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 | Visit Site | |
|---|---|---|
| Biz2Credit | Minimum Credit Score: 650 | View Rates |
| Fundera | Minimum Credit Score: 580 | 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 most attractive interest rates. On the downside, 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.
Top Lenders for Small Businesses
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.
American Express® Business Line of Credit
- No prepayment penalties
- Range of repayment options, no origination fees
- Apply online in a few simple steps
American Express® Business Line of Credit is a multi-draw line of credit. Each draw on the line is a separate 6-, 12-,18-, or 24 – month installment loan depending on your eligibility. Once approved, you are notified of how much credit you have and which of their three loan terms you qualify for.
Read the full American Express® Business Line of Credit Review
Conclusion
Startup business loans of one sort or another are a great option to get your new business idea off the ground. Now that you have these insights into the startup loans offered by 5 online lenders, you can make an informed decision and get the best business loan that’s right for you.
Disclaimers
American Express® Business Line of Credit:
**All businesses are unique and are subject to approval and review.
American Express® Business Line of Credit offers two loan types, installment loans and single repayment loans for eligible borrowers. All loan term types, loan term lengths, and pricing are subject to eligibility requirements, application, and final approval. This page contains general information about the American Express® Business Line of Credit installment loan type only.
American Express® Business Line of Credit offers access to a commercial line of credit ranging from $2,000 to $250,000; however, you may be eligible for a larger line of credit based on our evaluation of your business. Each draw on the line of credit will result in either a separate installment loan or a single repayment loan. All loans are subject to credit approval and are secured by business assets. Every loan requires a personal guarantee.
For single repayment loans, we charge a total loan fee that ranges from 0.95%-1.80% of the amount you borrow for 1-month loans, 1.90%-3.75% for 2-month loans, and 2.85%-6.05% for 3- month loans. Single repayment loans incur a loan fee at origination and the principal and total loan fee are due and payable at loan maturity. There are no required monthly repayments for a single repayment loan. Repaying a single repayment loan early will not reduce the loan fee we charge you. For installment loans, we charge a total loan fee that ranges from 3-9% of the amount you borrow for 6-month loans, 6-18% for 12-month loans, 9-27% for 18-month loans, and 12-18% for 24-month loans.
Installment loans incur a portion of the total loan fee for each month you have an outstanding balance. If you repay the total of the principal of an installment loan early, you will not be required to pay loan fees that have not posted for subsequent months. For each loan that you take, you will see the applicable loan fee before you take the loan. Once you take the loan, the loan fees that apply to that loan do not change. We reserve the right to change the loan fees that we offer you for new loans at any time. American Express reserves the right to offer promotions to reduce or waive loan fees from time to time.
Not all customers will be eligible for the lowest loan fee. Not all loan term lengths are available to all customers. Eligibility is based on creditworthiness and other factors. Not all industries are eligible for American Express® Business Line of Credit. Pricing and line of credit decisions are based on the overall financial profile of you and your business, including history with American Express and other financial institutions, credit history, and other factors. Lines of credit are subject to periodic review and may change or be suspended, accompanied with or without an account closure. Late fees may be assessed.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Loans are issued by American Express National Bank.
