We bring to you the best startup business loans you can exploit from repeatable lenders.
Starting a business is a dream for many entrepreneurs, but it requires capital to get it off the ground. Unfortunately, not everyone has access to the necessary funds, and that’s where startup business loans come in. These loans provide the financing needed to start and grow a business.
As there are different types of business loans, one could explore personal loans as well, one that could be accessed through loan apps, and other platforms.
In this article, we’ll explore some of the best startup business loans available and highlight the features of different lenders.
What Is a Startup Business Loan?
A startup business loan is a form of financing that is designed to provide financial support to new and early-stage businesses. Startup loans are intended to help entrepreneurs fund the launch of their business or support the growth of their existing business in its early stages.
Startup business loans can be used to cover a wide range of expenses, including equipment purchases, inventory, marketing and advertising, and other operational costs. These loans are typically unsecured, which means that the borrower does not need to provide collateral to secure the loan. Instead, the lender evaluates the borrower’s creditworthiness and ability to repay the loan based on their business plan, financial projections, and other relevant factors.
Startup loans can be obtained from a variety of sources, including traditional banks, credit unions, online lenders, and alternative lenders. The terms and conditions of these loans can vary widely depending on the lender and the borrower’s creditworthiness. Some startup loans may have higher interest rates or shorter repayment terms, while others may offer more favorable terms for borrowers with a strong credit history.
The 7 Best Startup Business Loan for Businesses
We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 20%
- Customer experience: 20%
- Eligibility and accessibility: 10%
- Application process: 10%
OnDeck
OnDeck is a lender that offers a variety of financing options for small businesses, including startup loans. OnDeck is known for its fast application and approval process, as well as its flexible repayment terms.
One of the biggest advantages of OnDeck is its online application process. You can apply for a loan online in just a few minutes, and you’ll receive a decision within hours. This makes OnDeck a great option for businesses that need funding quickly.
OnDeck offers loans from $5,000 to $500,000 with terms ranging from three months to three years. The interest rates vary depending on the loan amount, term, and the creditworthiness of the borrower. However, the interest rates are generally higher than those of traditional bank loans. The APR on an OnDeck loan can range from 9% to 99%, with the average being around 49%.
OnDeck also charges an origination fee of 2.5% to 4% of the loan amount. This fee is deducted from the loan proceeds, so it’s important to factor it into your loan request.
One of the benefits of OnDeck is that they don’t require collateral for their loans. This means you don’t have to put up any assets as security for the loan, which can be a big relief for many small business owners.
Another advantage of OnDeck is its flexible repayment terms. You can choose a repayment term that fits your business’s cash flow, with options ranging from daily to monthly payments. OnDeck also offers the option to pay off the loan early without any penalties, which can save you money on interest charges.
Overall, OnDeck is a great option for small businesses that need funding quickly and don’t want to deal with the hassle of traditional bank loans. The flexible repayment terms and lack of collateral requirements make OnDeck a good choice for businesses that don’t have a lot of assets to put up as security.
Lendio
Lendio is a lending marketplace that connects small businesses with multiple lenders. This platform allows you to apply for a loan online and receive offers from various lenders. Lendio’s network includes over 75 lenders, including traditional banks, alternative lenders, and online lenders.
Lendio offers a variety of loans, including SBA loans, term loans, lines of credit, equipment financing, and merchant cash advances. Their loan amounts range from $500 to $5 million, and their interest rates start at 6%.
Lendio’s application process is simple and straightforward. You can complete the application online in just a few minutes, and you’ll receive offers from multiple lenders within 24 hours. Once you’ve selected a lender, you can receive funding within a few days.
BlueVine
BlueVine is an online lender that offers lines of credit and invoice factoring. Their lines of credit range from $5,000 to $250,000, and their invoice factoring services can provide up to $5 million in financing.
BlueVine’s lines of credit have a six-month repayment term and a weekly repayment schedule. Their interest rates start at 4.8% for lines of credit and 0.25% per week for invoice factoring.
BlueVine’s application process is entirely online and takes just a few minutes to complete. You can receive a decision within 24 hours and funding within a few days.
American Express Line of Credit
American Express is a well-known name in the credit card industry, but they also offer a line of credit for small businesses. The American Express Line of Credit is a flexible financing option that allows businesses to access funds as needed.
One of the biggest advantages of the American Express Line of Credit is its flexibility. You can access funds as needed, up to your approved credit limit, without having to reapply for a loan. This can be a big help for businesses that have unpredictable cash flow or need funding for unexpected expenses.
The American Express Line of Credit offers credit limits from $3,500 to $50,000 with interest rates starting at 6.98%. The interest rate you’ll receive depends on your creditworthiness and the amount of credit you’re approved for.
Another benefit of the American Express Line of Credit is that there are no annual fees or prepayment penalties. This means you can pay off the line of credit early without any penalties or fees, which can save you money on interest charges.
To apply for the American Express Line of Credit, you’ll need to have an American Express business card and have been in business for at least two years. You’ll also need to have a credit score of at least 660 and be able to provide financial documentation to support your application.
Fundbox
Fundbox is an online lender that specializes in invoice financing and lines of credit. Their lines of credit range from $1,000 to $150,000, and their invoice financing can provide up to $100,000 in funding.
Fundbox’s lines of credit have a repayment term of 12 or 24 weeks and a weekly repayment schedule. Their interest rates start at 4.66% for lines of credit and 0.5% per week for invoice financing.
Fundbox’s application process is entirely online and takes just a few minutes to complete. You can receive a decision within a few hours and funding within a few days.
Biz2Credit
Biz2Credit is an online lending platform that connects small businesses with multiple lenders. This platform allows you to apply for a loan online and receive offers from various lenders. Biz2Credit’s network includes over 1,200 lenders, including traditional banks, alternative lenders, and online lenders.
Biz2Credit offers a variety of loans, including SBA loans, term loans, lines of credit, equipment financing, and merchant cash advances. Their loan amounts range from $5,000 to $5 million, and their interest rates start at 4.99%.
Biz2Credit’s application process is simple and straightforward. You can complete the application online in just a few minutes, and you’ll receive offers from multiple lenders within 24 hours. Once you’ve selected a lender, you can receive funding within a few days.
What Are the Requirements to Get A Startup Business Loan?
When applying for a startup business loan, lenders generally evaluate several factors to determine the creditworthiness of the borrower. Here are some common requirements that lenders may look for:
- Business Plan: Lenders will want to see a detailed business plan that outlines the company’s goals, market analysis, and financial projections.
- Personal Credit Score: Lenders will consider your personal credit score to determine your financial responsibility.
- Business Credit Score: If your business has been established for some time, the lender may also evaluate your business credit score.
- Collateral: Depending on the type of loan, lenders may require collateral such as property, equipment, or inventory to secure the loan.
- Cash Flow: Lenders want to see that your business generates enough cash flow to repay the loan.
- Industry Experience: Demonstrated experience in the industry or a track record of success in a similar business can help to strengthen your application.
- Legal and Regulatory Requirements: Depending on the industry, there may be specific legal and regulatory requirements that must be met before a loan is approved.
- Equity: Having some equity in your business can demonstrate your commitment and lower the lender’s risk.
It’s important to note that the requirements for a startup business loan can vary depending on the lender, the loan type, and the industry. It’s important to do your research and find the lender that best fits your needs.
Steps to Get a Startup Business Loan
If you’re looking to get a startup business loan, here are some general steps you can follow:
- Determine Your Funding Needs: Identify how much money you need to start or grow your business. This will help you determine the type of loan you need and the lender you should approach.
- Check Your Credit Score: Your credit score can impact your loan options and interest rates. Check your credit score and take steps to improve it if necessary.
- Research Lenders: Look for lenders that specialize in startup loans and have experience working with businesses in your industry. Compare interest rates, fees, and terms.
- Gather Required Documents: Be prepared to provide the lender with a detailed business plan, financial statements, tax returns, and other supporting documents. Make sure you have everything organized and ready to go.
- Apply for the Loan: Fill out the loan application and submit it to the lender. Be prepared to answer questions about your business and provide additional documentation as needed.
- Wait for a Decision: It can take several days or even weeks for the lender to review your application and make a decision. Be patient and follow up with the lender if necessary.
- Accept the Loan: If your application is approved, carefully review the loan agreement and make sure you understand the terms and conditions. If everything looks good, sign the agreement and accept the loan.
- Use the Funds Wisely: Make sure you use the loan funds for their intended purpose and manage your cash flow carefully to ensure you can repay the loan on time.
Remember, getting a startup business loan can be a complex process, and there’s no guarantee that you’ll be approved. However, by following these steps and working with the right lender, you can increase your chances of securing the funding you need to start or grow your business.
Types of Startup Business Loans
There are several types of startup business loans that entrepreneurs can consider, including:
- SBA Loans: These loans are backed by the Small Business Administration (SBA) and are designed to help small businesses get started or expand. They offer lower interest rates and longer repayment terms than traditional bank loans, but they can also be more difficult to qualify for.
- Business Lines of Credit: These loans provide businesses with access to a predetermined amount of money that can be drawn on as needed. They offer flexibility and can be used for a variety of business purposes.
- Equipment Loans: These loans are used to purchase equipment or machinery that a business needs to operate. The equipment itself serves as collateral for the loan.
- Invoice Financing: This type of loan allows businesses to use their unpaid invoices as collateral. The lender advances the business a percentage of the outstanding invoice amount, and the business repays the loan once the invoice is paid.
- Business Credit Cards: Business credit cards can be a good option for startups that need to make small purchases and build credit. They typically offer rewards and cash-back programs.
- Personal Loans: If you’re having trouble getting a business loan, you may be able to use a personal loan to fund your startup. This can be a risky option, as it can put your personal finances at risk.
It’s important to carefully consider the pros and cons of each type of loan and choose the option that best fits your needs and financial situation.
