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    2020's Best Startup Business Loans Explained

    You’ve had a killer idea you believe will revolutionize the world. You’re ready to unveil it to the masses but you hit a problem: money. Even if you’ve come up with the greatest thing since the internet, your startup is never going to start if you can’t finance it. Of course, you may not need a million dollars to get your venture off the ground. 

    However, there will come a point when you need to inject some cash into the business. Startup business loans are one way to turn your dream into reality. Although there are other options, including private investment, startup loans often give you a greater degree of flexibility and security. What’s more, you won’t have to give up a stake in your company to get one. To show you want we mean, check out our quick guide to small business loan startup offers. 

    Top Lenders
    Features
    • Automated payback
    • No late fees
    • Easy application process
    • No Origination Fee Or Early Repayment Fees
    • Flexible Payments With No Credit Check
    • Boasts a Speedy Application Process
    • Competitive interest rates
    • Great customer support
    • Quick loan procedures
    • Discounts for prepayment
    • Authorize loans and lines of credit
    • Short term loans

    What is a Startup Business Loan?

    In simple terms, start up business financing is the process of applying for a loan in order to grow your company. Each lender will have its own terms and conditions. However, it’s generally accepted that the best startup business loans allow you to use the money for operational costs, development, the purchase of property and marketing. In many ways, small business startup loans are just like any other. However, one of the biggest issues entrepreneurs run into when trying to finance their project is collateral or the lack of it. An established business that applies for extra funding will have tangible assets and a revenue history to support its application. Startups don’t always have the same luxury. Fortunately, there are startup business loans no collateral needed offers out there. One of the most commonly used sources of no collateral small business loans is the SBA (Small Business Administration).

    How Small Business Start Up Loans Work

    In general, start up business financing is a matter of finding the right lender for your needs. Credit cards are often seen as a standard option for newbies. However, there are plenty of alternative, less risky options out there. Three of the top sources for funding small business startup ventures are:

    SBA Loans for Startup Businesses

    If you’re short on collateral or simply want the security of a government-backed loan, the SBA should be your default choice. SBA loans for startups essentially provide a guarantee to lenders. In other words, the SBA shoulders part of the risk and guarantees part of the loan. A lender puts up the rest of the money, allowing you to receive some cash with very little in the way of credit history, collateral or proven income.

    Small Business Grants

    If you set up a business in certain fields, there will be organizations that have money set aside for funding. Whether public or private, grants to start a business are different from loans in that you don’t typically have to pay back the money. Again, the SBA is on hand to help. By partnering with a network of private organizations, the SBA oversees and can provides guarantees that allow grants to be given to startups.

    Crowdfunding

    In an age of technology, crowdfunding loans for startups have become extremely popular. These loans can be easier to get if all you have is a new idea because crowds of people may share your vision. What’s more, because the risk is often distributed among multiple parties, investors are often more willing to take a shot at funding a startup than a bank would be.

    How to Apply for Startup Business Loans?

    When you apply for startup business loan offers, there are certain pieces of information you’ll need to provide. In practice, each lender has its own requirements. However, if you intend to apply for a small business loan startup deal, you’ll need to do the following:

    1. Review the terms and conditions attached to the loan you’re applying for to see if you’re eligible.
    2. Complete an initial form of interest.
    3. When invited to, provide detailed information about you and your business, including your name, address, business plan, bank statements/cashflow statement, personal financial information, employment history.

    Assuming you meet the entry requirements, you’ll be offered a startup loan. If you’re happy with the interest rate and terms, you can accept and grow your business.

    Who Qualifies for Startup Business Loans?

    Funding for small business startup ventures is, as you’d expect, reserved for new companies and small businesses. In many situations, you’ll need to have a credit score of 600+ and have been active as a business for at least 11 months. If you haven’t been active that long, you may need a higher credit score (usually above 680). Additionally, you'll also find a selection of business startup loans for minorities out there. This type of start up business financing often comes in the form of grants handed out by organizations focus on specific minority groups. 

    Top Lenders

    • Award-winning low APR rates
    • Few restrictions on loan purpose
    • Dedicated account manager
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    • No guarantees needed
    • Low minimum credit score requirements
    • No hidden fees
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    • AAA+ Business Bureau
    • Work Qith Start-up Companies
    • Easy To Get Personal Advice
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    Advantages & Disadvantages of Startup Business Loans

    As we’ve said, start up loans aren’t the only way to get money for your new business. To help you decide if these options are right for you, here are a few advantages and disadvantages of small business startup loans:

    Advantages

    • It’s a safe way to build up credit and many start up loans are backed by federal agencies.
    • You can get collateral you didn’t previously have with startup equipment financing. This, in turn, gives you a stronger borrowing position in the future.
    • Startup loans are appropriate for a variety of business purposes, including operational costs, marketing and property.

    Disadvantages

    • Startup loans are relatively small in comparison to other forms of funding.
    • You need excellent personal credit to borrow in most instances.
    • Any money you borrow to buy equipment could quickly lose value as the equipment becomes obsolete.

    How To Qualify for a Startup Loan

    If you run a new, small business (1,500 employees or fewer and less than $7 million in revenue), a loan for start up ventures may be for you. However, there are some things you need to bear in mind when you apply:

    How Long Does Funding Take?

    Equipment loans for startup business projects can take just a few weeks to complete if you’re prepared. If you’re required to justify your application, it could take a few months.

    How Should I Choose A Startup Loan?

    The loan you choose will depend on your needs. For example, startup business loans no collateral needed are ideal for extremely new ventures. In contrast, if you’re a niche field that banks may deem as high risk, crowdfunding might be the best option. A broker can be a great way to get the right deal and, importantly, one you’re likely to be accepted for.

    How to Request a Start Up Business Loan

    A startup loan for new business projects requires a combination of personal details and business data. In general, you’ll need to prepare the following before you make an application.

    What you need to for start up business financing:

    • Driver's License
    • Voided Business Check
    • Bank Statements
    • Balance Sheet
    • Profit & Loss Statements
    • Business Plan
    • Business Tax Returns
    • Personal Tax Returns
    • Business Debt Schedule

    Top 3 Startup Loans

    PayPal

    PayPal might not be the first name you think of when it comes to loans for a startup business, but through PayPal working capital, start-up and growing businesses are eligible to receive finance for up to $125,000 on their first two loans. It’s worth noting that PayPal’s loans are best suited to businesses that use the PayPal platform to take payments, as loan rates are determined and applications are granted on the amount of money PayPal can see coming into your account. 

    Once you’ve got the money you need, you might agree with the heads of other startups that say it doesn’t even feel like taking out a loan at all. This is because any loans your startup receives through PayPal are repaid automatically through a small percentage of your future sales. This means you don’t need to worry about big chunks of money suddenly disappearing from your account and it definitely eases the worry of how you’re going to pay back your loan. There are no other hidden fees, either – just the one fixed fee for future payments. PayPal’s APRs aren’t publicly visible on the website so you’ll need to get in touch with PayPal directly to find out more about its rates as they’re assessed individually according to each application. 

    Fundera 

    To date, Fundera has helped over 50,000 small businesses get the finance they need to upscale and ultimately compete better with other businesses. If you’ve got an ambitious idea for your startup, the chances are you’ll need access to financing sooner rather than later. Fundera works by comparing loan rates from dozens of financial options at once. All it takes is just a couple of minutes to fill out an online application by answering questions to help Fundera gain a clearer picture of the startup loans your business qualifies for. 

    Once you’ve completed your application, one of Fundera’s in-house specialists will get in touch to learn more about your business and its future growth potential. From there, your specialist will be able to find loan offers that best suit the requirements of your business and you can compare multiple offers together. Ultimately, its specialists are there to make sure that any financial decisions you make are in the best interest of your business. Fundera is the perfect choice for startups that are interested in discovering what types of options are available before making any decisions. 

    Ondeck

    Ondeck specializes in providing loans for small businesses, with loan amounts of up to $500,000 available. With an A+ rating from the Better Business Bureau, a 4.9/5 customer rating on Trustpilot and with rates as low as 11.89% APR, you can trust the service you’ll receive from the team at Ondeck. To complete your application, you’ll need your last three months of bank statements, your Business Tax ID (EIN) and a current month-to-month statement of activity. Once you’ve completed your application, you’ll get a call from one of its dedicated loan experts to discuss what offers are available to you. 

    There are plenty of loans to choose from and a lot of room for support available to startups, owing largely to additional resources that are available on the website, like its Small Business Center. While Ondeck offers flexible terms and access to a wide variety of rates for small businesses, startups won’t have access to the same kind of support. While there is a section on the website that outlines the number of ways that startups can get financial support, Ondeck only provides loans to businesses that have been operating for at least three years.

    Startup Loans for Bad Credit

    Before we conclude this overview, let’s quickly talk about startup business loans bad credit borrowers can get. Being brutally honest, the reality is that you may struggle to get some cash. However, it’s not impossible.

    Although a lender might not say something like “bad credit startup business loans guaranteed approval,” there are organizations that specialize in this area. Again, a broker can help here. However, if you simply conduct an internet search, you can find startup business loans for bad credit guaranteed. 

    Startup Business Loans Online: A Virtual Way to Make a Real Difference

    It’s rare a new company can make it big without some sort of external funding. Although it’s possible, most use startup business loans to get their idea off the ground and take it to the next level. Applying for startup business loans online has become extremely popular over the years. In fact, thanks to the advent of new options and the internet, applying for funding has become a lot easier. Indeed, if you use our resources in conjunction with this guide, you should be able to find the best startup business loans to take your company in the right direction.