Loan type
Startup business loans: the honest version of what is available
Most "startup loan" marketing is aimed at businesses that already have revenue. Here is what genuinely exists at zero, and what it costs.
At a glance
| Realistic amount | $5,000 to $150,000 for a true startup |
|---|---|
| Rate | 8.0% - 30.0% APR |
| Term | 1 to 10 years depending on the source |
| Personal credit | The dominant factor — 680+ opens most of the doors |
| Your own money | Expect to contribute 20% to 30% of the project |
| Collateral | Whatever you have; often personal |
| Time to funding | 1 week to 90 days |
A good fit when
You have a specific plan, some of your own money in, and either relevant experience or a franchise with a track record.
A poor fit when
You are hoping a lender will fund an idea. No conventional lender does this, at any price.
The uncomfortable framing
Business lending is underwritten on repayment capacity, and a business with no revenue has none to show. So at the startup stage, lenders substitute something else: your personal credit, your own cash, a franchisor's track record, or a specific asset. Every real startup financing option is one of those four substitutions.
This is why the honest list is shorter than the advertised one. It is not short because the market is unfair; it is short because the arithmetic does not work otherwise.
What genuinely exists, in the order worth trying
| Option | Typical amount | Cost | What it actually requires |
|---|---|---|---|
| SBA microloan or CDFI | Up to $50,000 | 8% to 13% | A written plan, some of your money, often a training course |
| SBA 7(a) for a startup | $100,000 to $5M | 10% to 14% | 20% to 30% injection, industry experience, defensible projections |
| Franchise financing | $100,000 to $2M | 10% to 14% | An approved franchise brand with strong historical unit economics |
| Equipment financing | Asset value | 7% to 30% | A real, resaleable asset and decent personal credit |
| Business credit cards | $10,000 to $75,000 total | 18% to 29% | Personal credit in the 700s |
| ROBS (401k rollover) | Your balance | Setup plus annual fees | $50,000+ in a rollable retirement account, and a specialist provider |
| Friends and family | Anything | Varies | Documentation, so it does not destroy the relationship |
| Grants | $1,000 to $250,000 | Free | Time, a narrow fit, and a tolerance for long odds |
The SBA 7(a) startup, which is more possible than people think
The 7(a) has no minimum time in business. Startups do get approved. What they bring is:
- A meaningful injection. 20% to 30% of the project, not the 10% an established buyer would need.
- Documented industry experience. A resume that makes you a credible operator of this specific business.
- Projections built from something. Not optimism — a franchisor's Item 19 disclosure, comparable industry data, signed letters of intent, a pre-sold contract.
- Collateral, usually personal. Home equity is the common answer. Decide before you apply whether you are willing.
- A lender who does startups. Most do not. Ask directly, and do not waste six weeks finding out.
Franchises are a different, easier animal
If you are buying into a franchise on the SBA Franchise Directory with strong unit-level economics, you are in a materially better position than an independent startup. The lender can look at hundreds of comparable units, the Item 19 Financial Performance Representation gives them defensible numbers, and the failure rate data exists. Several lenders specialize in specific brands and will move quickly on them.
The flip side: not all franchises perform, and the brands that are easiest to finance are not always the ones with the best returns to the operator. Read the Franchise Disclosure Document in full, and talk to at least ten current franchisees who were not chosen for you by the franchisor.
What to do if the answer is no everywhere
- Start smaller. A version of the business that needs $15,000 instead of $150,000 is financeable today, and twelve months of revenue changes every conversation.
- Keep the job. Lenders view a startup with an owner who has outside income far more favorably, because the household survives a slow first year.
- Go to a CDFI anyway. Their whole mission is the businesses banks decline. Even a decline usually comes with specific, actionable feedback, which a bank will not give you.
- Use your local SBDC. Free, funded by the SBA, and genuinely useful for building the projections a lender will accept. Most people have never heard of them.
Questions people actually ask
Can I get a business loan with no revenue?
Yes, but not on the business's merits — on yours. Realistically that means an SBA microloan or CDFI loan, an SBA 7(a) with a large personal injection, equipment financing against a specific asset, or personal credit. There is no conventional lender who will fund a pre-revenue idea on the idea alone.
What credit score do I need for a startup loan?
680 and up opens most doors. 640 to 680 leaves microloans, CDFIs, and equipment financing. Below 640, focus on CDFIs and on rebuilding the score for six months — the difference between 620 and 680 is worth more than almost anything else you could do in that time.
Are there grants for starting a business?
Real ones exist, mostly through state and local economic development agencies, industry-specific programs, and some corporate initiatives. Federal grants for general small business startup are largely a myth. Grants.gov is the legitimate federal source. Anyone charging you a fee to "find" you grants is selling you a list you could search for free.
Is an SBA microloan really available to a brand new business?
Yes — startups are an explicit part of the program's purpose, unlike the 7(a) where they are an exception. Intermediaries lend to pre-revenue businesses regularly, usually alongside a training requirement and a written plan they help you build.