Starting a new business can be exciting, but it’s also expensive. The costs associated with startup loans can help you cover your startup costs, such as equipment, inventory, payroll, utilities, and insurance.
While obtaining traditional business loans may be more difficult for startups, some online lenders offer funding to borrowers with one year or less of business operation. Grants and business credit cards are two alternative funding options for new businesses.
Here are our recommendations for the best loan options for startups and advice on how to qualify for a startup business loan.
Best Loan Options for Startups
– Unsecured business loans for startups
Fundbox provides up to $150,000 in business credit lines with no physical collateral required. You may be eligible if you have been in business for at least six months.
– Startup business loans for bad credit
Fora Financial offers working capital loans of up to $750,000. You can qualify if you have been in business for at least six months and have a credit score of at least 500.
– Fast business loans for startups
OnDeck offers a short-term loan of up to $250,000 through a simple online application. Once approved, you can receive funding as soon as the next day. You may qualify if you have been in business for at least one year.
– Equipment loans for startups
Triton Capital provides up to $250,000 in equipment loans. Triton is able to fund startup businesses in many cases, though borrowing costs may be higher.
– SBA loans for startups
The SBA microloan program provides small loans to new and underserved businesses. Qualification standards differ depending on the lender.
How to Qualify for A Startup Business Loan
Some lenders may be reluctant to work with startups because they require more business history to demonstrate the financial ability to repay a loan. If you’ve been in business for less than a year or need capital to start a business, you’ll almost certainly need to borrow money based on your finances.
To be eligible for the best startup business loan options, you must have good personal credit and stable finances. If you’ve already established your company, it can be advantageous to demonstrate solid business finances and cash flow projections.
Anything you can use to demonstrate your creditworthiness and ability to repay the loan will help you qualify for a startup business loan and give you access to more favorable terms and rates.
Although some online lenders provide loans to borrowers with low FICO scores, be wary of any loans with no credit check or guaranteed approval. It could be a costly option — or a ruse.
Check your credit reports for errors dragging down your score and dispute them with the credit bureaus. Stay on top of all bills to build your credit score quickly.
