Startup business loans: what new businesses can get, and what it costs

By Solomon Wiesen, editor. Updated October 2026. Editorial standards | How this site is funded

A startup loan is any loan to a business with little or no operating history. That is what makes it hard: lenders price risk from a track record, and a new business has none, so the loan rests on you: your personal credit, your savings, your guarantee and your plan. The cheapest realistic option in October 2026 is an SBA 7(a) loan, capped at 10% to 13.5%. The fastest options cost several times that.

This guide covers the options that realistically lend to new businesses, what each one costs, how to borrow without pledging your house, which private lenders are worth a look, and the red flags that show up when a founder needs money quickly. It replaces three older pages on this site: the startup loans guide, the no-collateral guide and the private lenders guide.

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. If your score is the obstacle, see startup funding without a traditional credit check.
• 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. For SBA startup loans the minimum is now 10% of the project cost.
• 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

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. 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, which makes them the benchmark for every other quote you get. The chart shows the ceilings in October 2026.

The most an SBA 7(a) lender can charge, by loan size

Maximum variable rate in October 2026: the prime rate (7.00%) plus the spread the SBA allows for each loan size. Lenders can charge less; they cannot charge more.

$50,000 or lessPrime + 6.5

13.5%

$50,001 to $250,000Prime + 6.0

13.0%

$250,001 to $350,000Prime + 4.5

11.5%

Over $350,000Prime + 3.0

10.0%

0%5%10%15%

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. In New York City, the NYC SBA lender finder lists the banks and community lenders that actually make these loans, and SBA loans by borough shows where the money goes.

Borrowing without collateral

Most founders searching for a loan without collateral mean one thing: they do not want to pledge their home. That is achievable. A business loan with no security of any kind is rare. Know the three things a lender can ask for:

• Specific collateral is a named asset the lender can take if you default, such as equipment, a vehicle or real estate.
• A blanket lien (a UCC filing) gives the lender a claim on the business’s assets in general: accounts, inventory, equipment. Many “unsecured” online loans still file one. See UCC liens in New York.
• A personal guarantee makes you personally responsible if the business cannot pay. It is standard on small business loans, including SBA loans.

The options that do not require you to pledge specific property:

• Small SBA 7(a) loans of $50,000 or less, where lenders are not required to take collateral.
• SBA Microloans of up to $50,000 through nonprofit intermediaries. Some ask for collateral or a guarantee, but many are flexible with new founders and include free coaching.
• Nonprofit and community lenders. CDFIs and nonprofits lend to founders that banks turn down. Kiva U.S. offers crowdfunded 0% loans of $1,000 to $15,000 with no collateral and no minimum credit score; you must recruit some early lenders from your own network.
• Business credit cards, approved on your personal credit. Useful for small, short-term expenses; see using a business credit card to fund a startup.
• Online loans and lines of credit, which take no specific collateral but usually a personal guarantee and a blanket lien.
• Merchant cash advances, which require no collateral but are among the most expensive forms of funding, and in New York many agreements include a personal guarantee and, historically, a confession of judgment.

What replaces collateral in a lender’s eyes: strong personal credit, bank statements that show the business can carry the payment, more of your own money in the project, a co-signer with good credit, or a smaller first loan repaid on time that builds the history for a larger one.

Private lenders: who they are and what they cost

A private lender is any business lender that is not a traditional bank: online lenders, revenue-based funders, equipment finance companies, nonprofit lenders and loan marketplaces. They approve faster and accept thinner files, and they usually charge more for it.

Listing a lender is not an endorsement, and terms change often. OnDeck’s own disclosed average APRs for loans made in the first half of 2026 were 53.2% on term loans and 59.8% on lines of credit, several times the SBA ceilings above. That gap is the price of speed.

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. Products priced with a factor rate, such as merchant cash advances, are the extreme case: a 1.35 factor rate on a six-month term costs far more than 35% a year. Our factor rate to APR calculator shows the real number, and the MCA vs. loan calculator puts two offers side by side.

Also check for origination fees, prepayment penalties, daily or weekly payments, and whether the lender files a UCC lien on all business assets. In New York, most non-bank providers must show you the estimated APR before you sign; see New York’s commercial finance disclosure law.

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

Steps to apply

1. Work out exactly how much you need and what it is for. Lenders trust specific numbers.
2. Check your personal credit reports and fix errors before applying.
3. Start with the cheapest options you may qualify for (SBA, microloan, CDFI) before moving to online lenders.
4. Compare at least three offers on APR and total repayment.
5. Before signing, read every guarantee, lien and default clause. Our guide to reading a term sheet helps.

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. The NYC small business loans guide covers the city and state programs, including the NYC Future Fund.

Red flags

• Approval promised up front. 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, or an offer quoted only as a factor rate.

Where to go next

General information, not legal or financial advice. Rates and program rules change; confirm current terms with the lender before you apply. Listing a lender is not an endorsement.