The 3 Best Business Loans for Startups

BySarah PritzkerSep. 21, 2020

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The best-short term business loans
When you kick off a new startup idea, you need capital, which may come from a business startup loan, a specific type of business loan. Before you find funding, you need to know what your costs will be. Consider your initial costs such as office premises, plant and production equipment, legal fees, and office furniture.

Items that you own are classified as assets and can be used as collateral for your startup loans.

It’s important to include your ongoing expenses for at least the first 6 months of operation until your cashflow gets going. Expenses are areas you have to pay for but don’t get to keep. These cover things like payroll, rent, inventory, marketing, and insurance. Remember to count your business loan repayments among your expenses, too.

The Top Lenders at a Glance


Minimum Credit Score Time Until Funding Visit Site
Lendio 580
Within 48 hours View Rates
Fundera 680
2 days to 2 weeks depending on the lender View Rates
OnDeck 600
As fast as 24 hours View Rates

Alternative Ways to Get Funding for Your Startup

As well as considering taking a business loan from one of the top lenders, there are a few other options for kickstarting your new business. You can usually qualify for business credit cards and business lines of credit much faster than regular loans, but if you have a poor credit rating, you'll face a much higher APR. Microloans and SBA government-backed loans usually carry the best interest rates. On the down side, they are usually only for small amounts and can be difficult to qualify for.

Financially, scoring a grant or capital venture investment leaves you with the lowest amount to repay. You could also turn to crowdfunding, or borrow money from friends and family. Although the latter probably won’t charge you interest, you run the risk of ruining your relationship if the business doesn’t succeed. Finally, some entrepreneurs finance their business by taking out a personal secured or unsecured loan. This is highly ill-advised since it increases your personal financial risk.

How to Apply for a Business Startup Loan

When you apply for a business startup loan, you're likely to have to give a personal guarantee, which requires you to have good personal credit, probably 680 or over. Startup business loans tend to go up to $750,000 with the average APR between 7.9% and 19.9% and repayment terms from a few months to several years. You can get lower rates by using your business equipment as collateral for the loan or by getting an Equipment Financing loan, which lets you register your equipment as collateral and use it while still paying off the loan.

You’ll usually need to submit a business plan and list your assets as well as complete the lender’s application form and undergo a credit check. You'll have to send your most recent business income tax returns if you have any yet, and your personal income tax returns for the last three years if you don't. Your business' legal documents, verifiable details, and business financial statements (if you have any) will be requested, as well.

The 3 Best Business Loans

1. Lendio

Lendio

  • 10 different loan types
  • No minimum credit score    

Lendio is an online small business loan aggregator that brings business owners and lenders together on one platform. The site is free to use, and offers at over ten distinct loan programs, for every business need, from business acquisition to funding for commercial real estate, increasing your changes to find both a lender and a specific loan program that suits your needs.    

Read the full Lendio review >>

Lendio Lendio View Rates

2. Fundera

Fundera

  • Keeps information private, even from lenders
  • Highly acclaimed

Founded as an alternative to traditional bank loans, Fundera has worked hard to build a solid reputation of trust, professionalism, and competitive rates. With a wide range of loan types and flexible repayment options, Fundera gears itself towards small business loans and provides loans of anywhere from as little as $5,000 up to $5 million.

Read the full Fundera review >>

Fundera Fundera View Rates

3. OnDeck

OnDeck

  • 24-hour approval
  • Excellent customer service

OnDeck offers conventional business loans and lines of credit, allowing flexibility to get the loan you need. Best of all, you can have your money within 24 hours with fast approval and excellent customer service.

Read the full OnDeck review >>

View Rates

Conclusion

Startup business loans of one sort or another are the best way to get your new business idea off the ground. Now that you have these insights into the startup loans offered by the 5 best online lenders, you can make an informed decision and get the startup business loan that’s best for you.