By Solomon Wiesen, founder and editor of Startups #nofilter. Updated October 2026. Editorial standards | How this site is funded
A startup loan is any loan to a business that has little or no operating history. That last part is what makes it hard. Most lenders price risk from a track record: two years of tax returns, steady bank deposits, a credit file for the business. A new business has none of that, so the loan ends up resting on you: your personal credit, your savings, your guarantee and your plan.
This guide covers the options that realistically lend to new businesses, what each one costs, what changed for SBA startup loans in 2025, and the red flags that tend to show up when a founder needs money quickly.
What lenders look at when the business is new
- Personal credit. With no business credit history, your personal score stands in for the company’s. Many online lenders want 600 to 650 or higher; SBA lenders often want more.
- Revenue and time in business. Many online lenders want at least six to twelve months of deposits. Pre-revenue businesses are mostly limited to SBA loans, microloans, credit cards and personal sources.
- Your own money in the deal. Lenders want to see you take risk too. For SBA startup loans the minimum is now 10% of the project.
- Collateral and guarantees. Expect to sign a personal guarantee on almost any business loan. Larger loans may also take a lien on business assets or, for SBA loans, personal real estate.
- A plan that adds up. A business plan with 12 to 24 months of projections, showing how the loan payment fits into cash flow.
Your main options, compared
| Option | Typical size | Best fit | Watch out for |
|---|---|---|---|
| SBA 7(a) loan | Up to $5 million | Founders with good credit, a solid plan and at least 10% to put in | Slow approval, heavy paperwork, personal guarantee |
| SBA Microloan | Up to $50,000 | Small startups and underserved founders | Rates usually higher than 7(a); lender may require training or collateral |
| Nonprofit and CDFI lenders | Usually under $100,000 | Founders turned down by banks | Smaller amounts; availability varies by area |
| Equipment financing | Cost of the equipment | Businesses that need trucks, kitchens, machines | The equipment secures the loan and can be repossessed |
| Business credit cards | A few thousand to tens of thousands | Early, small expenses you can repay quickly | High interest if you carry a balance; based on personal credit |
| Online term loans and lines of credit | $5,000 to $500,000 | Businesses with 6 to 12 months of revenue | Higher rates, frequent payments, blanket liens |
| Merchant cash advances | Based on monthly sales | Businesses with card or bank deposits that need cash fast | Very high effective cost; read our MCA guide first |
SBA loans for startups: what changed in 2025
The SBA guarantees part of loans made by banks and other approved lenders, which lets those lenders accept newer businesses. New rules in the SBA’s lending handbook (SOP 50 10 8) took effect on June 1, 2025 and made startup loans stricter:
- 10% equity injection. Startups and business purchases must put in at least 10% of the total project cost from their own funds.
- Ownership. The business must be 100% owned by U.S. citizens, U.S. nationals or lawful permanent residents.
- Credit screening. 7(a) loans of $350,000 or less go through faster processing only if the business scores at least 165 on the SBA’s credit screening score (FICO SBSS).
SBA 7(a) interest rates are capped as a spread over the prime rate. For variable-rate loans the caps are prime plus 6.5 points for loans of $50,000 or less, prime plus 6 points up to $250,000, prime plus 4.5 points up to $350,000, and prime plus 3 points above that. Expect an SBA guarantee fee and lender fees on top.
For loans of $50,000 or less, SBA lenders are not required to take collateral. That makes small SBA loans one of the few low-cost options for a founder without property to pledge. More on that in our guide to getting a startup loan without collateral.
What a startup loan really costs
Compare loans by annual percentage rate (APR) and total dollars repaid, not by the headline rate. Two loans with the same rate can cost very different amounts once fees, payment frequency and term are counted. Watch especially for products priced with a factor rate, such as merchant cash advances: a factor rate of 1.35 on a six-month term works out to far more than 35% a year. Our factor rate to APR calculator shows the real number.
Also check for origination fees, prepayment penalties, daily or weekly payments, and whether the lender files a UCC lien on all business assets.
Documents to have ready
- A business plan with 12 to 24 months of financial projections
- Personal tax returns for the last two to three years
- Bank statements, personal and business, for the last three to six months
- Government ID and your EIN
- Formation documents. In New York, an LLC must also publish notice of its formation in two newspapers within 120 days, which can cost well over $1,000 when the county is Manhattan; lenders may ask for proof.
- Any leases, licenses or contracts the business already has
Free help in New York City
Before paying anyone to find you a loan, use the free options. NYC Small Business Services runs Business Solutions Centers in every borough that help with financing applications. The New York Small Business Development Center network offers free one-on-one advising, and SCORE pairs founders with volunteer mentors. Our New York City small business guide covers the local landscape in more detail.
Red flags
- “Guaranteed approval.” No legitimate lender can promise approval before reviewing an application.
- Upfront fees before you receive funds.
- Pressure to sign the same day, or an offer that arrives right after you take other financing. That is often the start of stacking.
- No clear cost disclosure. New York requires most commercial lenders and funders to show the estimated APR and total cost before you sign; see New York’s disclosure law.
Frequently asked questions
Can I get a startup loan with no revenue?
Yes, but the options narrow to SBA loans, microloans, nonprofit lenders, credit cards and personal sources. Most online lenders require revenue.
Can I get a startup loan with bad credit?
It is harder and more expensive. Nonprofit lenders and microloans are the most realistic paths. See startup loans and credit checks for what lenders look at.
How long does an SBA loan take?
Usually several weeks to a few months from application to funding, depending on the lender and how complete your file is.
Is a merchant cash advance a startup loan?
No. It is a purchase of future sales, it requires existing sales, and it typically costs far more than a loan. Read how a merchant cash advance works before considering one.
This guide is general information, not financial or legal advice. Rates and program rules change; confirm current terms with the lender before you apply.
