The Best Startup Business Loans in the US: 2022

Startup funding can be tricky to secure for new ventures. In fact there is no real product on the market specifically targeted as ‘small business start up loans’ as lenders often find startup business loans too risky, thus new startups often have to turn to angel investors or consider parting with some of their shares and controlling rights in their newly found business. That’s not to say however you can’t attain ‘start up business loans’. In order to achieve startup financing you just have to think a little more creatively than standard term loans. Think crowdsourcing for startup funding or peer-to-peer personal loans that you can use as startup business loans. You can even consider introductory credit card offers as a form of new business loans without security. Read on for our guide to the best startup business loans available today.

Best Startup Business Funding Options – Borrowing

Determining the best source of small business start up loans will be dependent on your business requirements and what you prioritise most. Do you need startup funding as soon as possible? Or would you prefer to go through a longer application if it meant cheaper startup financing? You require funds to start your business of course but what exactly do you plan to spend your startup funding on? Is it to make a one-off significant purchase for your business or do you require start up business loans for ongoing working capital purposes? Depending on your requirements, one of, or a combination of the following startup financing methods could be what you need to make your move.

Credit Cards

Using credit cards as a small-business owner is common and there are a range of business credit cards available on the market. However, if you’re a brand new startup you may not be eligible – particularly for an unsecured business credit card. That’s not to say you can’t use a personal credit card to kick off your business. 0% APR introductory periods are becoming more common – Citi, American Express and Discover all offer credit cards with a 12-15 month 0% introductory offer. At 0% interest you could consider this as interest free startup business funding – you’ll want to be absolutely sure you can repay the amount prior to the expiration of the interest free period though, otherwise fees can quickly become very costly. Your interest free start up business financing could easily turn into at least a 20% APR. Although it’s worth pointing out a number of providers offer 0% balance transfers for an introductory period too.

As you will be aware there is a high risk involved with credit cards and with a personal credit card you will be personally liable to repay the debt. Credit cards can be an expensive way of startup business funding, particularly if you have bad credit. Card issuers determine annual percentage rates largely on your personal credit score. As always, never take on more debt than you can afford to repay.

SBA Loans

With most SBA loans the SBA doesn’t actually provide startup funding – it simply provides a guarantee to act as collateral to an intermediary lender. Thus most SBA loans have a robust set of requirements your business has to meet, including at least 2 years of tax returns. 

There is one notable exception however – the SBA microloan program which can provide start up business loans up to the value of $50,000. Under this scheme the U.S. Small Business Administration provides funding to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in issuing new small business loans as well as management and technical assistance for small businesses. 

Each intermediary lender has its own lending and credit requirements that you’ll need to meet – after all community-based organizations may not be making profit but they are still expected to return the funds lent by the SBA back to the SBA. Otherwise they could face severe ramifications themselves. That’s why in this scenario intermediaries often require some type of collateral as well as a personal guarantee of the business owner (more on secured funding for startups later and why it may be the best/only option for some new business loans). The key difference however is that many intermediary lenders participating in the SBA microloan program do not stipulate a minimum of 2 years in operation in their lending requirements – thus it can be a viable source of business start up funding – all be it most likely on a secured basis.

The average SBA microloan is around $13,000 with an interest rate between 8-13%. The initiative has a particular focus to help aid minority communities to start a business. The SBA is a great place to begin your search for startup business loans for veterans and startup business loans for women.

Personal Loans

Many new small-business owners use personal loans for startup funding, often via the growing number of online lenders. However just like credit cards, personal loans often have high APRs, especially for bad credit borrowers. They’re a better option for borrowers with good personal credit scores and a strong income.

Typically, again as with credit cards, a personal business loan works best when businesses require new small business loans for startup or just a small amount of money for things like early launch activities and initial small stock purchases.

New startups may also be able to benefit from peer-to-peer loans too. One of the most well known P2P lenders in America, Prosper offers personal P2P loans that are suitable for early stage businesses and can be used as startup business loans.

Friends & Family

Last but not least you should consider borrowing money from friends or family if you are in a fortunate position to do so. Of course, this is driven by two things; a) you have friends or family in a position to lend spare capital and b) your friends and family trust you are able to pay them back – likely based on a good credit history.

Cost of failure may not result in as much financial distress as owing a registered lender money but on a personal level the ramifications could be far higher – those investing in you will need to be 100% comfortable with your input into the business and the risks involved.

Best Startup Business Financing Options – When Not Borrowing


Crowdfunding – the practice of funding a project or business venture by raising small amounts of money from a large number of people – is on the increase in the US. As is the number of crowdfunding platforms that you can find online.

Generally, there are two major crowdfunding routes you can explore – one which involves parting with some equity in your business (often referred to as equity crowdfunding) and one which doesn’t. If you don’t want to part with shares in your business then your ability to do this will be largely determined by the alternative value and rewards you can provide investors. B2C businesses and businesses providing a service can work well when seeking crowdfunding. For example, if you’re looking to launch a vineyard, you could offer free vineyard tours and a case of limited edition wines to investors.

Venture Capital

Venture capital is not easy to attain. Arguably it’s just as difficult, if not more difficult, than achieving small business start up loans. You’ll need to be able to demonstrate significant growth opportunities in your business. If you’re just looking to build a business with enough money for a solo/family income, then chances are you won’t be able to drive enough returns for an investor to get on board.

If you have bold plans for your new business then investors should be able to offer more than purely funds. They should hopefully bring their expertise and resources to your business as well. 

It goes without saying really but be aware that when giving equity away in your business, you’re also giving up a portion of your control and decision making in the business. 

US Government Grants

It’s likely that there are actually more government grants available to small businesses than you’re aware of. As well as assisting small businesses in attaining start up business loans, the Small Business Administration is a good place to start your search to understand the grants your business may be eligible for. Grants can come from your local municipality, state, or even at a federal level. For Federal grants you can check for a complete list of US federal grants. It should be noted that government grants have a strict set of requirements, so you should expect to invest a lot of time into the process.

What Advantages are There to Providing Security for Start up Business Loans?

It can be difficult for a brand new company, with little history, to acquire unsecured startup funding. For this reason, secured loans is an option you may want to explore for start up business loans. 

Security can range from a personal guarantee to the use of the asset purchased or all business assets as collateral. Because lenders have little business behavior on which to predict creditworthiness when it comes to startups, secured loans may be the easiest form of startup financing for newly formed businesses to secure.

In a lot of instances, lenders prefer you to provide your house as collateral – if you don’t want to do this or don’t have a house you could still consider other alternative methods of secured lending. If your business venture requires a significant outlay on equipment then equipment/asset financing can prove a good option for startup funding. You could then combine this with other forms of unsecured lending that provides you with your initial working capital.

Online lenders, such as Funding Circle, offer secured business loans in the form of: asset finance, property finance, and secured loans.

Final Word on Small Business Loans Startup Funding

Finding a startup business loan or startup financing is probably the most challenging capital raise your business is likely to face. It is easy to begrudge lenders, particularly banks, who can often reject applications without a tailored understanding of your business. 

On the other hand, the statistics relating to the number of new businesses which fail are based on evidence so the number of new business loans receiving approval would naturally be down to – according to the Bureau of Labor Statistics about 20% of businesses fail in their first year, about 50% of small businesses fail by their fifth year and by their 10th year around 70% of businesses have failed.

Your personal credit background, the stage your startup is at, the scale to which you wish to grow your startup and the industry you operate within will all influence the type of startup business funding available to you. Different small business loans for startup funding have inherently different levels of risk associated with them to you as the borrower – but just as lenders and investors are taking more of a risk in providing early stage businesses with startup financing, the chances are start up business loans are likely to be the biggest risk business owners take too.