% to 4%.

For businesses to qualify, OnDeck requires at least a 625 personal credit score, one year in business, and $100,000 in business annual revenue. OnDeck serves over 700 industries in every state except North Dakota. The table highlights some of the industries that don't qualify for funding:

Trustpilot rates OnDeck highly with a rating of 4.6 out of 5 stars. Reviewers report positive experiences with the company’s responsiveness and customer service.

Best for High-Growth Startups : Midwest Corporate Credit

 Midwest Corporate Credit

• Loan Amounts: Up to $250,000 (for new businesses)
• Interest Rates: Prime + 1%
• Process Time: funding in as few as 7 days
• Fees: None upfront. 10% success fee based on the amount you choose to borrow

If you run a startup that has proven high growth in its first two years of business, Midwest Corporate Credit’s business credit line would be the best tool to fuel you to the next stage. It funds up to $250,000 for brand-new businesses and up to $1,000,000 to grow existing businesses and e-commerce stores. Funding takes place within seven days of your completed application.

No collateral required

Revolving account

Rates start at prime + 1%

No upfront fees

Interest-only payments

Two or more years in business

Must be able to demonstrate repayment ability from earnings

Personal guarantee required by all owners with more than 20% interest in the company

With a five-minute prequalification, a high funding limit of $1,000,000, no collateral requirement, and rates as low as prime + 1%, Midwest Corporate Credit earns our nod for the best lender for high-growth startups.

Founded in 2010, Midwest Corporate Credit has made it to the prestigious Inc. 500 list three times and has funded over $250 million in small business loans. Borrowing with Midwest comes with the following:

• Revolving line with interest-only payments allowed
• No early prepayment penalty
• Does not report to personal credit bureaus

Your startup business must be at least two years old and able to repay the loan from proven earnings. If your startup is pre-revenue, Midwest may be able to help you with its business credit card funding program. This program typically funds between $25,000 and $250,000. Interest rates will likely be 0% for six to 12 months with no upfront fees and a 10% success fee paid from the proceeds of the approved funding amount. 

Though the credit card program will fund nonprofits, the business line of credit (BLOC) will not. Other businesses ineligible for the BLOC include:

• Bail bond companies
• Direct lenders
• Factoring companies
• Gas stations
• Investment companies
• Life insurance companies (not independent agents)
• Pornography
• Tobacco-related businesses

The company has received positive reviews on Yelp, Birdeye, BiggerPockets, and YouTube acknowledging its professionalism, impeccable funding knowledge, and work ethic.

Best for Long Repayment Terms : Seek Business Capital

Seek Capital

• Loan Amounts: $5,000 to $500,000 for startups
• Loan Terms: Varies
• Interest Rates: Varies
• Process Time: Up to six months

Though many banks can provide an SBA loan, Seek Business Capital’s proprietary technology makes it easy for several lenders to consider a startup for the best rates and terms for loans that can extend for as long as 25 years.

Seek Business Capital is not a direct lender but a digital lending platform that specializes in providing financial services for startups and small businesses through its partnerships with major banks. These partnerships allow it to lend in 50 states.

A wide network of third-party lenders that specialize in various financing solutions

Proprietary lender-matching technology

Long-term and low rates with an SBA loan

Backed by several major investment firms

Most SBA loans awarded to businesses that are at least six months old

20% to 30% capital contribution required for a long-term SBA loan

Must show profit and loss statement, balance sheet, business plan

Headquartered in Los Angeles and founded in 2014, Seek Business Capital can offer SBA loan products with repayment terms of up to 25 years with a streamlined application process and wide lender exposure, making it the best choice for long repayment terms.

Most SBA applicants who qualify have at least a 680 credit score. Borrowers are generally required to make a 20% to 30% capital contribution to reduce the lender’s—and the SBA’s—risk. Seek will ask you to prove your time in business and produce a business plan with a financial forecast projecting between two and five years. In addition, your financial statements must show that your business earns enough to afford the loan payments.

For the SBA 7(a) loan, an SBA loan type accessible to startups, there is a prepayment penalty for loans with terms of 15 years or more if they are paid off within the first three years of the loan. The prepayment penalty is 5% if the loan is paid off in the first year, 3% in year two, and 1% in year three.

There is a fairly extensive list of industries and businesses that are not eligible for an SBA loan. Many lending, investment, and gambling businesses are ineligible, as are pyramid sales companies charitable and religious organizations, and government-owned corporations.

Most startup loans have short terms, ranging from months to just a few years. The SBA loan’s maturity of 15 to 25 years, therefore, is highly sought after. It is a slow and paperwork-intensive process, so Seek Business Capital’s ability to turn that into a simple effort while maximizing your application’s exposure to many lenders is a tremendous benefit for busy business owners.

Best for Unpaid Invoices : Upwise Capital

 Upwise Capital

• Loan Amounts: Up to 100% of the invoice amount
• Loan Terms: Varies based on when the customer pays the invoice, typically charges 1% for each month the invoice goes unpaid
• Factor Rate: 8% to 30%
• Process Time: As fast as same-day

If you want to explore funding your startup with your unpaid invoices, there is no company more transparent than Upwise Capital, our top choice for invoice financing.

A great perk of working with Upwise Capital is the comfort of knowing that it has a broad suite of financial products that can help you in the many scenarios you’ll find your business in as it grows. 

Based on the credit of the invoiced business

Excellent transparency

Invoice is used as collateral

Can finance up to 100% of invoice and account receivables

Funding speed as fast as same-day

Invoices must be from well-qualified customers

Online lender, no physical location to visit

Fees are based on the time it takes for the customer to pay the invoice

Located in New York with clients like Domino’s, Subway, Five Guys, and the UPS Store, Upwise Capital provides up to 100% invoice financing with an efficient online application. Upwise provides flexible financing options for startups and established businesses. It offers more than a dozen financing products to more than a thousand industries.

There are no prepayment penalties because of how invoice financing works. Rather than prepayment penalties, invoice financing lenders, called factors, charge additional fees to the business for each month the invoices remain open.  

The firm also educates consumers on:

• How the process works
• Why a business wants to use this tool
• The pros and cons
• What it costs

It also provides detailed examples and an online calculator. Business owners are best served when there are few surprises, which is why Upwise is the best at providing transparency into their unpaid invoice financing for startups.

Most Upwise customers who qualify have an annual revenue of over $150,000, a credit score of over 600+, and more than one year in business, with invoices from credible clients. The company serves all 50 states, but the quality of the customer who owes the unpaid invoice is highly vetted. The typical high-risk industries, such as gambling and financial services for which the item in trade is money, won’t qualify.

Upwise Capital’s Trustpilot reviews are 4.7 out of 5 stars, specifically noting the company’s professionalism, customer service, and funding success.

Startup business loans can be some of the most difficult types of loans to obtain. Not only do they usually require high levels of credit, cash injection from the owner, and collateral (three things many business owners don’t have when they are starting their first business), but they can also be paperwork-intensive.

That’s why online lenders and financial technology companies are rising to the top. These types of companies have taken on a traditionally difficult challenge for the lender and the borrower and developed ways to reduce the risk and inconvenience for both parties. 

Our best overall for startup business loans, Finance Factory, is an online lender that funds pre-revenue startups, publishes learning resources, and is transparent with their rates and fees.

Guide to Choosing Startup Business Loans

What is a startup business loan.

A startup business loan is a form of financing that is available to new companies and those that have been in operation for at least one to two years. These businesses have a very limited credit history or none at all. Startup loans provide businesses with the capital they need to get off the ground, pay for operational expenses, rent facilities, and purchase equipment.

Startups can apply for funding through the SBA, banks, and other lenders. Other options include venture capitalists , private investors, family, and friends. Qualifying requirements and lending standards may be lower than other types of business loans, but borrowers are usually subject to higher fees and interest rates to compensate.

We reviewed 15 lenders to find the best startup business loans on the market. We considered banks, private loan companies, and online lender platforms to find our favorite for each category. Company history, reputation for service and success, and customer review scores served as the foundation for us to bring you winners that you can trust. Favorable rates, terms and conditions, and qualifications that we thought were obtainable by many helped slingshot candidates to the top of their category. Innovations in technology, funding success, or a wide range of services inspired us to bring the best to light.

Frequently Asked Questions

A startup business loan is designed to help a new business get off the ground. This type of loan can be used to pay for equipment, furniture, office space, payroll, insurance, and inventory—anything that a business owner needs to start their business. In some cases, they can be used to expand an established small business, too. Startup loans allow businesses to qualify for capital without having to apply for traditional business loans, which tend to be harder to get for business owners who are just starting. These loans can be funded through the SBA, certain banks and credit unions, and non-traditional lenders.

How Do I Qualify for a Startup Business Loan?

To qualify for a startup business loan, most lenders' programs, including the SBA options, strongly prefer your startup to already earn revenue, have a base of customers, and provide annual financial reports covering six to 12 months.

There are some startup business loan types, like business credit cards, which can get some funding pre-revenue if you have good personal credit . In short, to qualify for a startup business loan, you must have a good credit history , cash, or collateral .

Is It Hard to Get a Startup Business Loan?

In general, it is harder to qualify for a startup business loan because they require at least two to three years in business. If you choose the business credit card route, you’ll need a strong personal credit history to qualify. If you are two years into your startup phase and applying for a startup loan to fund your next level of growth, many lenders require your business to show an annual revenue of at least $100,000. In the SBA loan category, you’ll also need to invest at least 20% of the loan amount as a down payment.

What Credit Score Do You Need for a Startup Business Loan?

That depends on the lender. Most lenders will look at your personal credit score—especially if your business is just starting or in its infancy. Some lenders require a credit score of 700 or higher while others may be a little more lenient with their requirements. For instance, the SBA requires a minimum score of 620 for its microloan program.

Do Banks Give Loans to Startups?

Yes, banks give loans to startups. Whether your startup is in its first week and has not earned its first dollar yet, or your company is in its fifth year borrowing for a new location or additional equipment, banks have programs for you. Most bank programs will require heavy documentation during the application process, and they could range from a business bank credit card to a business line of credit to a short-term or long-term loan.

Can I Get a Business Loan With No Money Down?

One way to get a business loan with no money down is through an equipment financing loan . There are lenders that will use the equipment itself as collateral, thus reducing risk and eliminating the need for a down payment. Some other ways to get a business loan with no money down are business credit cards, short-term loans, and lines of credit. Working capital bridge loans and merchant cash advances may also be options for your business to get a loan with no money down.

What Are Some Ways to Finance a Startup?

The best way to fund a startup is to determine how much capital you'll need. Consider looking for capital from family and friends, venture capitalists, and other investors. You may qualify for a loan through the Small Business Administration, which guarantees loans from traditional lenders. Online lenders and crowdfunding sites may also provide you with funding for your business venture.

Superb Images / Getty Images

Finance Factory. " Startup Funding ."

Trustpilot. " Finance Factory ."

Become. " Startup Business Loans: Compare the Best Options ."

Trustpilot. " Become ."

OnDeck. " Put fast funds to work for your business ."

OnDeck. " A fast, flexible form of business funding ."

OnDeck. " Restricted Industries ."

OnDeck. " FAQs ."

Trustpilot. " OnDeck ."

Midwest Corporate Credit. " SERVICES ."

Seek Capital. " Best Startup Business Loans of 2024 ."

U.S. Small Business Administration. " 7(a) Loan Program: Terms, Conditions, and Eligibility ."

Upwise Capital. " Invoice Financing for Small Businesses ."

Trustpilot. " Upwise Capital ."

Janover. " SBA Loan Requirements: Credit Scores ."

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Home > Finance > Loans

The 5 Best Startup Business Loans of 2023

Data as of post date. Offers and availability may vary by location and are subject to change. Don't qualify for a traditional small business loan? Consider a personal loan  or a business credit card . 

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

Bottom line: Most startups will like Lendio best, since it gives you a shot at many lenders and kinds of loans. But in our rankings below, we’ll tell you about all the best startup business loans out there—and how to qualify for it—so you can make business boom.

In this ranking, we’ll focus on startup business loans you can qualify for with one year or less in business and $150,000 or less in annual revenue—in other words, business financing young startups can actually get.

As a startup business owner, you have so many opportunities and so much potential—if only you can work through cash flow problems that threaten to bring your business grinding to a halt. But you already know that. You just need to know how to get the financing to grow your startup.

We researched more than 50 business lenders and found out which ones lend to startup businesses.

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• Lendio : Best startup loans overall
• Bluevine : Best for low rates
• Fundbox : Best for young businesses
• OnDeck : Best for repeat borrowing
• Kiva : Best for 0% interest

Compare the best startup business loans

Data as of post date. Offers and availability may vary by location and are subject to change. *Does not represent the typical rate for every borrower, and other fees may apply.

Avant’s secure personal loan options and next-day funding make it our top pick for brand new businesses not yet qualified for business loans.

Qualifications:

No min. time in biz

No min. revenue

550+ credit score

Lendio: Best overall for startup loan for business

• 560 min. credit score
• $50,000 min. annual revenue
• 6 months min. time in business

With everything from equipment financing to lines of credit to long-term loans, Lendio offers one-stop comparison shopping for small-business loans. 

Lendio isn't what you'd call a "traditional" lender. Instead, it's a lending marketplace that partners with 75 or so lenders to help you find the right loan for your needs. So instead of spending time applying to multiple lenders to see who will approve you and what kind of offers you get, you fill out just one application and get multiple loan offers to compare and choose from.

To qualify for a Lendio loan, you’ll need to have been in business for six months and have at least a 500 personal credit score. Now, meeting those bare minimum qualifications won’t get you the lowest rates or biggest loans. But given that Lendio works with more than 75 lenders (including some we recommend below), there’s a good chance you’ll find some kind of funding for your startup.

Yes, these options we are offering in this article do truly rock but even if the offering is great, not every business owner qualifies for a small-business loan. If you aren't able to secure a loan for your startup, you may be able to apply for a personal loan or a business credit card . Enter some basic information about your business below, and we can refer you to potential lenders that meet your needs. (Please note that only certain lenders allow customers to take out personal loans with the intent to grow a business.)  Of course, if you do want to go the traditional startup business loan read on below for more in-depth reviews of other financing options. 

Bluevine: Best for low rates

• 625 min. credit score
• $40,000 min. monthly revenue
• 2 years min. time in business

Data as of post date. Offers and availability may vary by location and are subject to change.

*Does not represent the typical rate for every borrower, and other fees may apply.

Want to try for a low interest rate? A line of credit from Bluevine could work nicely for you.

Bluevine’s rates start at under 7% interest, making it competitive not just with other online lenders, but with traditional lenders too. Put simply, it can cost less than many other lenders on this list (especially ones that use fees instead of interest). 

That said, Bluevine does have comparatively high credit score and annual revenue requirements. And we do want to remind you that 6.2% is just its starting interest rate―your actual rate could end up quite a bit higher.

All the same, Bluevine’s low starting interest makes it an attractive lender for startup businesses.

Fundbox: Best for poor credit

• 600 min. credit score
• $100,000 min. annual revenue

Like Bluevine, Fundbox offers business lines of credit. Unlike Bluevine, Fundbox accepts applications from businesses with "poor" personal credit scores (starting with a FICO score of 600). And a line of credit from Fundbox is a much safer, sturdier loan choice for small-business owners with poor credit than, say, a merchant cash advance.

On the flip side, Fundbox's maximum loan amount is $150,000. That amount will work nicely for many startups, but if you need a higher business line of credit, we recommend looking at Bluevine instead.

OnDeck: Best for repeat borrowing

• 1 yr. min. time in business

We’ll be honest: OnDeck doesn’t have the best deals for first-time borrowers. But OnDeck gives repeat borrowers lots of perks, including reduced (or even waived) fees and lower APR on loans. So if you need a term loan for your startup now, and you think you’ll need more business loans in the future, OnDeck might be a good fit. And there’s no better time to start building that beneficial relationship with OnDeck than right now.

OnDeck has pretty reasonable application requirements for startups: a 625 credit score, one year in business, and $100,000 in revenue. Now, those application requirements are higher than some others on this list (notably Bluevine), so OnDeck isn’t for everyone and every business. But if you meet or exceed those qualifications, and you want to create a long-term relationship with your lender, then OnDeck might be right for you.

Kiva: Best for microloans

• No min. credit score
• No min. annual revenue
• No min. time in business

What if you didn’t have to pay interest on your financing? With Kiva, you don’t. It offers 0% interest on all its microloans . Sure, you’ll have to start the crowdfunding process by getting your family and friends to pitch in some funding (a process that can take more than 30 days), but what other lender offers interest-free loans?

Do keep in mind, though, that Kiva microloans go up to only $15,000. That’s a much lower maximum loan size than you’ll find from other lenders. (They’re called microloans for a reason.)

Of course, if you’re just getting started, a Kiva microloan might be more than enough.

Types of startup business loans

Traditional loans and lines of credit are great, but they’re far from the only way to finance your business.

And in fact, you may have a hard time getting loans, lines of credit, or other business financing for your startup. Lenders prefer to loan money to older businesses with high revenue. If you’ve got a young business―especially one without much revenue yet―even the lenders on this list may seem out of reach for now.

No need to panic, though. Like we said, you’ve got other options.

If you want to grow your startup, you can also consider other small-business funding options like these:

• Personal savings
• Personal loans
• Business credit cards
• Business grants
• Family and friend investments
• Angel investors
• Venture capitalists
• Crowdfunding sites

Sure, these alternative funding options have their downsides. It can take a long time to get investors, for example. Business grants are super competitive. And only certain lenders can legally allow you to use a personal loan to finance a business.

But these other forms of financing also have a big advantage: Your business’s age and revenue don't matter as much.

So while we do hope one of the small business loan lenders on this list works out for you, don’t forget about all the other options available to you and your business.

Honorable mentions

The lenders above are our favorites for startup businesses—but if none of are favorite lenders work for you, we have a few other recommendations. Note that several of our honorable mentions are merchant cash advances. We only recommend turning to a merchant cash advance if you're certain you can pay the loan off as soon as possible. Be sure to read up on merchant cash advances before applying.

Compare the best startup financing: Honorable mentions

Kabbage: best for monthly payments.

• 660 min. credit score
• 3,000 min. monthly revenue

Worried about how weekly or daily payments could affect your cash flow? Then try applying with Kabbage.

Kabbage uses a monthly payment schedule, making it unique among online lenders. For businesses with tight budgets, that can free up cash flow for the rest of the month.

Just watch out for the monthly fees with Kabbage. If you repay your funds quickly, they’re not bad. But if you take more than a few months, they’ll add up before you know it.

Lendr: Best for merchant cash advances

• Min. credit score unlisted
• $10,000 min. monthly revenue

As a rule, we dislike merchant cash advances and think you’re better off without them. If you’re determined to get one, though, we suggest going with Lendr.

Lendr has a couple key things going for it. Unlike other cash advance companies, Lendr clearly lists its rates and fees on advances. And it also earns much better customer reviews than many of its competitors.

To be clear, its cash advances still cost a lot. And if you don’t read carefully, the repayment method and schedule can still catch you by surprise. If you borrow carefully, though, Lendr may work well for your startup.

Square Loans: Best for Square users

Do you have one of the many businesses that uses Square to process credit card payments? Then you’re in luck―you might qualify for Square Loans.

Square offers loans to qualified users―basically users that have consistently processed a good volume of credit card payments through its service. That means Square doesn’t care about your overall revenue or your credit score. Just your Square processing history.

Unfortunately, Square doesn’t let you manually apply for a loan. If you don’t see an offer, you don’t qualify (yet). That makes Square Loans hard to plan for. But if you do get an offer, Square loans give you a convenient way to fund your startup.

Payability: Best for ecommerce sellers

• 3 mos. min. time in business

For businesses that sell on ecommerce marketplaces (like Amazon, Walmart, or Shopify), Payability can offer accessible startup funding.

Payability gives cash advances to qualified sellers. It looks at your sales history (with whatever platform you use). If you have a history of good sales, you can qualify―simple as that.

Note that Payability does expect a fairly high amount of revenue, though. And as with any cash advance, its funding costs a lot. At least it lets you save on fees by repaying your advance early.

Forward Financing: Best customer reviews

• 500 min. credit score

Forward Financing offers just merchant cash advances, but it gets incredible customer reviews.

In fact, Forward Financing consistently gets the highest reviews of any lending company we review. Its customers say Forward Financing is fast, easy to use, and has great customer service. All good stuff.

We still see downsides, though, like high (and hidden) costs. So despite what customers say, Forward Financing wouldn’t be our first choice for funding. If those downsides don’t worry you, though, Forward Financing reviews suggest you’ll have a good experience.

The takeaway: Best start-up loans for small business

Even as a startup business owner, you have plenty of financing options .

With Lendio ’s lending marketplace, you can compare funding offers and find the best deal. Or you can apply directly with Bluevine to try for low interest rates. Very young businesses may prefer applying with Fundbox. Borrowers with plans for the future might want to start a relationship with OnDeck. And business owners wanting the cheapest possible deal can enjoy 0% interest form Kiva.

So find the lender that fits your needs and qualifications the best, and then get that funding to grow your business.

Now that you’re reading to apply for a startup loan, make sure you avoid common mistakes when getting a business loan .

Startup loan FAQ

You may have a hard time getting a loan for your startup. Lenders prefer to loan money to older businesses with high revenue. If you’ve got a young business (less than a year old or less than $100,000 in revenue), you may consider a personal loan, business grant, or crowdfunding instead.  

When applying for a business loan, you’ll typically need at least one year in business and up to $150,000 in annual revenue. Other business loan requirements include:

• Personal credit score (620 or higher is preferred)
• Profit and Loss statements
• Balance sheets
• Bank account records (including current debt)
• Tax returns for the past two years

The best loans for starting a new business depend on your credit score and the loan amount you're looking for. Bluevine is best for low starting interest rates and Funcbox is best if you have poor credit and need to borrow $150,000 or less.

Our methodology

We evaluated over 50 traditional and online business lenders, focusing our search on those that lend to young businesses (one year or younger) with limited revenue (under $150,000). After narrowing things down, we graded the remaining lenders on financing costs, accessibility, customer reviews, and more―and the resulting scores gave us our rankings.

Related reading

• The 10 Best Unsecured Business Loans 2023
• 10 Best Startups Loans for Bad Credit in 2023
• How to Get a First-Time Small Business Loan
• Best Crowdfunding for Startups 2023: How to Fund Your Small Business

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What is a startup business loan? How does it work?

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Key takeaways

• The majority of new businesses need financing to cover operating expenses or expansion.
• Getting a loan for a new company can be difficult as lenders consider new businesses higher risk.
• Because of this, many lenders will examine your personal credit and require a personal guarantee.

A startup business loan is any loan that helps get a new business off the ground. According to the Fed Small Business’s 2023 Firms in Focus , 70 percent of companies under two years old used loans to fund operating expenses, and 67 percent used loans to pay for expansion in 2022.

Given the risks of financing new companies , startup loans require lenders to assume greater risk. But you can still find both traditional banks and online lenders that are willing to take a chance.

The best startup business loans will fund projects for companies with little time in business and limited credit histories. In return, you can expect additional requirements like significant collateral or a higher interest rate. 

How a startup business loan works

Startup loans ultimately work like any other business loan : You apply for funding, a lender assesses your creditworthiness and, if your loan is approved, you repay the funds with interest. Use these steps when applying for a startup loan:

1. Know the requirements

Startup loans may offer more lenient requirements in some respects, such as accepting borrowers with low revenue streams. But because many new small businesses fail, you may have to meet other requirements to offset lenders’ increased risks. You may have to provide greater collateral for approval, sign a personal guarantee or pay a higher interest rate.

Getting a startup loan is often easier if you launch your business before you apply for funding. Showing lenders your business has an operating history is a big help when seeking financing.

2. Gather documents

Before you apply for a loan, put together the documents you need when applying. This includes basic information about yourself and your company, such as ID, Social Security number and business formation documents. You also want to gather business bank account statements, licenses and other information that show details about your company’s operations.

Putting together a business plan that shows how you’ll use the funds and how you can repay the loan can also be a big help.

3. Focus on credit

You’ll also want to improve your credit . Small business lenders tend to prioritize your personal credit above your business credit. If you have strong personal credit, the personal guarantee you sign can help make it easier to get a business loan. 

Finally, limit your debt service coverage ratio . That is, try not to take on too much other debt before you apply for your startup loan. 

Startup loan vs. conventional loan

Startup loans are often offered by the same lenders as conventional loans. They may be marketed as startup loans or simply small business loans with relaxed minimum requirements for credit or time in business. 

Based on the Fed Small Business’s 2023 Firms in Focus, banks are the most popular sources of financing for new companies, with 48 percent getting financing from large banks and 39 percent from small banks. However, based on the difficulty that startups have securing funding, businesses aged zero to two years were twice as likely to use personal savings versus a financial institution or lender.

Types of startup loans

There are many different types of loans startups can apply for, each suited to a different purpose. For example, a startup valuing flexibility may prefer a line of credit, while one needing to make a one-time large purchase may feel a term loan is a better fit.

Understanding the different types of startup loans and when to use each is key to getting the right financing for your company.

• SBA loans : These loans are backed by the government and offer easier approvals and large loan limits. Through the SBA 7(a) program, borrowers can get loans up to $5 million.
• SBA Community Advantage loans : a special type of SBA loan, these focus on underserved communities, offering loans up to $350,000.
• Microloans : These are small loans, often available from SBA lenders. The maximum loan amount from the SBA is $50,000.
• Term loans: Term loans disburse funds all at once, making them useful for one-time purchases. You can get short-term or long-term business loans.
• Lines of credit : Lines of credit give you source of funds that you can draw from up to a certain limit as needed. Most are revolving, which means that you repeatedly borrow from the credit line as you pay back past loans.
• Equipment financing : These loans are used to buy expensive equipment and have long repayment terms. The equipment serves as collateral, which can help make qualifying easier.
• Invoice factoring and financing : Invoice factoring and financing allow you to sell the value of unpaid invoices to a third party to access funds quickly.
• Private loans. You may also be able to get a direct loan from an investor, peer-to-peer lending or family and friends.

As of October 2023, the SBA has approved over $27 billion in 7(a) loans and more than $6 billion in 504 loan funds, according to the SBA’s weekly lending report .

Alternatives to startup business loans

Startup loans are a useful source of funding for new companies. But like any form of financing, they have pros and cons . It’s important to consider all of your options when looking to fund a business. Some alternatives to startup business loans include:

• Grants : A grant can provide funds to help start or expand a company without requiring repayment. Grants may target specific industries or groups, but the application process is long and competitive. That said, it’s a great option to consider if you want to avoid debt financing.
• Business credit card . Credit cards are a flexible option to assist startups with operational expenses. Some of the best business cards offer introductory interest rates and rewards that can help you save money. Additionally, if you pay the balance back in full each month, you won’t be charged interest.
• Merchant cash advance : If your startup needs quick funding, a merchant cash advance is a good option that many businesses qualify for. Merchant cash advances use your company’s future debt and credit card sales to repay the loan. But losing a percentage of future revenue to repay the loan can make it easy to get trapped in a cycle of debt.

The bottom line

You’ll have the best chance of getting approved for a startup loan if you have at least six months in business and an established business credit score. Start by comparing lenders and figuring out how much you need. Requesting too much funding could result in a rejection.

Frequently asked questions

How much can a startup business get a loan for, how hard is it to get a business loan to start a business, is it smart to borrow money to start a business.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

" 2023 Firms in Focus: Findings from the 2022 Small Business Credit Survey. " Fed Small Business. Accessed on October 31, 2023.

" 7(a) loan program. " U.S. Small Business Administration. Accessed on October 31, 2023.

" 7(a) and 504 Summary Report. " U.S. Small Business Administration. Accessed on October 31, 2023.

Related Articles

How to get a startup business loan: 5 steps

How do business loans work?

How much can you borrow with a startup business loan?

What is a business line of credit and how does it work?

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Business Loans

Best startup business loans of May 2024

Ashley Harrison

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Updated 9:48 a.m. UTC May 2, 2024

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Startup business loans generally have less stringent approval requirements when it comes to your credit history, time in operation and annual revenue compared to other types of business financing. Additionally, the best startup business loans of 2024 generally offer a wide range of loan amounts, reasonably long repayment terms and fast funding, with some also providing discounts to reduce your overall costs.

Best loans to fund a startup business

• Credibly business loan : Best startup business loan.
• OnDeck business loan : Best for customer experience.
• Fora Financial business loan : Best for poor credit.
• National Funding business loan : Best for fair credit.
• OnDeck business line of credit : Best for fast funding.
• Balboa Capital business loan : Best for short-term loans.
• American Express® Business Line of Credit : Best for startups with low revenues.

Best startup business loan

Credibly business loan.

Loan amounts

Min. time in operation, min. annual revenue, what you should know.

With Credibly, you could receive an approval decision within just four hours, and if you qualify, you might get your funds as soon as the same day — which could make Credibly a solid choice if you need fast funding for your startup.

Credibly business loans are available for $5,000 to $600,000 with repayment terms ranging from three months to two years for short-term loans or 18 or 24 months for long-term loans. Borrowers will also have access to its Quick Draw funding program. If you’re approved for a loan and choose to take less funding than the maximum, you might be able to get the money you left on the table up to the program’s expiry date.

Keep in mind that to qualify with Credibly, your business must be in operation for at least six months with a minimum annual revenue of $180,000, and you’ll need a credit score of at least 501. Also note that your loan might come with an origination or monthly fee that could increase your overall borrowing costs.

Pros and cons

• Fast funding.
• Accepts poor credit scores.
• Offers Quick Draw funding program.
• Higher annual revenue requirement compared to some lenders.
• Might come with an origination or monthly fee.
• No advertised rate discounts.

More details

• Loan amounts: $5,000 to $600,000.
• Repayment terms: 3 months to 2 years (for short-term loans) or 18 or 24 months (for long-term loans).
• Discounts: None.
• Fees: Origination or monthly fee (if applicable, the amount will be listed in your loan agreement).
• Min. credit score: 501.
• Required time in operation: 6 months.
• Required annual revenue: $180,000.
• Time to fund: As soon as the same day after approval.

Best for customer experience

Ondeck business loan.

OnDeck offers a robust customer service team to help its borrowers through the loan process. This includes providing support via email and phone as well as assigning dedicated account managers to assist borrowers with their individual needs.

With OnDeck, you can borrow $5,000 to $250,000 with terms from 18 months to two years. You’ll need a credit score of at least 625, and your business must be in operation for at least one year with a minimum annual revenue of $100,000. If you’re approved, you could get your funds as soon as the same day (two to three business days for loans over $100,000 or if your state isn’t eligible for same-day funding). You might also qualify for rate reductions if you take out additional loans from OnDeck.

Note that while you don’t have to provide collateral, an OnDeck business loan must be secured by a general lien on your business assets along with a personal guarantee. Additionally, this lender charges an origination fee, and a prepayment penalty could apply if you pay off your loan ahead of schedule but don’t qualify for the 100% prepayment benefit option. OnDeck’s interest rates also aren’t disclosed on its website, and its loans aren’t available in Nevada, North Dakota or South Dakota.

• Responsive customer support team.
• Accepts fair credit scores.
• Charges an origination fee and prepayment penalties in some cases.
• Doesn’t publish interest rates online.
• Not available in all states.
• Loan amounts: $5,000 to $250,000.
• Repayment terms: 18 months to 2 years.
• Discounts: Repeat customer discount (amount not disclosed).
• Fees: Origination fee (0% to 4%) and prepayment penalty (75% of remaining interest if you don’t qualify for the 100% prepayment benefit option).
• Min. credit score: 625.
• Required time in operation: 1 year.
• Required annual revenue: $100,000.
• Time to fund: As soon as the same day (for loans up to $100,000) or within 2 to 3 business days (for loans over $100,000) after approval.

Best for poor credit

Fora financial business loan.

While many lenders require good credit, you might qualify for a business loan from Fora Financial with a credit score as low as 500. This could make this lender a good option for borrowers with poor credit whose businesses have operated for at least six months and generate at least $180,000 in annual revenue.

Fora Financial’s business loans range from $5,000 to $1.5 million and come with terms up from four to 15 months. This lender also provides the option to increase your loan amount after you’ve paid down 60% of your original balance, giving you some added flexibility. Additionally, if you pay off your loan ahead of schedule, you could qualify for a prepayment discount to reduce your overall costs.

Note that Fora Financial charges a one-time processing fee as well as a one-time wire transfer fee, which can increase your overall borrowing costs.

• Provides a discount for early repayment.
• Can increase your borrowing amount after repaying 60% of your original loan.
• Won’t help you build business credit.
• Charges a processing fee.
• Charges a wire transfer fee.
• Loan amounts: $5,000 to $1.5 million.
• Repayment terms: 4 to 15 months.
• Discounts: Prepayment discount (amount not disclosed).
• Fees: Processing fee (at least 2.5%) and wire transfer fee (amount not disclosed).
• Min. credit score: 500.
• Time to fund: Within 1 to 3 business days after approval.

Best for fair credit

National funding business loan.

If you’re looking to repay your loan over a long period of time, National Funding could be a good choice. Its short-term loans come with terms from four months to 18 months while you’ll have two to five years to repay a long-term equipment financing loan — longer than most of the lenders on this list. Plus, you could qualify for an early payoff discount if you repay your loan ahead of schedule.

With a National Funding business loan, you can borrow $10,000 to $500,000 or up to $150,000 with an equipment financing loan. To get approved, you’ll need a credit score of at least 600, and your business must be in operation for at least six months. If you’re approved, you could get your funds as soon as the next business day.

Note that National Funding’s minimum annual revenue requirement is $250,000 — higher compared to some lenders. This lender also doesn’t disclose its maximum factor rate (essentially a flat fee paid upfront instead of interest that’s paid over time), and it charges an origination fee that could increase your overall borrowing costs.

• Offers repayment terms as long as 5 years.
• Early repayment discount available.
• Doesn’t disclose maximum factor rate.
• Charges an origination fee.
• Loan amounts: $10,000 to $500,000.
• Repayment terms: 4 months to 5 years (depending on loan type).
• Discounts: Early repayment discount (7% of remaining balance).
• Fees: Origination fee (1% to 5%).
• Min. credit score: 600.
• Required annual revenue: $250,000.
• Time to fund: As soon as the next business day after approval.

Best for fast funding

Ondeck business line of credit.

If you’d like instant access to funds, a business line of credit from OnDeck might be a good choice. Its unsecured credit lines range from $6,000 to $100,000 with repayment terms of 12, 18 or 24 months that reset after each withdrawal, and you could get access to your funds as soon as the same day after approval. Plus, any draws you make on your credit line between $1,000 and $10,000 will typically be funded within just seconds, no matter the day or time.

To be eligible for an OnDeck business line of credit, you’ll need a credit score of at least 625. Your business must also have been in operation for a minimum of one year with at least $100,000 in annual revenue.

Keep in mind that this lender doesn’t offer same-day funding in every state, and it doesn’t disclose its maximum interest rate. Additionally, OnDeck business lines of credit aren’t available in North Dakota.

• Doesn’t require collateral (though a general lien will likely be placed on your business).
• Doesn’t disclose its maximum interest rate.
• Doesn’t operate in all states.
• Same-day funding not available in all states.
• Loan amounts: $6,000 to $100,000.
• Repayment terms: 12, 18 or 24 months.
• Fees: None.

Best for short-term loans

Balboa capital business loan.

If you’re looking for a short-term loan, Balboa Capital could be a good choice. Its business loans range from $20,000 to $250,000 and come with terms from three months to two years, and if you’re approved, you could get your funds as soon as the same day. Additionally, borrowers who have been in operation for longer periods of time than the minimum one year required might be eligible for higher loan amounts — which might make Balboa Capital appealing for future financing as your business grows.

Keep in mind that you’ll need a credit score of at least 620 as well as a minimum annual revenue of $300,000 — higher compared to other lenders offering similar loans. This might work for startups that have been established for a few years or experienced significant revenue growth in a short amount of time.

Also note that Balboa Capital doesn’t disclose its interest rates or fees online. To see what you might qualify for and what costs to expect, you’ll need to reach out to the lender.

• Very short term lengths available.
• Lack of transparency around fees.
• Loan amounts: $20,000 to $250,000.
• Repayment terms: 3 months to 2 years.
• Fees: Does not disclose.
• Min. credit score: 620.
• Required annual revenue: $300,000.

Best for startups with low revenues

American express® business line of credit.

Average monthly revenue

Several lenders require six-figure annual revenues to qualify for funding. However, you could get approved for a business line of credit from American Express after one year in business and at least $3,000 in monthly revenue. This could make this lender a good option for newer startups with lower revenues.

American Express business lines of credit range from $2,000 to $250,000. In addition to meeting minimum time-in-business and revenue requirements, you’ll also need a credit score of at least 660* to be eligible — though keep in mind that all businesses are unique and are subject to approval and review. If you’re approved, you could have access to your funds within one to three business days.

One of the big disadvantages with these lines of credit is that they require the borrower to understand and manage a fairly complex system. Each draw on the credit line will result in a separate installment loan with terms from six, 12, 18 or 24 months. These loans must be secured by business assets along with a personal guarantee. Also keep in mind that American Express charges a monthly fee for each month that you carry an outstanding balance as well as late fees — both of which can increase your overall borrowing costs. Total monthly fees incurred over the loan terms are as follows: 3% to 9% for six-month loans, 6% to 18% for 12-month loans, 9% to 27% for 18-month loans and 12% to 18% for 24-month loans.

• Lower annual revenue requirement compared to some lenders.
• Charges monthly fees on outstanding balances.
• Charges late fees.
• Poor Trustpilot reviews for the company overall.
• Loan amounts: $2,000 to $250,000.
• Repayment terms: 6, 12, 18 or 24 months.
• Fees: Monthly fees for outstanding balances (3% to 9% for 6-month loans, 6% to 18% for 12-month loans, 9% to 27% for 18-month loans and 12% to 18% for 24-month loans) and late fees (amount not disclosed).
• Min. credit score: 660*.
• Required average monthly revenue: At least $3,000 in monthly revenue.

*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.

Compare the best startup business loans

Methodology

Our expert writers and editors have reviewed and researched multiple lenders to help you find the best startup business loan. Out of all the lenders considered, the six that made our list excelled in areas across the following categories (with weightings): loan details (20%), loan cost (20%), eligibility and accessibility (35%), customer service (15%) and application process (10%).

Within each major category, we considered several characteristics, including APR ranges, late fees and prepayment penalties, loan amounts, maximum loan terms and funding time. We also evaluated each provider’s requirements for credit score, time in operation and annual revenue as well as customer support options and customer reviews.

Why some lenders didn’t make the cut

Of the business loan lenders that we reviewed, only a fraction made the cut. The reasons for this varied by lender, with several not receiving high enough scores due to not publicly disclosing their rates or eligibility information like minimum credit score while others scored lower based on fees and a lack of discounts.

What is a startup business loan?

A startup business loan is a type of financing designed specifically to help newer businesses get off the ground. 

“Obtaining financing is challenging for new startups because traditional banks require borrowers to show an established business history and have collateral or a valuable asset to place a lien against in case you don’t pay back the loan,” says Jeff Saling, executive director at StartUpNV, a nonprofit startup incubator and accelerator. 

As a result, startup business loans often have less stringent eligibility criteria compared to more traditional business financing options. However, keep in mind that because these loans can be riskier to lenders, they could also come with higher interest rates and additional fees. Additionally, they might not help you establish your business credit history, depending on the lender.

Types of startup business loans

There are a few types of startup business loans that might be available to you, depending on your business and personal circumstances, including:

Private startup business loans

These loans are offered by private financial institutions, usually online lenders. Eligibility criteria and loan terms can vary depending on which lender you choose. Additionally, while private business loans might provide higher loan amounts and faster funding, they can also come with higher overall costs based on interest rates and fees.

Government startup business loans

The Small Business Administration (SBA) provides several types of business financing. Specific SBA loans available for startups include microloans and Community Advantage loans, which can help eligible business owners to build their businesses. The SBA microloan program offers smaller loans of up to $50,000 while the Community Advantage program provides loans of up to $350,000. 

These loans can be less expensive in terms of interest and fees compared to private loans. However, funding can take several weeks or even months.

Nonprofit startup business loans

Nonprofit organizations like Kiva offer microloans to startup business owners with little or no interest charges and possibly also no credit check. 

The catch is that loan amounts are relatively low — Kiva, for instance, maxes out at $10,000 — and there might be other requirements you’ll need to meet. For example, Kiva crowdfunds loans from individual contributors, and you’ll need to start by recruiting people from your community to fund your loan.

What you need to qualify for a startup business loan

The eligibility requirements can vary depending on the type of loan and the lender you choose. Some of the factors lenders consider include:

Personal and business credit history 

You’ll typically need to undergo a personal credit check when you apply for a startup loan. While some lenders specialize in working with business owners with bad credit, many others require you to have good credit (usually meaning a credit score of at least 670). 

Lenders might also consider your business credit history to determine your creditworthiness. It generally takes six months to a year to establish business credit, so your business might not have a credit score if you’ve only recently begun operating. Because of this, lenders that work with startup business owners might have more lenient requirements regarding your business’s credit history.

Minimum time in business

How much time your business must be in operation will depend on the individual lender. Some accept shorter minimums of six months while others require at least one year or more.

Minimum annual revenue  

You’ll also need to show that your business generates a certain amount of annual revenue. Many lenders require an annual revenue of at least $100,000. However, some accept lower revenues than this — for example, the average monthly revenue for an American Express business line of credit is at least $3,000.

Collateral  

Depending on the lender and the type of loan you apply for, you might need to provide collateral. Generally, securing a loan with collateral lowers the lender’s risk, which can result in better terms. However, it also means you could lose your property if you don’t keep up with your payments.

Collateral for business loans will typically be business assets, such as inventory or equipment. A personal guarantee is also typically required, which is your promise as a borrower that you’ll repay the loan from your personal assets even if your business defaults. 

Time to fund

Secured vs. unsecured startup business loans

Many startup business loans are unsecured, which means you don’t have to provide collateral to get approved. However, the lender might still require a lien on your general business assets or a personal guarantee. Additionally, because an unsecured loan is riskier for a lender, you might end up with a higher interest rate or additional fees.

Most kinds of business loans, on the other hand, are secured — regardless of which stage you’re at in the business life cycle. Requiring collateral can also extend to startup loans, depending on the lender and type of loan you choose. Collateral for a business loan will typically be business assets, such as inventory or equipment. 

A secured loan is less risky for the lender, which means you might be able to take advantage of better loan terms. However, if you default on your payments, the lender can seize your collateral and sell it to recoup the remaining loan amount.

What is a personal guarantee?

A personal guarantee is your agreement to repay your loan from your personal assets if your business fails. Ultimately, this gives permission to the lender to pursue you for repayment if your business defaults on the loan. 

Personal guarantees are required by most business lenders. This includes lenders that offer financing to startups.

“New startups have few, if any, valuable assets and no financial history,” says Saling. “This is why banks (and other types of lenders) require a personal guarantee when a business is new.”

How to get a startup business loan

If you need financing for your new business, follow these steps to apply for a startup business loan :

1. Review your credit

When you apply for a startup business loan, the lender will review your credit to determine your creditworthiness as well as your interest rate. Because of this, it’s a good idea to check your credit before you apply to see where you stand.

In many cases, eligibility for startup business loans will depend on your personal credit score rather since startups might not yet have established business credit. You’ll typically need a good credit score (usually considered to be 670 or higher) to qualify. There are also several lenders that offer loans for poor and fair credit, but these generally come with higher interest rates.

You can use a site like AnnualCreditReport.com to review your credit reports from the three credit bureaus — Experian, Equifax and TransUnion — for free. Additionally, you can check your FICO credit score for free through Experian, a credit-monitoring service or even your bank or credit card company.

If your startup has operated long enough to have established business credit, make sure to review that, too. You can do so through a third-party company like Dun & Bradstreet or through the credit bureaus Experian or Equifax. Be sure to report any errors you find in your personal or business credit reports to the appropriate credit bureaus to potentially boost your credit scores.

2. Determine your capital needs 

Before you apply, it’s important to consider what type of financing would best suit the needs of your startup. For example, do you need money for working capital or long-term growth? Additionally, do you prefer a lump-sum disbursement with an installment loan or the ability to repeatedly borrow from a revolving line of credit ? 

3. Compare lenders and pick your loan option

Take some time to shop around and compare your options with as many startup business loan lenders as possible. This way, you can find the right loan for your needs. Consider not only interest rates but also loan amounts, fees, repayment terms and eligibility requirements. You might also want to check if the loan will help establish your business credit.

After comparing lenders, choose the loan option that you like best.

4. Gather your documentation and apply

You’ll need to submit both personal and business documentation when you apply. This will likely include tax returns, financial statements, business licenses, debt schedules (if any) and information for collateral if it’s a secured loan. Lenders might also ask to see a business plan or proposal to verify how you plan to use the loan and if you can reasonably afford to repay it.

After you’ve gathered your documentation, you’ll have to complete a full loan application. This can often be done online — though you might have to discuss your options with a loan specialist to proceed, depending on the lender.

5. Get your funds

If you’re approved, the lender will have you sign for the loan so the funds can be disbursed to you. Note that while several online lenders provide funding as soon as the same or next business day, traditional banks and credit unions can take weeks or even months to process and fund business loans. 

Alternatives to startup business loans

If a startup business loan doesn’t seem right for you or you’re struggling to qualify, here are some alternatives to consider:

Personal loans 

A personal loan can come with a lower interest rate and longer repayment term compared to a startup business loan. However, you’ll generally need good to excellent credit to qualify. Additionally, because the loan won’t be tied to your business, it won’t help to build your business credit. 

Also keep in mind while some personal loan lenders allow their loans to be used for business purposes — such as Discover and Upstart — many do not. So be sure to read the restrictions before you apply.

Business credit cards 

This could be a good option if you’re looking to cover small, routine expenses, such as paying for travel or purchasing small pieces of equipment. Business credit cards can also come with rewards and other perks as well as help you build business credit. 

However, you’ll typically need good or excellent credit to qualify for a good one, and depending on your situation, a credit card might not provide enough capital for your needs. Additionally, some business expenses can’t be charged, such as inventory and payroll.

Invoice factoring

If your business is paid through invoices, this type of funding could help you get faster access to the cash you need. With this option, you’ll assign responsibility for collecting invoices to a third-party company in return for a fee. In return, you’ll get 70% to 90% of the invoice amount from that company within a few days — faster than the typical 30 to 90 days you spend waiting for invoices to be paid.

Just keep in mind that you’ll lose some of your funds to interest and fees, which will vary by company. This can make this option more expensive compared to other kinds of business financing. 

Crowdfunding

If you have a product you want to sell, you could use a website like Kickstarter or Indiegogo to crowdfund the money you need. Instead of repaying the funds like a loan, you’ll provide your backers with early access to your product and possibly extra incentives. 

That said, it can take a lot of creativity, time and connections to mount a successful crowdfunding campaign.

Help from friends and family

Your friends or family might also be willing to help fund your business goals. However, you also run the risk of straining your relationships if you fail to repay what you’ve borrowed. Be sure to document any loans or equity investments you receive and follow through on the repayment agreements you make.

Your personal savings

If you can afford it, you might consider self-funding your business with your own income or savings.

“When the business matures, you can pay yourself back,” Saling says. “You should [document this as] a formal loan if you intend to raise money from others later so it’s properly on the books.”

Frequently asked questions (FAQs)

It can be hard to get approved for a business loan if you’ve just launched your startup. Most private lenders, for example, require businesses to have been in operation for at least one year — though some, such as Credibly and Fora Financial, accept a minimum of six months.

If you haven’t been in operation for enough time, there are other options you might consider to help your business in its earliest stage. For example, you could look into SBA microloans, personal loans or even crowdfunding.

There’s no single best way to finance your startup. Ultimately, the right option for financing your startup will depend on your business’s needs as well as your personal financial situation.

Make sure to weigh all of your options carefully and determine the best course of action based on what you find. Some points to keep in mind include how much money you need, how fast you need the funds and how much you can reasonably afford to repay (including interest and fees).

Typically no — most lenders require you to have a minimum amount of annual revenue to get approved for a loan. However, you might qualify for different financing options even if you have no revenue. 

For example, business credit card eligibility is often based on your personal income and personal credit score. This means you might be able to get a business credit card even if your startup has no revenue yet.

Yes, several lenders offer startup business loans for bad credit. For example, Fora Financial accepts credit scores as low as 500 and Credibly accepts scores as low as 501. Keep in mind, though, that bad credit loans typically come with higher interest rates and fees compared to good credit loans — which can make it harder to repay what you owe. 

Getting approved for a business loan with no credit, on the other hand, will likely be much more difficult as most lenders require a minimum credit score. If you don’t have enough credit history to generate a credit score (often referred to as having thin credit), you’ll likely need to consider other financing options.

For example, invoice factoring often relies on checking the credit of your customers rather than a review of your personal credit. There are also some lenders that offer personal loans for thin credit, such as Upstart.

Depending on the lender and your situation, you may be able to borrow as little as $1,000 or as much as $1 million or more. Make sure to carefully consider your startup’s needs and your ability to repay a loan before applying, and only borrow what you actually need to keep your costs as low as possible.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Ben Luthi is a freelance writer who covers all things personal finance and travel. His work has appeared in dozens of online publications. Ben lives in Salt Lake City with his two children and two cats.

Ashley Harrison is a USA TODAY Blueprint loans and mortgages deputy editor who has worked in the online finance space since 2017. She’s passionate about creating helpful content that makes complicated financial topics easy to understand. She has previously worked at Forbes Advisor, Credible, LendingTree and Student Loan Hero. Her work has appeared on Fox Business and Yahoo. Ashley is also an artist and massive horror fan who had her short story “The Box” produced by the award-winning NoSleep Podcast. In her free time, she likes to draw, play video games, and hang out with her black cats, Salem and Binx.

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How to Get a Startup Business Loan (in 7 Steps)

March 7, 2023

Are you struggling to find new business startup loans? Don’t worry; you’re not alone. Fifty-nine percent of business owners do not have their funding needs met, but we’ll show you how to improve your odds of getting startup business loans.

Startup companies can still get loans. Lee Smith, the owner of Urbanity, was six months out of college when he wrote a 75-page business loan and got a $250K loan. Today he’s making over $1.5 million selling clothes. That’s a great return on investment, and it shows how much the right plan and funding can help you succeed.

We’ve partnered with National Business Capital (NBC), the number one online site for getting small business loans approved. They’ve helped secure over $2 billion in business loans for over 25,000 small businesses like yours. That’s an average of $80,000 for business startups.

• What is a startup business loan?
• How do startup business loans work?
• What are the best startup business loans?
• How to apply for startup business loans
• Alternatives to new business startup loans

What Is a Startup Business Loan?

A startup business loan isn’t a specific type, but a catch-all for business loans you can get to start a business. Startup business loans are one of the hardest types of business loans to get. Since the company has not built a track record, the decision is made based on how well the lender can tell the business owner thought through the business plan.

Lee Smith, the owner of Urbanity told us:

I sat down for two months and put together a 75-page business plan. I went and got a loan for a quarter million dollars.

Check out our interview with Lee below:

Why Is It Hard to Get a Startup Business Loan?

It’s hard to get a startup business loan because startup businesses often fail in the first five years. In those cases, a business startup loan might not be paid back, which causes lenders to be more cautious when lending to a startup business. Don’t worry! There are ways to improve your odds!

How Do Business Startup Loans Work?

A startup business loan will normally rely on the personal credit history because the business does not have the same financial records and credit length to evaluate whether the risk is worth taking. Because banks back the business owner, a business startup loan often requires a personal guarantee. You’ll want to make sure you have the following before you apply for business startup loans:

Personal Credit Score

Tax returns, bank statements, accounts receivable, credit card sales, unpaid invoices, business plan, legal documents.

Keep reading for more about each one.

You’ll want at least a 650 minimum personal credit score when applying for a business startup loan, but higher is better. A higher personal credit score improves your odds of approval and normally reduces the interest rate.

You’ll need at least two years of personal and business tax returns for most lenders. National Business Credit does not normally require tax returns.

You might need three months to three years of bank account statements depending on the lender. National Business Credit is typically three months. 

These help lenders establish how much money people owe your small business and can be used to help secure financing. 

This document is another proof of revenue. It also helps lenders calculate a commonly overlooked cost of doing business.

Unpaid invoices fall into two categories:

• Money owed to the company : Invoices that a customer has not paid yet could be used to secure startup loans.
• Invoices the company needs to pay : These invoices will negatively impact your loan because they reduce the amount you can pay towards the loan. Try to clear as many of these as possible before applying for a startup loan.

Be prepared with a business plan that shows lenders that you have considered how you will make your business thrive. 

Remember to have copies of your business license, LLC or incorporation documents, EIN, and other documents that prove you are a legal business entity. Corporations are commonly viewed as more credit worthy because they have more reporting responsibilities that make it easier for companies like Dun & Bradstreet (D&B) to analyze your credit.

Check out our blog about how to get a business loan to learn more about D&B and other business credit-building tips.

What Are the Best Startup Small Business Loans?

The best small business startup loans are the ones you can actually get! Fortunately, National Business Credit has some loans that are really simple to get:

Equipment Financing

Asset-based lending.

• Small Business Administration Microloans

Personal Loans

Franchise loans.

Let’s look at each.

An equipment loan requires a 650 FICO score OR $120K in annual sales. The equipment secures the loan, so if you don’t pay the business loan, you won’t be able to operate. Find out more about NBC’s equipment loans .

If you have assets to bank your startup business loan, you can qualify for a business loan with three months of bank statements and a soft pull of your credit. People with higher credit scores and higher asset values are more likely to qualify for asset-backed startup loans.

If you have stellar personal credit, you can qualify for a line of credit or a personal loan and use it for your startup business financing. Alternatively, you can refinance your mortgage and pull out equity for your startup business.

Franchises tend to have an easier time getting a startup business loan. If you’re considering a startup loan as a franchisee, check the SBA franchise registry to make sure the business is on the list of companies that get easier and faster approvals.

There are other business financing options that small business owners may come across, but the majority of business loans are not open to startup companies unless they have:

• 2 years in business
• $100,000 annual revenue
• 650 personal credit score (or 80 D&B score)

Small Business Administration Loans

The Small Business Administration is a government agency that helps small business owners succeed. They offer four main services:

• Business Guides : They have good overviews of how to plan, start, run, and grow businesses.
• Funding Programs : We’ll talk about these below.
• Federal Contracting Assistance : Federal contracting has a range of requirements that the SBA can help you meet.
• Local Assistance Centers : Every state is different so going to a Small Business Administration office can be beneficial for state-specific guidance.

Let’s look at the business loan options available from the SBA.

SBA Loans Startup Business

A new business can apply for an SBA loan or business line of credit. There are three categories of SBA loans:

7(a) Business Loan

504 business loan.

7(a) Loans are the SBA’s most common loan program if you are buying real estate because they back loans of up to $5 million that can be used for:

• Short- and long-term working capital 
• Refinance current business debt 
• Purchase furniture, fixtures, and supplies 
• Real estate

Businesses have to meet the following qualifications to get small business loan:

• Must be profitable company
• Must be operating and based in the U.S.
• Owner must be invested in the company
• Exhausted all other resources
• Demonstrate the need for the loan 
• No delinquencies to the U.S. Government

If you are buying an existing business or franchise, you may need to ask the existing business owner for the following:

• Current balance sheet 
• Profit and loss statement
• Three years of tax returns
• Proposed bill of sale with full terms
• Asking price 
• Schedule of inventory
• Machinery and equipment
• Furniture and fixtures
• Licensing agreements from franchise, Jobber, and other companies
• Proof of equity 
• Additional SBA forms based on the scenario

Check out the SBA for more 7(a) information .

This SBA loan is for businesses to upgrade property through a Small Business Development Center as long as they have less than:

• $15.5 million in total 504 loans
• $15 million tangible net worth
• $5.5 million in current needs
• $5 million of net income based on the last two years tax returns

A 504 loan is meant to create both business and job growth through the construction or upgrading of:

• New buildings
• Existing buildings or land 
• Long-term equipment and machinery 
• Parking lots 
• Utilities 
• Landscaping

You cannot use a 504 loan to increase working capital or inventory, restructure debt, or speculate on real estate. Learn more about 504 loans .

These are the smallest type of startup loan you can get from the Small Business Administration. They are up to $50,000 and can be used for anything except buying real estate or restructuring debt. A microloan lasts for no more than six years and will normally have interest rates of 8% to 13%. Find a microloan lender .

How to Get Loans for Startup Business

Applying for startup business loans is simple. Just follow these seven steps:

• Build your credit score. 
• Choose a loan type.
• Choose a lender.
• Prepare your documents.
• Update your business plan.
• Apply for a startup business loan.
• Build for growth.

Step 1. Build your credit score

As mentioned before, you’ll want a 650+ personal credit score or an 80 business credit score from D&B. If you don’t already have the necessary business and personal credit score, consider these options:

• Arco Fleet Card

You can also use NAV to find ways to build your business credit score.

Step 2. Choose a loan type

You’ll need to sort through and choose the type of startup loan you want to apply for if you go through a financial institution, but lenders like National Business Capital (NBC) will discuss the best startup loan options for you. NBC will help you get better startup financing because they work with 75 business lenders. That means you get the best business startup loans for your scenario. You can choose from:

• Equipment Loans
• Lines of Credit
• Asset-Based Loans
• Invoice Financing
• Merchant Cash Advances (MCAs)
• Industry Specific Financing

Find out why more people go to online lenders for startup financing than traditional financial institutions.

Step 3. Choose a lender

In this step, you’ll look for a financial institution that will help with your startup financing. You can get a startup loan from:

• Local banks and credit unions
• Major banks
• Finance companies
• Online lenders

Let’s look at each of these.

Local Bank or Credit Union

If you have a bank account with a local lender like a credit union, they are more likely to approve you than larger banks or online lenders. Unfortunately, fewer small business owners apply for bank loans from smaller banks according to the FED Small Business Survey .

Major Banks

According to the Federal Reserve Small Business Survey, most business owners go to a traditional lender like Wells Fargo, Chase, or Bank of America when they apply for business loans, but they do not offer great odds of approval. You’re better off going to almost anyone else. The table below shows what percentage of business owners apply at each location and what the odds of approval are. Finance companies and small banks are the most under-utilized.

Finance Companies

These lenders focus on activities like equipment financing. They tend to be alternatives to a traditional business loan, but they have the best approval odds because the monthly payments are secured by something other than your word and credit history. 

If you need credit, business lines from vendors can be a phenomenal way to start a business. The loan amount may not be as big, but there are benefits to running a lean startup. These may be online or in-store. Synchrony (formerly GE Finance) is a major player in this market, but you can also find plenty of other lenders on National Business Credit.

Online Lenders

Online lending tends to be more friendly to small business startup loans for bad credit. The loan amount might be lower than other business loans and the interest rate higher, but when you want funding for a business start up it makes sense to consider them. One of the nice things about National Business Credit is they bring together private lenders for business startup loans. This helps you get better credit offers and reduces the number of hits on your credit.

Step 4. Prepare your documents

Make sure you have all the documents you need to apply for a startup loan. If you don’t, they can hold up the processing time,  which for many lenders can be three to nine months. Make sure to ask about the business loan application process before you get started. That way you are fully prepared with everything you need to apply for startup capital. We discussed what you’ll need in earlier sections of the blog.

Step 5. Update your business plan

If you haven’t already, you’ll want to update your business plan with the most up-to-date information. Better information helps you be more likely to receive a line of credit or business loan. Pay special attention to the financials and the explanations, especially on how you’ll use the business line of credit.

Step 6. Apply for a startup business loan

Once you have everything ready, it’s time to apply for your small business loans. Startup companies will often be denied credit from traditional financing options unless they have a good personal credit score, business credit, and offer a personal guarantee. Online lenders tend to be more generous as long as you have a 650 credit score and are using the loan amount for something that can secure the business.

What to consider before accepting startup loans for business

Before you accept startup loans for new business ventures, you’ll want to consider:

• Interest rates
• Lump sum loans vs business lines of credit
• Monthly payments
• Impact on working capital and cash flow
• Duration of startup loan

Let’s look at how each of these impact business success.

Payment Terms

Before you accept startup business loans with no revenue, you’ll need a plan to pay them back. The payments will be a combination of interest payment and principal. Depending on the loan, you might have:

• Daily Payments : This arrangement is common with merchant cash advances.
• Weekly Payments : This is also common with merchant cash advances and invoice financing.
• Monthly Payments : As the most common type of payment arrangement, these are used by traditional bank loans, business credit cards, SBA loans, and business lines of credit.
• Paid Upon Triggering Event : Invoice financing often reroutes the invoice payments to the lender and then they pay you. When this occurs, the triggering event is the receipt of the invoice payment.

Make sure you can afford the payments otherwise you may default on the loan or lose your business. This is especially important if you have a period of time between when you accept the startup loan and when you receive revenue. If you keep part of the loan aside to pay the loan payments, you can protect against this risk.

Interest Rates

Your interest rates are effectively a business expense. Every time you pay interest, you have less money to reinvest in your business. We created a table of common startup loans to show you how much you’ll be spending on interest for different types of loans using the SBA data and calculator.net .

High rates are one of the main reasons that successful small business owners discourage taking out small startup business loans with bad credit. 

Next, we’ll discuss why business lines of credit are some of the best small business loans you can get.

Term Loans vs Business Lines of Credit

Always choose a business line of credit over a term loan if you are offered it. Lines of credit are some of the best loans for startup business operations. Term loans pay you a lump sum upfront and you pay interest on the full amount. A line of credit is similar to how a business credit card works; it charges you interest on the amount of credit you use. 

Let’s look at how that can impact your payment using the 25-year loan from the example above. Pretend you only need $25K in the first month. Instead of paying $2,187.72, you’d pay 9.52% interest on $25,000 making it where your payment is only $218.77. You just saved $1,968.95.

As you pay the line of credit off, your available credit goes back up. This doesn’t happen with a traditional loan.

Impact on Working Capital and Cash Flow

A startup loan will impact your working capital and cash flow. Let’s look at a few definitions:

Working Capital = Current Assets (convert to cash in less than a year) minus Current Liabilities (must be paid within a year)

Cash Flow = Money In minus Money Out

Here’s how a loan impacts your capital and cash flow:

• The loan will initially provide working capital and cash flow to help with startup costs.
• Payments on the loan will reduce working capital and cash flow.
• Depending on how well you convert the investments into revenue, the working capital and cash flow may increase or decrease as you earn revenue and make the loan payments.

Duration of Startup Loan

The duration of the loan will impact the payments and interest rates. Assuming the loan amount stays the same, you’ll see the following impacts on other aspects of the loans for startup business operations.

Step 7. Build for growth

Once you get approved for a startup loan, it’s time to put your business in hyperdrive. Use the loan for the purposes you stated in the startup loan application. If you received an SBA loan, make sure you aren’t using it for items that are specifically excluded from your terms. Lee told us:

I spent way too much on the build-out (remodeling the business.) If I had it to do over again, I would have reduced the amount spent on bathrooms and invested in more inventory.

Next, let’s look at some alternatives to loans for startup businesses. 

Alternatives to New Business Startup Loans

Creativity offers a ton of ways to start a business without applying for a startup loan. Consider some of these alternatives to a startup business loan:

• Credit Cards

Small Business Grants

Friends and family, crowdfunding.

We’ll look at each of these below to help you with more ideas to get business funding.

Business Credit Cards

You can use business credit cards instead of a startup business loan. It’s easier to qualify for these forms of credit, but they most likely won’t cover more expensive costs like buying equipment or property. In addition, business credit cards tend to have higher interest rates than startup business loans. That means lower profits.

Startup grants are by far the best way to get money for your small business if you can get them. The Small Business Administration has grants for:

• States to Help with Exporting : Learn more about the SBA exporting grants . Apply with your state to get exporting assistance.
• Research and Development : Grants for developing scientific or military applications are available from the Small Business Innovation Research ( SBIR ) and Small Business technology Transfer programs.
• Management and Technical Assistance : If you want to provide managerial or technical guidance to small businesses, there are grants for you too. It’s called the 7(j) program .

Check out other SBA grants .

Friends and family can help you become a small business owner. They can either give you money or offer you a startup business loan. You’ll need to find a provider that offers loan servicing for individuals, but it can be done.

I financed my home through a friends and family loan that was managed by WestStar to get a lower interest rate than was available on the open market. You may want to ask if they service business loans that way too.

Business owners can also get startup funds through crowdfunding. When you use this method to start a new business, you may be committing to deliver a product in exchange for help covering business expenses. Learn how Pooch Selfie approached crowdfunding below:

Selling equity requires incorporation, but business owners can raise far more money through selling equity. This method of fundraising involves selling stock, which means the business has multiple small business owners and each is entitled to part ownership. You’ll want to hire a business lawyer to help you draft the incorporation documents if you plan on taking this approach.

Build Your Business 

It’s not always easy to get loans for startup business operations, but if you can acquire one, it can help you accelerate your business growth. Just make sure you have a solid plan for how you’ll use it or you may find yourself in a worse spot than when you started.

What kind of business loans have you used?

Equipment Financing Asset-Based Lending SBA Microloans Personal Loans Credit Cards Other: Specify

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31 Best Self-Employment Ideas 2024

You don’t have to hire employees to be a business owner. Many people start working for themselves just because they want the freedom to be their own boss and set their own hours. Get ready! We’re going to share some of the best self-employment ideas for new business owners.

[su_note note_color="#dbeafc"]We’ve compiled a list of the best self-employed jobs you can find today. Click on any of the links below to jump straight to the section that interests you!

12 Unique Business Ideas for Self-Employment

Top 10 work-for-yourself jobs, self-employed jobs with no qualifications, self-employment ideas for over 50, faqs about self-employment jobs ideas.

#1. Phone or Electronics Repair

Average Annual Revenue: $560,320 Average Profit Margins: 5.7% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: 1.4% Best for: Detail- and systems-focused entrepreneurs, electronics and repair experts

Check out our video on how Joe Pilat, of Joe’s Gaming & Electronics, started his business from scratch by repairing and refurbishing broken gadgets and electronics.

[su_youtube url="https://www.youtube.com/watch?v=Rqce8NAZWYw&ab_channel=UpFlip"]

Cell phone repair alone was a $1.3 billion industry in 2022, and it makes sense why–97% of Americans own a cellphone, and 66% of them have damaged their phones in the past year. 

Best for people considering self-employed jobs, 70% of cellphone repair shops are opened by local business owners with no prior industry experience. 

You don’t need to open a brick-and-mortar storefront to start your own repair business, either. A mobile repair business, or one with pick-up and drop-off service, is even more convenient for customers and saves you the expense of a physical location.

#2. Grocery Delivery Service

Average Annual Revenue: $340,600 Average Profit Margins: 6.7% Startup Cost: $500-$250K Time To Revenue: 3+ months Annual Market Growth Rate: 3.6% Best for: Drivers, those that like to socialize and meet new people, those with networks with other business owners

Demand for last-mile grocery delivery soared during the pandemic, with online grocery sales exceeding $85 billion in 2022, more than double pre-pandemic figures. 

At the same time, many grocery stores don’t have the staff, infrastructure, or capability to offer delivery in-house. This opens the door for self-employed entrepreneurs seeking a profitable business opportunity. 

Starting a delivery service also lets you support other local small businesses while you gain financial freedom. That was one of Adam Haber’s main goals when he started Trellus, a same-day local delivery market. You can hear his advice on how to start a delivery business in this podcast interview: 

#3. Project Management Services

Average Annual Revenue: $363,300 Average Profit Margins: 10.3% Startup Cost: $1K-$100K Time To Revenue: 1-3 months Annual Market Growth Rate: 0.8% Best for: People with an expertise in organizing and delegating tasks, taking responsibility for managing the work of other people, and people with strong leadership and communication skills

The number of project managers in the workforce hasn’t kept up with the demand for them in recent years. That talent gap leaves space for those with project management skills to start a self-employed business and work for companies on a freelance basis. 

As a freelance project manager, you get more freedom over when you work and the projects that you take on than when you work full-time for a company. There’s also a wide variety of work available, from software and IT projects to marketing and PR campaigns, construction projects, or just about any other industry you can name.

You can also make more money. Freelance project managers earn $451 per work day on average, which equates to roughly $117,000 a year, far higher than the $85,662 salary average reported for project managers on Indeed.

#4. Career Coaching and Resume Writing Service

Average Annual Revenue: $234K Average Profit Margins: 5.8%   Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: 1.1% Best for: People that enjoy managing, mentoring, and coaching other people, and those that are detail-oriented and independent entrepreneurs with good interpersonal skills

A career coach helps other professionals make career progress. This often starts by helping them map out their career path. A career coach also often offers services like resume or cover letter writing, interview preparation, and offer negotiation advice. 

People with a background in recruiting or HR are ideally suited to become self-employed as career coaches. This is also a great business idea for former executives and managers who have first-hand insights into what businesses look for in applicants. 

#5. Tax Preparation

Average Annual Revenue: $1.57M Average Profit Margins: 18% Startup Cost: $500-$5K Time To Revenue: 1-3 months (not including time training as a CPA) Annual Market Growth Rate: 1.7% Best for: CPAs, finance experts, entrepreneurs with strong math skills

Tax preparation is one of the few self-employment job ideas with a built-in demand. Every individual and business needs to file taxes, and that means tons of potential clients. 

While you do need professional certification to start a tax prep business, it’s not hard to get, and there’s no fee to obtain one. Aside from this certification, all you’ll need is an understanding of the tax code and a few clients to start building your reputation and customer trust. 

#6. Catering Business

Average Annual Revenue: $124,410 Average Profit Margins: 5.5% Startup Cost: $1K-$100K Time To Revenue: 6-18 months Annual Market Growth Rate: 1% Best for: Chefs, cooks, bakers, and other food experts

For chefs, bakers, and other food service workers who want to become self-employed, a catering business is one of the most affordable ways to go about it. 

Watch the video below on how Kyle Gourlie, the owner of Vet Chef, built a successful food truck business.

[su_youtube url="https://www.youtube.com/watch?v=YCnE13BaQlk&ab_channel=UpFlip"]

This can also be an ideal business plan for a home cook or baker who wants to break into the food industry without starting from the bottom of the hierarchy in a restaurant. 

One reason for this is that you don’t need a storefront to start catering. Many use clients’ kitchens to prepare the food, or they rent a commercial kitchen when they need it. You can also easily scale a catering business by opening a food truck , cafe, or restaurant as you grow. 

#7. Airbnb Hosting

Average Annual Revenue: $201K Average Profit Margins: 8.1%   Startup Cost: $100K-$3.5M Time To Revenue: 6-18 months Annual Market Growth Rate: 2.2% Best for: Homeowners, frequent travelers, people with hospitality experience

If you’re looking for self-employed jobs from home, why not turn your home into a source of income? As an Airbnb host, you can rent out unused rooms, buy and fix up properties to rent, or convert a shed or garage into a mini-apartment.

The unique and varied properties available for rent are one of the biggest appeals of Airbnb for travelers, and unique places to stay often do quite well on the site. 

However you go about it, Airbnb hosting can be a very lucrative business. Nicasa started from a single property in 2009 and has now grown to 22 properties that bring in $3 million in annual revenue. Hear how the business started in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=6m-MosXlpOE"]

#8. Tutoring 

Average Annual Revenue: $18,170 Average Profit Margins: 13.1% Startup Cost: $100-$1K Time To Revenue: 1-3 months Annual Market Growth Rate: 8.5% Best for: Teachers, educators, professors, and experts in a particular skill or knowledge area

Tutoring is among the top self-employed business ideas for recent graduates and a common way for college students to make a bit of extra cash. 

You don’t need to be close to your school years to make a good living as a tutor, either. It’s also an excellent self-employed job for teachers, professors, and other education professionals who want to branch out on their own. 

The trickiest part of starting a tutoring business for many is where to connect with students. The Tutor Resource’s guide to finding students is a great place to start. You can also grow your reputation online by posting how-to videos, informative blog posts, and other educational content that demonstrates your knowledge. 

#9. Car Wrapping

Average Annual Revenue: $241,230 Average Profit Margins: 16.1% Startup Cost: $1K-$100K Time To Revenue: 1-6 months Annual Market Growth Rate: 1.8% Best for: Car enthusiasts, detail-oriented entrepreneurs, and those that enjoy working with their hands

People keep their cars longer than in the past, with the average age of a car on the road increasing by 44% since 1995 . Protective car wrapping helps cars and trucks look like new for longer. Offering that service is one of the best small business ideas for people who love cars. 

Car wrapping can be a creative pursuit, too. A car can be wrapped in graphics just to change the look or for marketing and branding of company cars or driving billboards. 

Between these two uses, there’s a high demand for car wrapping. Fred Roman started WrapCo in 2012 and has grown it to $70,000 in monthly revenue. See how in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=LM1wFesfapQ&list=PLaU6uY9Yy7XkECNQPPT_LNAxEghhffqv7&index=11"]

#10. Notary Public

Average Annual Revenue: $552,900 Average Profit Margins: 9.4% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: -0.5% Best for: People interested in legislative and legal topics, and those who have excellent reading and writing skills

Notaries are basically professional witnesses, verifying people’s identities when they sign contracts, give oaths, or other legally-binding agreements. 

Some notaries work for other businesses, but many are working for yourself jobs. A self-employed business as a notary public can be very profitable, too. Roughly 33% of all mobile notaries earn more than $4,000 a month, and it’s double that figure for notaries with at least 3 years of experience. 

While you do need a license to work as a notary, the process for getting licensed isn’t complicated. You can see the regulations state-by-state on the American Society of Notaries website.

#11. Be a Tour Guide

Average Annual Revenue: $995,900 Average Profit Margins: 6.6% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: 3.5% Best for: Those with a love for local history and attractions, those who like to socialize and meet new people, and those who like to educate

If you live in a place that gets a lot of visitors, giving tours can be a fun and profitable business venture. The types of tours you give can depend on your location and interests. For example, a foodie could give a tour of local restaurants, or you could give haunted history tours if you’re into the supernatural. 

The most difficult part of starting a tour guide business is often finding customers, especially since your target market tends to be people who don’t live near you. Having your own website and a strong online presence can help.

#12. Tailoring or Clothing Alterations

Average Annual Revenue: $27,825 Average Profit Margins: 8.3% Startup Cost: $500-$250K Time To Revenue: 3+ months Annual Market Growth Rate: 1.6% Best for: Those that like to work with their hands, those that enjoy sewing and handicraft, fashionistas tuned into fashion trends

Tailoring is among the best home business ideas for fashionistas who love to sew. Depending on your skills and interests, you can focus on a niche like formalwear alterations or hand-made custom clothes, or provide a range of services to maximize your revenue.

#1. Real Estate Agent

Average Annual Revenue: $298,870 Average Profit Margins: 44.6% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: -0.3% Best for: Strong salespeople and negotiators, entrepreneurs who want a passive income

A realtor or real estate agent works on behalf of property buyers or sellers to help them get what they want out of the deal. If you’re an active listener with strong sales, organization, and negotiation skills, real estate can be a great business idea. 

Now, you do need a license to become a real estate agent. The licensing requirements vary by state and usually involve around 60-120 hours of coursework followed by an exam. None require a degree beyond a high school diploma, so while you will need specific knowledge to excel in this field, that doesn’t need to be a barrier to entry.

Do you want to know how to become a successful real estate agent? Highly successful real estate agents can earn upwards of $500,000 a year! But, to make it into the highest tier of earners, you need to be aware of certain insider information which details the best path for how to become a successful real estate agent. Watch our video to uncover these secrets!

[su_youtube url="https://www.youtube.com/watch?v=lzgxxq_FYHY"]

Do you want to know how to be a real estate agent–and one that doesn’t fail in their first 5 years, like 87% of new agents? Santino Filipelli is the principal broker and owner of the $175K/month firm Modern Realty, and he’s sharing his tips and insight in this episode. 

#2. Web Designer

Average Annual Revenue: $239K+ Average Profit Margins: 5.3% Startup Cost: $100-$1K Time To Revenue: 1-3 months Annual Market Growth Rate: 1.4% Best for: Designers, programmers, or anyone with website building skills

Freelance web design is a profitable self-employment idea for people with strong visual design and computer skills. The Bureau of Labor Statistics projects a 23% increase in demand for website designers through 2031, making this a potentially lucrative business venture with a lot of opportunities. 

You don’t need to be a tech expert to start your own business designing websites, either. While a basic understanding of HTML and other coding languages is helpful, people with expertise in WordPress templates, search engine optimization, and user experience can build a successful small business as a web designer.

#3. Freelance Writing

Average Annual Revenue: $712K/employee Average Profit Margins: 14.6% Startup Cost: $100-$200 Time To Revenue: 1 month to 3 years Annual Market Growth Rate: -1.5% Best for: Creative entrepreneurs with strong communication skills

Despite the doom and gloom predictions that AI will eliminate writing jobs, these tools still have major limitations and freelance writers are as in-demand as ever. 

As a self-employed freelance writer, you can take on a huge variety of work. Some focus on online content like news articles and blogs, while others ghostwrite novels, memoirs, and other books for clients. 

Freelance writing can also be combined with other skills to boost your self-employment income. For example, technical writing is a profitable option for tech industry experts, while those with healthcare experience can turn that into a career as a medical writer.

#4. Graphic Designer

Average Annual Revenue: $123,240 Average Profit Margins: 13.5% Startup Cost: $500-$5K Time To Revenue: 3+ months Annual Market Growth Rate: 2% Best for: Visual artists, creative entrepreneurs, and entrepreneurs with web design, user interface, or similar tech skills

Another creative profession that’s a great self-employment idea is graphic design. Just like with writing, there are a lot of ways you can earn money if you have these skills. 

Some graphic designers work closely with web designers, creating the images that enhance this online content. Others create images for ads and marketing materials, design logos for companies, or upload their designs to print-on-demand sites like Redbubble .

Another great business opportunity for graphic designers is to open your own online shop through a site like Etsy. Vlad Kuksenko combined his graphic design expertise with his love of animals to start TagPup, now the site’s #1 pet products store. 

[su_youtube url="https://www.youtube.com/watch?v=7dqHBHA4AmU"]

#5. Affiliate Marketing

Average Annual Revenue: $60K-$160K Average Profit Margins: 8% Startup Cost: $500-$2K Time To Revenue: 1-3 months Annual Market Growth Rate: 10.5% Best for: Bloggers, YouTubers, those with a large social media presence

If you have a substantial social media presence, affiliate marketing could be the right business idea for you. It’s also a good home business idea for bloggers, copywriters, and experts in search rankings, SEO, and other digital marketing skills.

Affiliate marketers promote products and services to earn money on commission from each sale made through their site. This can bring in a big income with a small time commitment if you’re able to generate a lot of traffic.

To make even more money, you can scale your business into a marketing agency. Affiliate marketer Matt Diggity started his own firm and now makes about $400,000 in monthly revenue:

The best part about affiliate marketing for many is that you work completely for yourself, not for clients. This gives you full control to set your own hours and pick what products you promote. 

#6. Photography

Average Annual Revenue: $50K Average Profit Margins: 7.3% Startup Cost: $1K-$10K Time To Revenue: 1-6 months Annual Market Growth Rate: 0.3% Best for: Photographers and visual artists with strong customer service, communication, and organization skills

Photography is another of those self-employed businesses that can take a lot of forms. You can open a portrait studio, photograph events like weddings, or sell your pictures as stock photos through sites like Shutterstock or Getty Images , just to name a few options.

Another great way to make money as a photographer is to partner with other businesses. Mile High Productions specializes in drone photography and videography for real estate agents, commercial marketing, and similar clients, and makes upward of $35,000 a month doing it. Hear more advice from them in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=EUcv1HAAbns"]

Katelyn James Photography has grown into the premier online destination for photography education. The business’s revenue has grown along with its reputation, generating more than $200,000 every month. That’s way beyond the $24,000 a month goal Katelyn made starting a photography business in college. 

#7. Direct Sales Consultant

Average Annual Revenue: $68,310 Average Profit Margins: 6.8% Startup Cost: $1K-$100K Time To Revenue: 3+ months Annual Market Growth Rate: 0.5% Best for: Salespeople, those with marketing skills, those that like to travel and socialize with other people

The classic door-to-door salesman is a type of direct sales consultant, though today, many connect with customers online or over the phone as well as face-to-face.

Being a direct sales consultant is similar to affiliate marketing in that you earn a commission for selling other people’s products to customers. The commission is higher in direct sales, though, usually around 20%-40%, so you can make money fast if you have strong sales skills. 

#8. Landlord or Property Manager

Average Annual Revenue: $372,940 Average Profit Margins: 10.1% Startup Cost: $100K-$3.5M Time To Revenue: 6-18 months Annual Market Growth Rate: 1.3% Best for: Those that are interested in real estate investing, home repair, and maintenance

You can become a landlord by investing in real estate and renting it to tenants, or managing properties on behalf of others if you don’t have the cash on hand to invest.

Property management is among the most profitable self-employment ideas, too. Thach Nguyen averages $800,000 every month from his properties. Hear his advice and strategies in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=TWCzwn3R78A"]

#9. Social Media Consultant

Average Annual Revenue: $817K  Average Profit Margins: 6.9% Startup Cost: $100-$10K Time To Revenue: 1-6 months Annual Market Growth Rate: 1.3% Best for: Social media experts, writers, and content creators, people with search engine optimization (SEO) expertise

In the interview below, we talk to the CEO and founder of Socialistics, learning how he turned a side hustle into a mid-six-figure business.

[su_youtube url="https://www.youtube.com/watch?v=kb1czTEK8f8&ab_channel=UpFlip"]

A strong presence on social media platforms is a must-have for many businesses today, but not every business owner is skilled with these platforms. If you are, self-employment as a social media consultant could be the right business idea for you.

Growth potential is one of the main advantages of starting a social media consulting business. It can be easily scaled into a digital marketing agency, as Eric Berman did with Brandetize. You can learn how he built his business in this podcast interview:

#10. Event Planning

Average Annual Revenue: $34,380 Average Profit Margins: 12.2% Startup Cost: $500-$5K Time To Revenue: 3+ months Annual Market Growth Rate: 1% Best for: Strong networkers, great party planners, outgoing and social entrepreneurs

An event planner does exactly what it sounds like: helps people and businesses put together big gatherings. These could be corporate events for companies or private events like weddings, Bar and Bat Mitzvahs, family reunions, or birthday and anniversary parties. 

How much you can expect to earn as an event planner depends on what niche you focus on. The average salary of a corporate event planner in the US is around $63,000 a year , while wedding planners earn an average annual revenue of $112,000 .

#1. Start an Online Store

Average Annual Revenue: $60K-$120K Average Profit Margins: 5-15% Startup Cost: $100-$10K Time To Revenue: 30-90 days Annual Market Growth Rate: -9.3% Best for: Thrifters, collectors, hobbyists, and craftsmen

You can make money selling just about anything with an e-commerce business. For makers and artists, it’s a way to sell your wares to customers all over the world. You could also resell things like vintage clothes, collectibles, rare books, or whatever else tickles your fancy.

Whatever you decide to sell with your e-commerce business, you’ll need customers to buy it. This is why people with strong marketing skills tend to do the best with an e-commerce business. 

Portland Razor Company built a community around their brand to grow their sales to $7,500 a month. You can hear how they did it in this YouTube interview: 

[su_youtube url="https://www.youtube.com/watch?v=aXWiqmePZe0&list=PLaU6uY9Yy7XmTcFZcez2SJipVSL_iC_J8"]

E-commerce was still a fairly new industry when Unique Vintage started 22 years ago. The company has grown with the industry, earning accolades like being one of Inc 5000’s fastest-growing private companies in 2020 and Newsweek’s Best Online Shop for 2020/2021. In our interview with her, Unique Vintage founder Katie Echeverry explains how she started and grew this thriving online clothing store. 

#2. Be a Virtual Assistant

Average Annual Revenue: $35K-$50K Average Profit Margins: 10.5% Startup Cost: $100-$200 Time To Revenue: 1-3 months Annual Market Growth Rate: 1.9% Best for: Outgoing and social entrepreneurs; those with strong scheduling, time management, and problem-solving skills

A virtual assistant business is one of the easiest to start from home. All you need is a reliable internet connection and a few clients who need help planning or organizing their life or business.

The type of work you do as a virtual assistant depends on your clients. It often involves things like replying to emails, making travel or dinner reservations, and other planning and logistic things. 

The site 24/7 Virtual Assistants is a great place to find work if you’re thinking of starting this type of business. 

#3. Start a Cleaning Service

Average Annual Revenue: $74,880 Average Profit Margins: 6.7% Startup Cost: $1K-$30K Time To Revenue: 1-6 months Annual Market Growth Rate: 1.2% Best for: Self-motivated, independent, and detail-oriented entrepreneurs

Life is messy–and that’s why cleaning services exist. Like other options on this list, there are a variety of niches you can go into, from residential home cleaning to janitorial services to outdoor work like window or gutter cleaning. 

The 7-Figure Cleaning Business Blueprint is an excellent resource for anyone who’s considering self-employment in home cleaning services.

A cleaning business is a great option for a first-time entrepreneur because start-up costs are low and you don’t need special training to get started. Just ask Chris Mondragon. He and his wife started Queen Bee Cleaning Service in 2015 with just $5,000. Five years later, they’ve grown to a staff of 25 and earned a revenue of $1.5 million in 2021, with more than $3.2 million in cumulative sales. 

If you’re more interested in something like power washing or roof cleaning, this interview with Northwest Pro Wash founder Spencer Claeys can give you some helpful insights.

[su_youtube url="https://www.youtube.com/watch?v=2lTDQb4HJH0&list=PLaU6uY9Yy7XmmBfiLC1KpSMZ3-Ms0vGtc&index=4"]

#4. Be a Child Care Provider

Average Annual Revenue: $143,110 Average Profit Margins: 0.9% Startup Cost: $0-$1K Time To Revenue: 1-3 months Annual Market Growth Rate: 51.7% Best for: Those that enjoy childcare and like children

Busy parents need people they can trust to keep their kids safe and healthy when they’re not home. You can provide this service while being your own boss by starting a child care business. 

The simplest and most affordable way to start is with nanny or babysitting services right in clients’ homes. If you want to scale, you can open your own daycare center, either out of your home or in a commercial space. 

#5. Be a Personal Trainer

Average Annual Revenue: $16,867 Average Profit Margins: 10.9% Startup Cost: $500-$5K Time To Revenue: 1-6 months Annual Market Growth Rate: 0.6% Best for: Fitness buffs, exercise experts, people who excel at motivating others

Personal trainers work one-on-one with clients to help them lose weight, recover from injuries, prepare for athletic events, or simply improve their overall health. It’s one of the best self-employed business ideas for people who love to exercise and stay active on the job.

The average salary for a personal trainer in the US is $65,790 a year , but in truth, there’s no upper limit on what you can earn. Personal training is a big part of Bedros Keuilian’s multi-million dollar empire. You can hear how he built it in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=gXdFpkfXvGA"]

#1. Life Coach

Average Annual Revenue: $63,400 Average Profit Margins: 10.5% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: 1.5% Best for: Therapists, productivity experts, people who love helping others

Being self-employed as a life coach can be a very rewarding job, helping other people to improve their personal life, mental health, relationships, career progress, or whatever else they struggle with.

People come to life coaches for their experience and wisdom, making this one self-employed job where being over 50 gives you an advantage over younger entrepreneurs. 

#2. Personal Finance Consultant

Average Annual Revenue: $1,810,230 Average Profit Margins: 36.1% Startup Cost: $500-$5K Time To Revenue: 1-3 months Annual Market Growth Rate: 8.2% Best for: Accountants and financial experts

This is another excellent way to leverage a lifetime of experience managing your personal finances into a self-employed job. People look to finance consultants to help them plan for retirement, save for their kids’ college, or prepare for a large purchase like a home or new business. 

Bankers and accountants are especially well-suited to this type of work, and you’ll have the easiest time landing clients and earning their trust if you have certification like a CPA .

#3. Reselling

Average Annual Revenue: $60K-$120K Average Profit Margins: 5-15% Startup Cost: $100-$1K Time To Revenue: 30-90 days Annual Market Growth Rate: -9.3% Best for: Shoppers and collectors, thrifters and collectors

If you have an eye for spotting valuable items at garage sales, thrift stores, or storage unit auctions, you can make self-employment income selling these items for a profit. 

Life-long collectors may not even need to buy inventory to resell if they have items around their home they’re willing to part with. You can also find free inventory on sites like Craigslist or Facebook Marketplace to get started with no investment. 

You can turn your passion for collecting valuable items into a lucrative business, just like how Tia discovered when she was reselling clothes and sneakers. Check out the video below on how she managed.

[su_youtube url="https://www.youtube.com/watch?v=dJryzKeGwtU&ab_channel=UpFlip"]

An eBay shop or similar online store is the fastest and most affordable way to start reselling. That’s what Mike Wilson did to start Golden State Picker, a $30,000-a-month reselling business:

If you’d rather stay analog, you can open a storefront or rent a booth at a flea market or similar venue. 

#4. Professional Organizer

Average Annual Revenue: $168,360 Average Profit Margins: 10.6% Startup Cost: $1K-$100K Time To Revenue: 1-3 months Annual Market Growth Rate: 1.2% Best for: Highly organized entrepreneurs, strong planners, communicators, and collaborators, creative problem-solvers

Professional organizers help people bring order to the chaos of daily life. It’s among the top self-employment ideas for seniors with high analytical reasoning, high empathy, and strong communication skills.  

As an organizer, the main thing you bring to the table is your knowledge and guidance, so this is a very affordable business to start. There also isn’t too much physical work involved. While you may help move items, much of the work is helping people decide what to keep or dispose of and giving them strategies they can use to maintain the order you’ve created.

What are the 4 types of self employment?

The most common types of self-employment include:

• Freelancing - Also known as independent contractors, freelancers perform services for clients but control when and how they work.
• Gig work - This includes jobs like rideshare and delivery drivers. Gig workers choose which jobs they take on, but usually have less control over when and how they work than freelancers. However, these terms are often used interchangeably.
• Sole proprietor - A sole proprietor owns their own business selling a product or service. They may be a solo entrepreneur or have a team of employees.
• Partnership - This is when you own your own business along with a business partner. 

Can I do self-employed business ideas from home?

For those wondering what kind of business I can start from home, you can start any of these self-employment business ideas from home.

What is the cheapest, most profitable business to start?

This depends on what skills and knowledge you bring to the table. However, on average, the businesses with low upfront costs that have the highest profit margins include affiliate marketing, Airbnb hosting, and digital marketing. 

What are some self-employment ideas for nurses?

Having medical credentials opens up a lot of options for RNs, LPNs, or other nursing professionals. One option is to become a traveling nurse or nurse consultant who works in healthcare facilities as a contractor.

If you’d rather work with people in their homes, working as a personal trainer, nutritionist, or wellness consultant might be up your alley. 

Senior care is a growing home health segment that opens up self-employment jobs for trained nurses. 

What kind of business can I start from home?

Many of the business ideas listed here can be started easily out of a private home without needing a brick-and-mortar space. Any service-based business falls into this category, including things like event planning, cleaning, tutoring, writing, or any kind of coaching. Online stores can also be easily run from home. 

What are some easy self-employment ideas for ladies?

Any of the self-business ideas listed in this article can be a great way for people of any gender to set their own hours and be their own boss. 

The most popular self-employment ideas for women in the US, according to the Bureau of Labor Statistics , are professional services (such as accounting or consulting), education, health, and retail. 

What are good self-employment ideas to earn passive income

Being a landlord or Airbnb host can generate a large, mostly-passive income stream, and can be fully passive income if you hire someone to work with guests or tenants. 

Are you ready to start your own business and make your own hours?

We’ve provided you with dozens of self employment ideas for you to try. 

Using this list is just the beginning. We aim to create content that helps people the most. 

If you are self employed, we want to know what you think are the best self-employed jobs. What is your favorite business idea?

How to Get a $100K Business Loan (in 7 Steps)

• 1 out of 118 Alternative Financial Services
• 1 out of 30 Business Development Services
• 1 out of 246 Non-Bank Financial Services
• 2 out of 103 Financial Institutions
• 3 out of 282 Financial Consultants
• 4 out of 331 Business to Business Services

How to Get a $100K business loan

• Build your credit score.  
• Consider business loan types.
• Choose a lender to service your business loan for 100K.
• Apply for a business loan.

• NAV : Similar to Credit Karma for businesses. Paying $40 (rate subject to change) boosts your credit and helps get better loan options as your credit profile improves.
• Divvy : A free financial management platform, payment processor, and credit card provider. They even have a secured credit card for businesses that are building credit.

What credit score is needed for a $100K business loan?

How hard is it to get a $100k business loan.

• Your odds of getting approved go up when you have more than $100K revenue. If you have employees, they are even better.
• Big banks loan the most, small banks approve the highest percentage, but non-employers tend to go to credit unions and online lenders disproportionately.
• If you want more than $100K, you better have employees. Employers are 10 times as likely to make over $1 million and four times more likely to have over $100K in debt than solopreneurs.

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How to get a $100 k business loan.

• $120K in annual revenue
• 6+ months in business
• 580+ personal credit score (some are as high as 700)

How much downpayment do I need for a SBA loan?

Step 2. Consider these business loan types 

• Secured vs unsecured business loans
• $100K term loans
• $100,000 business lines of credit
• Small business loan for mortgaging a building
• $100K equipment loans
• $100,000 secured loans
• Hybridge™ SBA Loans
• $100K merchant cash advances
• $100,000 business loan for franchise startups
• Other Small Business Administration loans

Secured vs Unsecured Business Loans

Small business term loans.

Business Line of Credit

Asset based lending.

• Purchase Orders : When you have ongoing purchase orders of over $100,000, NBC helps you get the cash to fulfill the order and the invoice gets paid directly to the lender who takes their cut and sends you yours. Doesn’t require collateral, minimum credit scores, or time in business.
• Accounts Receivable : Get up to 80-90% of accounts receivables and invoice factoring as cash upfront (as long as you have more than six months in business and $40K+ monthly receivable accounts). You can even choose which accounts you want to use invoice factoring to get a $100K loan for business.
• Inventory : These require collateral in the form of existing inventory but can help you buy more inventory or pay other expenses.
• Real Estate : Use existing land and buildings to secure a business loan to expand your business.
• Bonds, Stocks, and Crypto: NBC does not specifically mention these as an available loan type, but some lenders offer such loans. Be careful because cryptocurrencies and stocks are highly volatile. If the market drops below a certain level, the online lender may require additional funds or liquidation of the assets.

Merchant Cash Advances

Franchise Financing 

Commercial mortgage financing, what’s required for a national business capital commercial mortgage loan.

• One-page application
• Three months bank statements
• Over two years in business
• $250K+ annual revenue
• 620+ FICO score (lower may qualify in some scenarios)

Hybridge® SBA Loan

Step 3. Choose a lender to service your business loan for 100K

Traditional banks vs online lenders.

• Business financial statements
• Business legal documents
• Business’s credit history
• Business plan
• Two to three years of annual sales 
• Personal guarantee for the bank’s financial protection
• Personal bank account 
• Legal documents
• Up to 180 days to get approved

Step 4. Prepare documents

• Documentation of personal and business taxes
• Cash flow statements
• Profit and Loss (PNL) statements
• Documentation for all businesses and personal loans
• Any legal proceedings that haven’t been updated yet. 
• Vendor and client contracts

Step 5. Update Your Business Plan

• Your business timeline (sometimes referred to as a roadmap)
• The organizational structure 
• Five year forecast
• Anything that had material changes

Step 6. Apply for the Business Loan

• $10K Business Loan
• $25K Business Loan
• $50K Business Loan
• $100K Business Loan
• $200K Business Loan
• $250K Business Loan
• $300K Business Loan
• $350K Business Loan
• Startup Business Loan
• Hybridge® SBA Business Loan

Step 7. Invest in Growth

Try our $100K business loan calculator

• Type of loan 
• Loan amount
• Interest rate
• Compounding schedule
• Down payment

Keep Growing Your Business!

How to Start a Clothing Boutique (And Make $102K/Month)

What is an online boutique?

• Accessories
• Shopping bags

Defining the Idea

• What type of business models are used in successful boutiques and which is best for me?
• Who are the major players in clothing boutiques?

What is the industry outlook?

Which business model is best for a clothing boutique.

The traditional retail boutique

An online boutique, both a retail boutique and an online boutique.

• Increasing brand awareness
• Having higher cost-per-item with drop shipping because you are not ordering in bulk

Who are the major players in the clothing boutique business?

• Asos $2.5B/year in revenue
• Revolve $479.5M/year in revenue
• NastyGal $167.7M/year in revenue
• Lulus $385M/year in revenue
• Francesca's $34M/ year in revenue
• Urbanity $102K/month in revenue
• Check out our interview with Marcus
• Throwbacks NW $25K/month in revenue
• Trendy & Tipsy

Starting a successful boutique

• Writing a Boutique Business Plan
• Purchasing Inventory For Your Boutique
• How Much Does It Cost To Start A Clothing Boutique?
• How to start your own clothing boutique with little or no capital

Funding Your Clothing Boutique

• How Profitable is a boutique?

Naming Your Clothing Boutique

• Getting a domain name
• Meeting the legal requirements for a boutique business.

Write a Boutique Business Plan

• One-page business plan
• U.S. Small Business Administration (SBA) Business Guide
• State-specific templates
• Business Plan Template for a Startup Business
• UpFlip’s blog on How to Write a Business Plan
• SCORE’s free business plans and startup assistance resources
• The Complete Business Plan Course (Includes 50 Templates)

Where to buy clothes for a boutique

• Check out resellers like Goodwill and other nonprofits. Sometimes you can find steals for a low cost.
• If you frequent other boutiques, you can sometimes find improperly priced items. A friend of mine has sold over 1,500 items on Poshmark this way.
• Magic Fashion Events are a great way to keep up with trends in the fashion industry.
• Dropshipping companies which I discussed earlier.
• Check out Brands Gateway's blog about 70 wholesalers for a great list of wholesalers to contact.

How Much Does It Cost To Start A Boutique?

How to start a boutique with no money.

• Shopify - 14-day free trial, which is plenty of time to set up an online shop and sell some products.
• Dropshipping - Check Shopify's app store for options that sell the brand-name clothing you want to sell.
• Amazon - Connect Shopify to Amazon Marketplace to increase exposure to potential customers
• Instagram - Create an Instagram shop and connect your Shopify to it.
• Use social media marketing to start selling to potential customers.
• Reinvest earnings to get some inventory for photoshoots and paid advertising to start marketing and attract even more customers.

• Personal funds/personal assets
• A loan from family or friends
• Funds from a business partner
• Government programs
• Crowdfunding  
• Credit cards
• Home equity loan
• Business loan - check out our partners
• Rollover for business startups (ROBS)

How much profit can a boutique make?

• Does it describe what you do?
• Is it easy to remember?
• Does it prevent weird acronyms?
• Is it available as a domain name? Check that the domain name and social media accounts are available with namechk .

Get a domain name

• Google Domains

Meeting the legal requirements for a boutique business

Sole proprietorship

Limited liability corporation (llc), partnerships and corporations, apply for an ein, sales tax permit.

Tax filing and withholding

Federal employment and labor law posters.

• Employment Eligibility Verification (Form I-9)
• State’s New Hire Program
• Worker’s Compensation Insurance
• Disability Insurance—varies by states
• Occupational Safety and Health Administration (OSHA)

Unemployment Insurance

Launch a website, product pages.

• The backend of the platform
• Cybersecurity requirements to protect your customers’ credit card information

• Multiple pictures of the product. I suggest following Amazon photography specs as they are the leader in e-Commerce sales.
• Capitalize the 1st letter of each word in the title but don’t use all caps. Make sure the brand and product name is in the title too.
• Include the price, quantity, and an add-to-cart button.
• Product descriptions should communicate the purpose of the product, important features, dimensions, care instructions, and warranty.
• Product identifier that is used to differentiate products. To learn about them or buy some for your products, go to the GS1 website . You’ll need a separate barcode for each variation of size, color, style, or quantity.
• Quick checkout buttons, like the Checkout with Paypal button, are fabulous for conversions.
• Manufacturer information if it is not your own brand.

The back end of a boutique online store

• Woocommerce
• SquareSpace

Cybersecurity requirements

Payment processors, strategies for opening day of a clothing boutique.

• Set up social media pages for your business. Post whole pictures of whole outfits on your social media with links to each product page. Add a discount if they buy the whole outfit.
• Partner with popular brands and do popup stores at fun locations.
• If you are comfortable with Facebook Live, TikTok, or other social media that uses video, launch your brand there.
• Hire teenagers to help you keep an eye on the market and help spread the word with your business.

Grow through marketing

Market Research

• Marketing Plan
• Marketing on Social Media
• Growing Your Email List
• Tapping Into and Growing Your Network

How do I find out who my potential customers are?

Demographics and psychographics.

• Other Interests
• Marital Status
• Number of children

Use Demographics and interests to build your target market

Use your marketing plan and update it regularly.

Marketing with Social Media

• Facebook (rebranding as Meta) - the largest platform with over 2 billion global monthly users. You can use it for lead generation and email collection.
• Instagram - another Meta-owned platform with approximately 500 million global monthly users. With the highest engagement rate and the best ability to reach 18-29-year-olds, Instagram is best for showing off outfits and linking to product pages.
• Twitter Advertising - I'll be honest with you: I find Twitter to be a way to communicate in industries that move the quickest. While fashion changes, it doesn't change as fast as politics, current events, crypto, and other financial news. If your target market falls into these categories, it might be worth it. If not, don't bother.
• Pinterest Advertising - 175 million monthly users that are mostly women. Pinterest is best for products without being a promotion because the promoted pins blend in with the rest of the styles.
• LinkedIn Advertising - 227 million monthly users that are primarily in the B2B market. I'd only use this if you are offering fashion for business professionals that are too busy to do their own shopping.

Grow Your Email List

Tap into your network, running your boutique, hiring employees.

• Post Open Jobs
• Conduct Interviews
• Establish Compensation
• Manage Tax Filings and withholdings
• Comply with Federal and local labor laws

Job Posting 

• Zip Recruiter
• Who is your current favorite designer?
• How does your previous experience make you a better fit than other applicants?
• How do you respond to a customer when you don’t know the answer to your question?
• Have an article (or articles) of clothing ready and ask them to go through the store and find accessories to go with it.
• What are your compensation expectations?
• Do you have any ongoing commitments that impact your availability? If so, what dates and times will it impact?

Compensation

Hybrid Models

Outsourcing.

• State’s New Hire Program - This is required so that people who owe child support remain in compliance
• Worker’s Compensation Insurance - Insurance for when employees get hurt on the job. Check out this guide to state laws
• Disability insurance - California, Hawaii, New Jersey, New York, and Rhode Island, and Puerto Rico have requirements. Learn more about disability insurance
• Occupational Safety and Health Administration (OSHA) - Federal and state laws govern what are safe working conditions. Fines can be up to $136,532/violation or up to $13,653/day. Make sure you understand your area’s laws at OSHA.gov .

How To Retain Customers For Your Clothing Boutique

• Can they shop without logging in?
• How many steps does it take to check out?
• Can customers easily get to other products that will look good with the item they've added to the cart?
• Do you save items they've added to the cart?
• If they leave the cart (and you have their contact info), do you send them a friendly reminder in case they got distracted?

Managing inventory

Top influencers.

• CladandCloth
• The Pretty Dress
• Check out StarNGage for a ton of other influencers that might fit your boutique.

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Fueling Your Growth: A Guide to Startup Business Loans

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Secure Funding for Your New Startup Business: How to Get a Startup Loan

Kristal Sepulveda, CPA

May 8, 2024

Did you know that 74% of Americans have come up with a business idea? But, between the initial concept and acquiring customers, there often lies a significant hurdle: funding . Startup business loans can bridge this gap.

In this article, explore the various financing options available to aspiring entrepreneurs like you and learn how to successfully navigate the process of securing the capital needed to bring your entrepreneurial vision to life.

Further reading: Fast and Easy Funding: Exploring Easy-Approval Startup Business Loan Options

Unleashing Capital Potential

Overview of startup business loans.

Startup business loans are vital for entrepreneurs eager to start a business and need substantial working capital to cover initial expenses such as equipment, inventory, and salaries. These loans provide the necessary funds to start and expand operations.

New business owners look to establish themselves in competitive markets. Effective financial support can significantly influence a startup's ability to thrive, making these loans a strategic asset beyond mere financial aid.

Types of Startup Business Loans

For financing a new business, entrepreneurs have several loan options, each tailored to different needs and stages of business development:

• Traditional Business Loans : Offered by banks and credit unions, these are preferred due to their lower interest rates and longer repayment terms but require a good credit score and comprehensive business plan.
• SBA Loans : Backed by the Small Business Administration (SBA), these loans are designed to help those who might not qualify for traditional business loans, offering favorable terms and lower rates.
• Alternative Lending : Includes online lenders that provide quicker approvals and less stringent requirements but may have higher rates. Ideal for business owners with bad credit or those who need quick funding for their startup .
• Microloans : Particularly beneficial for small business owners starting out with smaller capital needs.
• Equipment Financing : Tailored for buying business equipment, with the equipment itself often serving as collateral.

Identifying the Right Funding Accelerator

Selecting the right loan program depends on the startup's stage, industry, financial health, and long-term goals. For example:

• Early-stage businesses may find SBA microloans or alternative lending more accessible.
• Manufacturing or restaurant startups needing equipment might benefit from equipment financing.
• Established businesses with solid financials and a good credit history might opt for traditional business loans or comprehensive SBA options.

Analyzing your startup's requirements and matching them to the appropriate loan type ensures that you get the best possible funding to meet your specific needs.

Further reading: Find Free Funding: Small Business Grant Opportunities for Startups

Tailoring your loan choice for rapid growth.

To align your financing choice with your business growth objectives, consider the following:

• Scalability : Opt for loans that offer flexibility to accommodate future growth, such as increased credit lines.
• Cost-effectiveness : Factor in the total cost of the loan, including interest rates and fees, to ensure it supports financial stability.
• Purpose-specific financing : Match the loan type with your funding needs—use equipment loans for machinery purchases to avoid higher costs associated with more general loans .
• Review terms and conditions : Ensure the loan’s repayment schedule aligns with your business’s cash flow to avoid financial strain.

Carefully choosing the right type of loan is critical for business owners aiming to start and grow their businesses effectively. This strategic financial planning supports not just the launch but the sustainable growth of your startup.

Streamlining the Process

How to apply for a startup loan.

Applying for a startup loan is an integral step in securing funding for your business. Here’s how to effectively navigate the application process:

• Assess Your Financial Needs : Determine the loan amounts needed to fund your business. Consider all aspects, including operational costs and capital for growth.
• Choose the Right Financial Institution : Research various financial institutions, including small business lenders and credit unions, to find options that fit your needs.
• Gather Necessary Documentation : Prepare essential documents such as financial projections, a business plan, personal and business credit reports, and past tax returns.
• Check Credit Reports : Review your personal credit and business credit reports. Correct any discrepancies before you start the application process .
• Develop a Solid Business Plan : Your business plan should detail your business model, market analysis, and financial projections. Review your business plan carefully as it's a significant part of your application.
• Submit Your Application : Apply for a loan by filling out the necessary forms and submitting your documentation. Ensure all information is accurate to avoid any delays.
• Follow Up : Maintain communication with the lender to track your application's status and provide any additional information if required.

Increasing Approval Odds

To boost your chances of getting approved for a loan, consider the following strategies:

• Improve Credit Scores : Both personal credit and business credit scores are vital. Pay down personal loans and business debt and avoid high credit card balances.
• Offer Collateral : Collateral can secure the loan, providing the lender reassurance and potentially reducing interest rates.
• Enhance Your Business Plan : A comprehensive business plan shows the lender you have a clear strategy for using the loan funds.
• Capital Injection : Demonstrating that you have invested personal funds into the business can make a significant impact on the lender’s decision.
• Prepare for Financial Scrutiny : Be ready to explain how you will repay the loan and how the loan funds will be utilized in your business operations.

Building a Compelling Case for Your Business

To effectively secure funding, present a compelling case to potential lenders:

• Demonstrate Market Viability : Use market research to highlight the demand for your product or service and outline your competitive advantage.
• Show Financial Prudence : Present detailed, realistic financial projections that show your capacity to manage business debt and repay the loan.
• Personal and Business Credit History : A strong credit report without significant blemishes can increase confidence in your financial responsibility.
• Detail Management Expertise : Showcase your experience and that of your management team to reinforce your capability to lead a successful business startup.
• Establish Relationships with Lenders : Building a rapport with your lender can provide an advantage, particularly when seeking loans from institutions that value personal connections, like small business lenders and nonprofits.

By thoroughly preparing for and understanding the loan application process, you increase your ability to get a startup business loan that fits your needs and supports the growth and sustainability of your business startup.

Beyond the Basics

Recognizing the trade-offs.

In considering different types of startup loans, it's essential to be aware of the potential risks and downsides, which can vary by lender and loan type:

• Interest Rates and Fees : High-interest rates on some business credit cards or line of credit options can escalate the total cost of borrowing. These costs need careful consideration as they impact financial health.
• Collateral Requirements : Secured loans, including many SBA loans, require collateral which might put business assets at risk if the loan cannot be repaid.
• Equity Financing : Utilizing equity or crowdfunding platforms involves sharing a portion of business ownership. This might dilute the business owner’s control over their company.
• Flexibility and Terms : Term loans provide funds with a fixed repayment schedule, whereas lines of credit offer flexibility but might carry variable interest rates that vary by lender.
• Specialized Lenders : Some loan alternatives, like those from nonprofit lenders or industry-specific finance options, come with stringent usage rules about how funds can be used, which might not fit every business model.

Building a Strong Financial Foundation

Effective management of a startup loan maintains and builds financial stability. Here’s how to ensure responsible management:

• Comprehend Loan Agreements : Be sure you fully understand the terms and conditions, as loans may have specific stipulations about usage and repayment that vary by lender.
• Timely Repayment : Consistently meeting repayment obligations helps in building a positive business and personal credit history.
• Use of Funds : Strategically use the borrowed funds to generate income, which can be reinvested back into the business to fuel growth and ensure you can comfortably repay the loan.
• Cash Flow Management : Monitor cash flow meticulously to ensure that operating expenses and loan repayments are well-managed without compromising business operations.
• Refinancing Opportunities : Keep an eye on opportunities to refinance high-cost loans if your business credit improves or if better terms are available.

Importance of Bookkeeping and Tax Planning

Strong bookkeeping and tax planning are fundamental in managing the financial aspects of a startup efficiently:

• Diligent Financial Tracking : Use advanced bookkeeping software to keep precise records of all transactions, which simplifies managing business credit cards, loan funds, and other financial aspects.
• Understanding Tax Implications : Be aware of how different forms of funding affect your taxes. For example, interest on small business loans might be deductible, which can reduce tax liability.
• Professional Advice : Engaging with a financial advisor can provide insights into effective tax strategies and help in making informed decisions about business financing.
• Financial Reviews : Regular financial assessments can help in identifying areas for improvement in your financial strategy and ensure compliance with existing tax laws.
• Invest in Growth : Appropriately managing your finances allows for reinvestment in key areas of your business, which is crucial for scalability and long-term success.

Implementing robust financial management and planning practices from the start can significantly impact the stability and growth potential of your startup, making it beneficial to integrate these practices into your daily operations.

Key Takeaways: Startup Business Loans

What are the basic requirements to qualify for a startup business loan.

To secure funding for your startup, lenders evaluate several key aspects:

• Business Plan : Essential for demonstrating the viability and potential of your startup. This plan should detail your strategy for entering the market and gaining a competitive edge.
• Credit History : Both the owner’s personal and business credit histories are scrutinized. A solid credit score can significantly enhance your loan approval chances.
• Collateral : Some loans, particularly traditional ones, may require collateral as a security measure, which the lender may seize if the loan is not repaid.
• Time in Business : Although this criterion can vary depending on the lender, many financial institutions prefer businesses with at least six months to two years of operational history.
• Cash Flow Projections : Demonstrating that your business can generate sufficient cash flow to cover loan payments is vital.
• Legal and Financial Documentation : This includes items like business licenses, articles of incorporation, tax returns, and detailed financial statements.

How much can you borrow as a startup?

The amount you can borrow varies widely and depends on several factors, including:

• Lender’s Policies : Each financial institution or lender may have different lending caps, especially when it's about how much they’re willing to risk on a new business.
• Business Needs and Projections : The amount you can borrow is aligned with your startup’s projected financial needs and ability to repay.
• Creditworthiness : A strong credit profile may increase the amount a lender is willing to provide.

What is the average interest rate for startup business loans?

Interest rates can vary greatly:

• Type of Loan : SBA loans generally offer lower rates compared to other business loans due to government backing.
• Lender’s Risk Assessment : Higher risk may lead to higher interest rates. Factors include the borrower’s credit history and the business's financial health.
• Market Conditions : Economic factors can influence interest rates across the board.

Can you get a startup business loan with bad credit?

While challenging, it is possible to get a startup loan with less-than-ideal credit:

• Alternative Lenders : Some lenders may specialize in high-risk loans but at higher interest rates.
• Smaller Loan Amounts : Starting with a smaller loan amount can be a feasible option to prove creditworthiness.
• Guarantors or Collateral : Providing additional security can improve approval chances.

How long does it take to receive funds after loan approval?

The disbursement time can vary widely:

• Type of Lender : Traditional banks might take longer, sometimes several weeks, whereas online lenders might disburse funds within days.
• Loan Complexity : Larger loans or loans requiring more documentation may take longer to process.
• Efficiency of the Borrower : The speed at which a borrower can provide the required documents and meet the lender's requirements can also affect the timeline.

Understanding these elements can help prospective business owners make informed decisions when exploring financial options to start or expand their businesses. Each lender’s terms and the borrower’s financial readiness play pivotal roles in shaping the loan process and terms.

How can Taxfyle help?

Finding an accountant to manage your bookkeeping and file taxes is a big decision. Luckily, you don't have to handle the search on your own.

At Taxfyle , we connect small businesses with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will manage your bookkeeping and file taxes for you.

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A comprehensive guide to startup business loans.

Starting a business from scratch is a thrilling endeavor, but it often requires a substantial amount of capital. While some entrepreneurs may have personal savings or access to funds from family and friends, many turn to startup business loans to finance their ventures. However, navigating the world of business loans can be daunting, especially for those new to entrepreneurship. This comprehensive startup business loans guide aims to demystify startup business loans, providing valuable insights into the types of loans available, the application process, and tips for securing funding.

Understanding Startup Business Loans

Startup business loans are specifically designed to provide financial support to new businesses during their initial stages of operation. These loans can be used to cover various expenses, including equipment purchases, inventory acquisition, marketing efforts, and working capital needs. Unlike traditional business loans, which may require an established track record and collateral, startup loans are tailored to meet the unique needs and challenges faced by fledgling enterprises.

Types of Startup Business Loans

• Small Business Administration (SBA) Loans: SBA loans are popular among entrepreneurs due to their favorable terms and government backing. These loans are offered by banks and other financial institutions but are guaranteed by the U.S. Small Business Administration, reducing the risk for lenders and making them more accessible to startups.
• Term Loans: Term loans provide a lump sum of capital upfront, which must be repaid over a fixed term with interest. Startups can use term loans to fund various business activities and typically receive funds within a few days of approval.
• Business Lines of Credit: A business line of credit offers flexibility, allowing startups to borrow funds as needed up to a predetermined credit limit. Interest is only charged on the amount borrowed, making it a cost-effective option for managing cash flow fluctuations.
• Equipment Financing: Startups in need of equipment, machinery, or vehicles can opt for equipment financing. With this type of loan, the purchased equipment serves as collateral, reducing the lender’s risk and potentially leading to lower interest rates.
• Invoice Financing: Invoice financing, also known as accounts receivable financing, enables startups to access funds by selling their outstanding invoices to a lender at a discount. This can help improve cash flow by providing immediate access to capital tied up in unpaid invoices.

The Application Process

Securing a startup business loan involves several steps, including:

• Research and Preparation: Before applying for a loan, startups should thoroughly research their options and prepare necessary documents, such as a business plan, financial projections, and personal and business credit reports.
• Choosing the Right Lender: Different lenders specialize in various types of loans, so it’s essential to select one that aligns with the startup’s needs and qualifications.
• Completing the Application: Startups must complete the loan application accurately and provide all requested documentation. This may include details about the business, its owners, financial statements, and collateral.
• Underwriting and Approval: Once the application is submitted, the lender will review the information provided, assess the startup’s creditworthiness and risk, and make a lending decision.
• Loan Disbursement: Upon approval, funds are typically disbursed directly to the startup’s bank account, allowing them to start utilizing the capital for business purposes.

Tips for Securing Funding

• Build a Strong Business Plan: A well-crafted business plan demonstrates the startup’s viability, market potential, and growth prospects, increasing the likelihood of loan approval.
• Establish Good Credit: Startups should work on building and maintaining good personal and business credit scores, as lenders often use these metrics to evaluate creditworthiness.
• Seek Professional Guidance: Consulting with financial advisors, accountants, or business mentors can provide valuable insights and guidance throughout the loan application process.
• Explore Alternative Funding Sources: In addition to traditional loans, startups can explore alternative funding sources such as angel investors, venture capital firms, crowdfunding platforms, or government grants.
• Be Prepared for Rejection: Rejection is common in the lending process, but startups should view it as an opportunity to learn and improve their financial position before reapplying.

In conclusion, startup business loans play a crucial role in helping entrepreneurs turn their business ideas into reality. By understanding the different types of loans available, navigating the application process effectively, and implementing strategies to secure funding, startups can overcome financial hurdles and embark on the path to success. With careful planning and perseverance, aspiring business owners can access the capital they need to fuel growth and achieve their entrepreneurial dreams.

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Last reviewed on May 10, 2024

Reading time: 11 min

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Page written by Rachel Wait . Last reviewed on May 10, 2024 . Next review due October 1, 2025.

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If you’re looking to grow your new business, it’s important to know how to finance it. Financing your business in the right way will provide a solid financial base and ensure you have sufficient funding to help your business succeed. 

There are many different ways to finance a new business and different methods will suit different business types, as this guide explains.

What is business finance?

Business finance is simply the funding a business needs to operate. You’ll need funds to start, run or expand your business. Having sufficient funds available to you will help drive your business forward, allowing you to buy raw materials, hire staff, invest in equipment and so on.

Finance is the foundation of any business as it’s almost impossible to succeed without it. 

What are the best ways to finance a new business?

There are several ways to finance a new business, so it’s important to research each one carefully to help you decide which is the right option for you and your business. 

Personal investments

Investing your own money into your business can be quicker than applying for finance and, as you’re not borrowing from anyone, you won’t need to pay interest. Using your own money can also help to show any future lenders that you’re confident in your company’s success. 

You might have a lump sum to invest in your business if you’ve saved up enough over the years or if you’ve received a large redundancy pay out or inheritance.

Funding from family and friends

It can also be worth asking family or friends whether they would be willing to invest in your business. They might agree to loan you a lump sum which you agree to repay over a set term, with interest added. Or they might ask for a stake in your company in return for their investment. 

The advantage of borrowing through family or friends is that interest rates can be lower. The downside is that if things go wrong, your relationship could be affected. 

Whichever option you choose, make sure you have an official written agreement stating how everything will work. It should explain whether the money is a loan, investment or gift and, if you need to repay the money, it needs to state how repayments will be made and over what length of time, as well as what happens if you can’t repay it. 

Business loans

Business loans are a popular way for companies to borrow money as they give you access to a lump sum of cash which you then repay in monthly instalments over a set term, with interest on top.

Many high street banks and online lenders offer business loans, meaning you’ll have a wide range of options to choose from. Just be aware that some lenders might be less willing to offer you a loan if you haven’t been trading for long and if you don’t have much of a business credit history. 

To increase your chances of acceptance, you’ll need a detailed business plan that outlines your goals and how you plan to use the money. It’s also important to ensure that the amount you want to borrow is affordable so that you can keep up with your repayments. A longer loan term can help reduce your monthly repayments, but this also means you’ll end up paying more interest, making it more expensive in the long run. 

Startup loans

A startup loan is a business loan specifically aimed at new UK businesses to help them launch and grow. It works in the same way as any other business loan, as you borrow a lump sum that is repaid in monthly instalments at a fixed rate of interest. This funding can help you to pay for concepts, testing, designs, machinery, premises, marketing and more.   

To qualify for a startup loan you must be at least 18 years old and living in the UK and your business must have been trading for no more than 36 months. You will also need to be able to show that you couldn’t obtain a loan from alternative sources. 

It’s possible to get a startup loan with a mainstream bank, but the primary source for startup loans is the UK government-backed startup loan scheme, which is offered by the British Business Bank. You’ll usually find that these loans offer lower interest rates compared to business loans provided by mainstream lenders. You can typically borrow between £500 and £25,000 over one to five years. 

Equity investment

Equity investment is another option you could explore and involves selling a stake in your business in exchange for investment. Equity finance investors will have a claim on your future earnings as a result, but you won’t need to worry about repaying the capital or paying interest. 

You might choose to have multiple rounds of equity financing from different types of investors, such as business angels, venture capitalists and private equity funds.

Business angels or angel investors are high net worth individuals who have the money to invest into a business. They typically prefer to invest in startups and early stage businesses, making them ideal if you’re just starting out. Because they are usually experienced entrepreneurs, as well as being able to take advantage of their investment, you can also benefit from their skills, knowledge and contacts, all of which can help your business to grow. 

Business angels usually invest between £50,000 and £500,000 and they might work on their own or as part of an angel network. 

By contrast, venture capitalists won’t invest their own money in your business; rather they will invest other people’s. They do this by setting up a fund for others to buy shares in the company. They usually invest larger sums and the return on investment is often higher too. 

Private equity funds are pools of capital to be invested in a company, making this more suited to established private businesses. The money managed by the fund usually comes from institutional investors such as large pension funds, insurance companies and sovereign wealth funds. 

While venture capitalists tend to invest upwards of £250,000 in high-growth startups and early stage businesses that need capital and business expertise, private equity firms tend to invest much larger amounts, say upwards of £5 million, in established businesses that need a cash injection or a new strategy to help move them forwards. In return, they will usually have a large or controlling share in your business. 

You can find out more about how to find investors for your business with our guide.  

Crowdfunding

Crowdfunding enables you to collect money from a large number of people via online platforms. Depending on the type of crowdfunding you use, these people might get a share in the company or a reward in exchange for their investment. As well as helping you to raise money, crowdfunding can also raise the profile of your business, which can boost its chances of success. 

If you want to raise money through crowdfunding, you’ll need to decide how much money you need and then create a campaign to show what your business has to offer and why you need the investment. This will be displayed on the crowdfunding website for a set number of days. Platforms you can use include Seedrs , Crowdfunder and Crowdcube .

Be aware that not all crowdfunding campaigns succeed and you’re likely to have better luck if your business has good growth potential and offers an innovative idea. If your business model is fairly traditional, crowdfunding might not be the right choice for you. 

Peer-to-peer lenders

Peer-to-peer lending is a type of business loan that’s offered by a number of private investors usually through an online platform. The idea is that it removes the need for financial institutions like banks and, instead, matches those who need to borrow money with those who have money to invest. Borrowers get better interest rates than they would with a standard loan, while investors can get a better rate than they’d get on a standard savings account. 

If you’re thinking of applying, you’ll need to complete an application form on a peer-to-peer lending website. Your risk profile will then be assessed and you’ll be given a credit rating. After this, you’ll be sent different options from proposed lenders with varying interest rates and you can choose the best one for your business. The stronger your business profile, the lower the interest rate on your loan.

Business grants

A business grant is a sum of money awarded to a business to help it grow and develop. You can choose to invest the money in training, equipment or reaching new markets, for instance. Business grants are usually awarded by the government or other companies and, unlike loans, they do not need to be repaid.

Across the UK, there are hundreds of different grants you can apply for, but these will often be targeted at specific industries, community groups or types of business, so eligibility criteria will be tight. Depending on your business, you might be able to choose from the following:

• Innovation grants, which are provided by funding bodies such as Innovate UK to support innovative ideas and business growth. 
• R&D tax credits , which are cash payments from the government to encourage companies to carry out research and development projects related to science and technology.
• The National Lottery Heritage Fund which provides grants to sustain and transform the UK’s heritage.
• Local Enterprise Partnerships, of which there are 38 across England. These are voluntary partnerships between local authorities and businesses that provide business funding, support and guidance in their local areas. 
• The Prince’s Trust which supports young people who want to start and run their own business.

When applying for a business grant, you’ll need to write a business grant proposal to explain what you plan to do, how your business meets the grant qualifying criteria and what success looks like as a result of taking on the grant.

You can view the many options available to you by  registering with Swoop . There’s a wide range of grants available across several sectors including grants for manufacturing, tech businesses, transport, energy, information and communication technologies, security, climate, aerospace, food, health, environment, and more. 

How to choose the right finance option for your business

To help you decide which finance option is right for your business, you will need to think about how much funding you actually need, factoring in how much it will cost to get your business off the ground as well as operating costs for the year ahead. You’ll need to ensure you have enough money to get your business started, but you should also avoid borrowing more than you can afford to repay as this can ultimately lead to financial difficulty.

You then need to consider which of the above funding options might enable you to borrow this sum of money. Go through the different types of funding available and consider the pros and cons of each to help you decide which one might be the best fit. 

Ask yourself whether you’re happy to offer people a stake in your business in return for their investment, or if you’d prefer to opt for a traditional loan, which you will need to repay with interest. If you’d prefer to take out a business loan, check that you will be able to comfortably afford the repayments. Bear in mind that UK government-backed startup loans are unsecured and offer a lower interest rate compared to business loans offered by mainstream lenders.

It’s also important to consider eligibility criteria. If you’re looking into business grants, for example, you’ll need to meet strict eligibility criteria to qualify. If you’re not eligible, you’ll need to look at alternative options. 

Similarly, if you have a fairly traditional business model, crowdfunding might not be the most appropriate route for you to go down. 

If you’re not sure which funding option is right for your new business, the team of experts at Swoop will be happy to talk through your options and help you find the best solution for you. Get in touch today.  

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Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.

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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

Find out more about Swoop’s editorial principles by reading our editorial policy .

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BREAKING: House Speaker Mike Johnson will attend Trump’s hush money trial today in a show of support for the former president

Stress, confusion and uncertainty as borrowers navigate Biden debt relief plans

When student loan repayments began last October, Rachel Grace was faced with a painful financial choice: start making payments or drop her health insurance coverage. She chose her loans and has since been crossing her fingers that she stays healthy.

“We’re already all pinching pennies. It was that big health insurance cost every month that I thought was the one place where, at least for now, fingers crossed, I can do without so that I can tackle this loan payment,” said Grace, who is 39 and works in marketing communications in Nebraska. “Of course, that could change in an instant, and that’s scary.”

But this week, Grace got the news she'd been in financial limbo over for months — her federal loans were being forgiven, wiping out a roughly $300 a month payment, under a Biden administration plan to clear the loan balances for those who have been making payments for at least 20 years.

After the Supreme Court rejected President Joe Biden’s sweeping debt forgiveness proposal and a Covid-era pause on student loan payments expired , millions of borrowers have been faced with tough financial choices and a web of new debt relief plans and administrative delays that have left many in limbo over if and when their debt will be forgiven, said student debt counselors and borrowers.

“The road to hell is paved with good intentions,” said Betsy Mayotte, the head of the Institute of Student Loan Advisors, a nonprofit that provides free student loan advice. “I have seen a significant number of borrowers who have had relief, but on the flip side, because everything has had to happen really fast, it’s also caused some confusion for borrowers and it’s caused some bumps in the road.”

But the effects of that relief are starting to be felt by more borrowers like Grace, something the Biden campaign is working to capitalize on in the months leading up to the election.

Biden’s efforts to provide relief to student loan borrowers has been a top policy priority during his time in office. The Biden administration says it has provided student debt relief to 4.6 million Americans through more than two dozen different programs, including fixes to a pre-existing loan forgiveness program for public service workers, erasing debt for borrowers defrauded or misled by their school and expanding debt forgiveness for people with disabilities.

Last month, Biden proposed additional plans he said would reduce or erase the student loan debts for millions more as early as this fall, an Education Department official said.

But many borrowers have struggled to make sense of what all those initiatives mean for them or see the full benefits as some programs continue to be implemented, said Robert Farrington, who counsels student loan borrowers and is editor-in-chief of the website The College Investor.

“There is a firehose of announcements and new programs and so many various nuances to all of these things. There’s different repayment plans, there’s different forgiveness programs, different lawsuits,” said Farrington. “It’s hard for borrowers to even know what applies to them. It’s so confusing.”

Education Department officials say borrowers who believe they are eligible for debt relief but haven’t received it yet should contact their loan servicer or the department ombudsman ’ s office .

Amid the confusion, the Biden campaign has been seeking to show the real-world impact on borrowers who have received debt forgiveness in its pitch to voters for a second term, a campaign official said. Biden and other top administration officials have fanned out across the country to tout their efforts.

In one instance, Biden visited the home of a former school principal in North Carolina who had $90,000 in debt erased under the public service loan forgiveness program, a decades-old program the Biden administration has made changes to in order for more borrowers to qualify. A TikTok video of the visit made by the man’s son got millions of views.

Still, the majority of voters have said they disapproved of Biden’s handling of the student loan issue — with 44% approving, making it Biden’s strongest area among registered voters, according to an NBC News poll last month. In a separate poll by the Harvard Institute of Politics, just 39% of voters under age 30 said they approved of the job Biden has done on student loans. But like in the NBC poll, it was a higher approval rating than on other key issues.

The campaign official said it will take more time and aggressive messaging to get the attention of voters, whom the campaign believes are not yet paying close attention to the election. The campaign is also seeking to contrast Biden’s policies with those of former President Donald Trump, who has opposed student debt relief programs and actively sought to eliminate funding for them while president.

Rep. James Clyburn, D-S.C., a close Biden ally, said he expects tens of thousands of additional borrowers to see debt relief ahead of the election as Biden’s programs continue to be implemented, giving the campaign more opportunities to highlight the contrast with Trump’s opposition to such programs, he said.

“Who do you want to put in charge of that program?” Clyburn said in an interview with NBC News. “The guy who refused to implement it?”

Biden “has implemented the program that [Trump] tried to get rid of,” Clyburn continued.

But for the millions of borrowers not eligible to have their debt cleared, they have been required to make payments since October, creating an additional financial strain for many. Around 40% of borrowers who have resumed payments said they are cutting back on spending while 29% said they were reducing the amount they were saving, according to a University of Michigan survey released in January.

The survey found that borrowers who had lower incomes, less education and weaker income prospects were more likely to increase their use of credit to maintain their spending amid the resumption of loan payments.

Others have opted not to make their payments. Around 64% of borrowers who had payments due were current on their student loan payments as of the end of December, according to the Department of Education.

The Biden administration has said it will hold off until this fall on enforcing the harshest penalties for nonpayment, like reporting delinquent borrowers to credit rating agencies and using forced collections.

Mayotte said a number of borrowers she works with have been holding off on making their payments because they can’t afford them or have opted to use the money to pay down higher-interest debt or to invest in high-yield savings or investing accounts until the administration’s nonpayment penalties kick in.

Once that happens, the wider implications of the restart in payments could be felt, but so far it hasn’t appeared to have had a significant impact on the wider economy, according to an analysis by Wells Fargo.

For Grace, who took out around $40,000 in private and federal loans to attend a four-year public university in 2003, she said her monthly loan payments have been a heavy burden on her finances since she first started making them more than a decade ago.

At the start of her career, her loan payments amounted to more than 15% of her take-home pay, preventing her from being able to build up an emergency fund for unexpected costs, like a car repair, and causing her to rack up credit card debt. For years, she said, she had to work a second job on the weekends to cover her expenses.

But her financial picture drastically changed during the pandemic when the Covid payment pause began. Without that monthly loan payment, she said she was able to start building up her savings and pay off credit card debt. Eventually, she was able to buy her first home.

“Prior to that pause, things were pretty dire,” Grace said. “And so this gave me the opportunity to really finally start to catch up. It’s amazing what happens when you don’t have hundreds of dollars month after month going to this.”

Grace said she knew the payment would eventually restart and didn’t take on any additional monthly expenses. But with inflation driving up the cost of everything from groceries to utilities, the resumption of the payment was an even bigger strain on her budget than before.

When it came time for the payments to restart in October on the $10,000 she still owes, Grace was also making a decision about signing up for her employer’s health insurance plan for 2024. She opted to take the risk of going without health insurance to continue making progress on paying down her debt.

With her federal loan payment now forgiven, she knows what she will do with the extra next month.

“I won’t be going to Target with that money, I won’t be going on vacation,” she said. “I will be enrolling in health insurance.”

Shannon Pettypiece is senior policy reporter for NBC News digital.