Compare the Best Startup Business Loans

Want to jump straight to the answer? The best startup business loans for most people are Upstart and Fundera. 

Funding a startup during its first few months is one of the most challenging aspects of operating a small business. Unfortunately, traditional lenders have many reasons to turn away startups, including poor or no credit history and poor cash flow projections. So we searched for lenders known to work around startups’ unique funding challenges to help you get your business off the ground. 

The Top 6 Best Startup Business Loans 

• Upstart – Best For No Credit History 
• Fundera – Best Marketplace to Compare Business Loans 
• Riviera Finance – Best Startup Business Loan for Invoice Factoring 
• SmartBiz – Best for SBA 7(a) Loans
• Accion Opportunity Fund – Best Loans for Underserved Businesses 
• Credibly – Best for Working Capital Loans With Poor Credit 

Upstart – Best for No Credit History 

A personal loan is an underrated startup financing option. Personal loans are generally easier to qualify for than business loans. These loans also have fewer qualification requirements. You can use the loan to finance minor business expenses like rent, payroll, or inventory. 

But what happens if you have no credit history? A personal loan from a traditional bank is almost always impossible in this situation. This is because banks check your credit history to assess your creditworthiness. 

Upstart has a unique underwriting process. Rather than checking your credit history, the lender uses alternative criteria to assess eligibility. For example, Upstart uses AI to evaluate your job history, college education, and residence to qualify your eligibility. 

Upstart also offers business loans, and the qualification criteria are just as lenient. Business loans from Upstart have a higher borrowing amount of up to $200,000. You can use these funds for significant business expenses like new construction or purchasing equipment. 

There are no restrictions on using a personal loan for business use. The lender also offers other types of loans, including car refinance, debt consolidation, and debt repayment loans. 

Borrowing on Upstart is straightforward. Simply enter the amount you wish to borrow on the Upstart website. Next, you’ll need to answer a few personal questions, including your level of education, credit score, and employment status. You’ll receive an estimated rate for the loan before moving forward. 

Upstart also has a quick funding time. You can prequalify for a loan within five minutes. Then, the approval process typically takes one business day. Finally, you’ll receive your funds in as little as one business day after signing the loan agreement. 

The lender lets you change your monthly payment date as often as you wish. In addition, you can change your repayment date from the online portal. The only caveat is the new date can’t be later than the monthly deadline. There’s also a 15-day grace period to make your payment before the lender applies late fees.

Upstart also only offers unsecured loans. This is good news for a startup without collateral. There are also no minimum credit score requirements. Again, this is encouraging news for a business that hasn’t operated long enough to earn a FICO score. 

Upstart charges an annual percentage rate (APR) between 5.31% and 35.99% on its loans. You can also choose a loan term of three or five years. Finally, the lender also charges an origination fee. However, it’s a worthwhile expense if you don’t qualify for traditional term business loans. 

Fundera – Best Marketplace to Compare Business Loans 

Fundera isn’t a direct lender. Instead, it is a marketplace where you can compare loans to find the best one. It’s a one-stop shop if you prefer to explore multiple lenders before making a final decision. 

Specifically, Fundera is a terrific resource for startups that don’t qualify for traditional term loans. Most similar marketplaces offer hundreds of lenders. Funder is more limited, primarily because of its stringent lender vetting process. So you can be assured of matching with only the most trusted lenders. 

The best part is you don’t have to pay a fee to match with a lender. The platform is free to use. Fundera receives a commission from the lender based on your loan agreement. You can explore different types of loans, including short and medium-term loans, lines of credit (LOCs), merchant cash advances, equipment loans, invoice financing, SBA loans, and relief financing. 

The only significant requirement to use Fundera is to be a registered business. (Unfortunately, the platform doesn’t support personal loans.) You’ll be requested to fill out an application form with basic information about your business. This information helps Fundera connect you with the best lenders for your business. Some of the information you’ll need to provide includes the nature of your business, time in business, annual revenue, and personal credit score. 

Next, Fundera offers you a list of pre-approved lenders based on your eligibility and criteria. The best part is you’ll work directly with a Funding Advisor to explore your loan options. Then, you can use this information to select the best loan for your needs. 

Riviera Finance – Best Startup Business Loan for Invoice Factoring 

Invoice factoring is an excellent option for startups that want to minimize debt out of the gate. This type of financing lets you sell your outstanding invoices for immediate cash. In addition, Riviera Finance has some of the most lenient qualification requirements, making it perfect for startups without an extensive credit history. 

The lender can advance you up to 95% of your invoice value. Most startups don’t have predictable revenue. Riviera Finance doesn’t impose monthly minimum payments, so you can make payments as invoices get paid. Most contract lengths go for six months, which is ample time to make your payments. 

Additionally, the lender offers non-recourse factoring. As a result, you don’t have to worry if your client doesn’t pay the invoice. Riviera Finance assumes all the risk and liability if a client goes bankrupt and can’t pay the invoice. It’s an excellent way to eliminate bad debt and guarantee cash flow for your startup. 

You can visit a physical office to apply for financing. The lender has offices in more than 25 offices covering the entire United States and Canada. In addition, you’ll have an in-person meeting with an agent to discuss your financing needs. Alternatively, you can fill out an online application to receive a quote. 

There is also plenty of room to negotiate. For instance, you can negotiate longer repayment terms or a better rate. In addition, Riviera Fiance doesn’t charge extra fees except for an early termination fee. 

While Riviera Finance is best known for financing receivables, it also has other excellent financial products, such as Riviera FastCredit. This tool allows you to apply for a loan online and receive automated credit approval instantly. 

The FastCredit portal also lets you view your invoice history. This way, you can tell when to expect payment from specific clients. You can try out FastCredit free for 15 days. 

SmartBiz – Best for SBA 7(a) Loans

Most startups are too risky for traditional lenders. But, the U.S. Small Business Administration (SBA) comes to the rescue. The agency can guarantee up to 85% of your loan, making your business more attractive to lenders. 

The SBA doesn’t offer loans directly. Instead, it works with lending partners like SmartBiz. However, SBA loans are notorious for back and forth between borrowers, the SBA, and partner lenders. In addition, the head-spinning red tape and bureaucracy leave many small business owners confused and frustrated. 

SmartBiz has streamlined the SBA application and approval process, making it a top choice for SBA-backed loans. You can borrow up to $350,000 for debt refinancing or working capital. You can also borrow up to $5,000,000 in commercial real estate loans. You can expect attractive loan terms, interest rates, and APR fees.  

Granted, SmartBiz has relatively strict criteria. For example, you need at least two years with good credit, sufficient cash flow to make monthly payments, and no recent foreclosures or bankruptcies. However, many startups meet these requirements. 

The application process is streamlined. First, you’ll need to provide basic information about your business. Then, SmartBiz performs a soft check for your personal and business credit. This check doesn’t affect your credit score. 

Finally, SmartBiz will match you with banks within its lender networks. You can also work with a SmartBiz consultant to help you with every step. For example, you’ll get professional advice regarding the application process and the best financing option. This process eliminates going back and forth between different lenders and the SBA. 

SmartBiz also offers other types of loans, including term loans and custom financing. But, again, you only need to provide a few details about your process. Then, SmartBiz will match you with suitable lenders for your needs. And you can rely on its consultants if you get stuck on the details. 

Accion Opportunity Fund – Best Loans for Underserved Businesses 

Funding a startup is difficult even if you meet the typical lender requirements. Funding is even harder to come by for certain underserved businesses. Accion comes to the rescue of small businesses and startups that traditional lenders usually overlook.  

The Accion Opportunity Fund is a nonprofit company seeking to create an inclusive financing system. The nonprofit offers loan products to empower underserved businesses, including:

• Women-owned business loans
• Veteran-owned business loans 
• Business loans for people with disabilities 
• Foreign-born business owner loans 
• Minority-owned business loans 
• Native American business loans 
• Green loans
• Loans for childcare business 
• Startup loans 
• Small business loans 
• SBA loans

Accion offers lower interest rates than most banks and other traditional lenders. The rate varies between 5.99% and 25.99%. However, most loans max out at around 16.99% APR. Of course, the interest rate varies depending on your qualifications and creditworthiness. 

The loan application is streamlined. You can fill out an application online or over the phone. You’ll provide details about your business for review. The application takes about 15 minutes. The best part is Accion connects you with an agent whether or not the application is successful. 

If successful, the agent will take you through the following steps. If your application is rejected, the agent will explain the rejection. The agent also offers actionable advice to help you improve your application. Accion may also connect you with one of its lending partners that might be a better fit. 

You can borrow between $5,000 and $100,000. You can also choose the term length you’re most comfortable with. These vary from 12, 24, 36, and 60 months. Then, you’ll repay the loan in monthly installments, and there’s no penalty for repaying your loan early. 

Finally, Accion offers additional resources to help you grow your business. You can access a comprehensive resource library, personalized business coaching, and mentoring. The nonprofit is undoubtedly one of the foremost supporters of startups and small businesses. 

Credibly – Best For Working Capital Loans With Poor Credit 

Credibly is a terrific lender for startups with tight cash flow. The online lender serves all 50 states. There are also few barriers to entry. For example, you only need to be in business for six months to qualify. Plus, Credibly lends to businesses with FICO scores as low as 500. 

Credibly offers seven different types of loans, including:

• Working capital loan 
• Line of credit 
• Invoice factoring 
• Equipment Financing 
• Long-term business expansion loan 
• Merchant cash advance 
• SBA loans 

Of course, you can choose the type of loan that best suits your business needs. You’re encouraged to explore all of Credibly’s loan offerings to find the best one. However, the lender is most famous for its working capital loans. 

Credibly’s working capital loans are perfect for quickly resolving a cash flow shortfall. For example, you can use the loan to purchase inventory, meet payroll, or purchase equipment. This loan has relatively lower requirements, including:

• At least six months in business 
• FICO score of at least 500
• Average monthly bank deposits of $15,000 for the past three months

The loan terms are equally attractive for startups. For example, the term lengths range from six to 18 months. You can also choose daily or weekly repayments. Finally, you can borrow up to $400,000 with factor rates as low as 1.09.

The lender also has a straightforward application process. Simply fill out an online form to prequalify for the loan. You’ll need to provide simple details like your name, company name, business phone number, time in business, and desired loan amount. Then, you can receive funding in as little as 48 hours after approval. 

Where most lenders impose a prepayment penalty, Credibly takes the opposite route. The lender incentivizes early repayment. You get a discount for paying your loan early. 

How to Find The Best Startup Business Loans for You

Finding the best startup business loan is simple if you know what to look for. Below are some factors to consider when looking for the best business loan. 

Loan Options 

The best type of loan for your startup depends on your financing needs. For example, a working capital loan helps keep your business afloat. Unfortunately, these loans typically attract higher interest rates. But, the promise of ready cash to purchase inventory or meet payroll makes these loans worth the higher cost. 

Similarly, invoice factoring is helpful if you have multiple unpaid bills. Lenders like Riviera Finance fund up to 95% of your outstanding invoices. You may also opt for a traditional term loan to finance significant investments like constructing a new building or purchasing equipment. 

The ideal lender should have multiple loan products to choose from. It’s also good if the lender provides a financial expert to help you find the best loan for your business. For example, Credibly offers seven different types of loans. Some of the loan options to consider include:

• Working capital loan 
• Merchant cash advance 
• Line of credit 
• Invoice factoring 
• Equipment Financing 
• Long-term business expansion loan 
• SBA loans 
• Microloans 
• Business credit card 

Finally, it is worth hiring a business loan specialist if your lender doesn’t provide one. This is your best chance of getting a fair interest rate, realistic repayment term, and flexible repayment schedule. 

Eligibility Requirements 

Eligibility requirements vary depending on the lender. So check these requirements before applying for your loan. It will save you time and effort applying for loans you don’t qualify for in the first place. Fortunately, most lenders let you prequalify in a few minutes before proceeding with your application. 

The primary thing to watch out for is predatory lenders. These lenders prey on startups with poor credit scores. In addition, the lenders charge exorbitant interest rates in exchange for the loan. Therefore, focus on reputable lenders with a positive track record of serving startups that don’t qualify for traditional term loans. 

For example, Upstart is a terrific lender for startups with no credit history. The lender uses alternative qualifying criteria such as education or employment history. As a result, you’ll still be able to get fair interest despite not meeting most lenders’ eligibility requirements. 

Application Process 

You’ll need to submit various documents before your loan is approved. Still, the lender should make this process quick and painless. The lenders featured in this review post have transparent and streamlined application processes. 

Additionally, most lenders let you apply online. But, again, it helps if the lender provides an agent or consultant. The expert will help guide you through the process and ensure there are no errors or omissions in your application. 

Finally, find out how long it takes the lender to approve applications and disburse funds. This factor is crucial for short-term loans meant to resolve a cash shortfall. Fortunately, finance is a competitive industry. As a result, most lenders disburse loans in less than seven business days or as little as 24 or 48 hours after approval. 

Repayment Schedule 

At the very least, the lender should provide multiple loan term options. You want a repayment schedule you are comfortable with. Some lenders like Accion let you choose from loan terms ranging from 12, 24, 36, and 60 months. 

Also, find out about prepayment penalties. Ideally, you shouldn’t be penalized for repaying your loan early. Some lenders even offer a discount or other incentive for repaying your loan before the end of its term.