How to get a start-up business loan is often the problem with many start-ups and small businesses. For every small and start-up business, funding is an essential ingredient that ensures the growth and survival of every business.
However, it is more difficult for small and start-up businesses to access traditional loans like their well-established counterparts.
While small employer businesses are at the backbone of US business growth, they are more likely to face a financial crisis than big businesses.
To run successfully financing in the form of small business start-up loans is essential. Hence, if you are here to find out more about business start-up loans, then continue reading till the end.
Business Start-up Loan—Demystifying the Process
A business start-up loan is a financing solution that is designated for small and start-up businesses.
Small business start-up loans can help small and start-up businesses settle working capital or purchase office machinery and fittings or even secure an office apartment.
Other ways small businesses and start-ups can get running capital for their business includes some kinds of SBA Loans and crowdfunding. They can also consider applying for business credit cards.
Small business owners who have started searching for loan opportunities will admit that there are numerous options available. However, it is necessary to know that no matter your choice of loan, there are pros and cons to consider.
Read: 10 Effective Steps To Get A Business Loan
There are also low-cost business loans that are only accessible to large/established businesses with many years of experience, strong revenue, and a credit base.
Since the lenders are numerous and the requirements differ from one lender to the other, how do you know the right lending option for your small business?
One of the best criteria to determine whether a lender is suitable for you or not is their requirements. Some requirements tell your business is out-rightly not qualified for a particular loan.
Factors like minimum credit scores, years of operation, and revenue amount are all factors that can disqualify a small business from accessing small business start-up loans.
Again, the kind of loan a lender offers can tell you whether you want to apply for a loan from them or not. For instance, you wish to apply for a long-term loan for major investment or business expansion. Small loan lenders cannot be of help to you in this situation.
Therefore, it is essential to look for a lender that is willing to offer long-term services.
The same situation applies to the loan amount you are requesting from a lender. If you are a small or start-up business, your goal will be to get the ideal lender that can lend to support your small business at a lower interest rate.
Again, it is essential to consider the funding time as a start-up business when applying for a business start-up loan.
If your need for funds as a start-up company is not an urgent one, then any of the lending companies can work just fine. However, if the reverse is the case, then you will have to look a lot more to find a company with a shorter turnaround time.
Without much ado, below are the top ten business start-up loans you can apply for in 2022.
Top Ten Best Lending Options for Small and Start-ups in 2022
#1. Lendio: Most Suitable Choice for Small Businesses
- Interest rate: starting at 4.25%
- Loan amounts: starting from $1 thousand to $5 million
- Types: line of credit, Term loans, commercial mortgage, invoice financing, etc.
- Minimum credit score: 560
- Funding time: within 2 days
If you are a start-up or small business, you should consider Lendio. One thing that makes Lendio unique is the fact that Lendio functions like a loan matchmaker. All you need to do is take some time to fill out the online form, which takes about 15 minutes to complete.
Lendio uses the information you provide to link you up with the right lender for your funds. While funding takes as little as two days, Lendio takes about 72 hours to provide you with a list of loan amounts that you qualify for based on your application.
Lendio works with over 75 lenders, which provides you with a variety of options ranging from short-term business start-up loans to equipment financing etc.
See the table below for a preview of Lendio’s financing options.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Term Loan | $5,000 to $2 million | Starting from 6% | 1 to 5 years |
| Line of Credit | $1,000 to $500,000 | Starting from 8% | 1 to 2 years |
| Commercial Mortgage | $250,000 to $5 million | Starting 4.25% | 20 to 25 years |
| Invoice | As much as 90% of the receivables | 2% factor rate | +/- 1 year |
Read: HOW TO APPLY FOR A SMALL BUSINESS LOAN IN 10 EASY STEPS
#2. SBD Funding: Best Flexible Choice
- Interest rate: starting at 1.75%
- Loan amounts: starting from $10 thousand to $5 million
- Types: line of credit, Term loans, commercial mortgage, invoice financing, etc.
- Minimum credit score: 500
- Funding time: within 2 days
For small and start-up businesses, flexibility is an essential factor when sourcing business loans. You mustn’t get hooked up with a particular loan for a long time.
At the same time, you don’t want to be in a situation where you will have to struggle to find funds to repay a loan in a very short time. SBG provides flexible funding opportunities for businesses, ranging from short-term to long-term loans.
The loan term can be as to be as little as six months and can stretch for five years.
Besides the loan terms, SBG also provides a flexible lending opportunity of up to five million (depending on the loan type).
SBG funding helps you to build a solid relationship with them as you grow in your business. They are also willing to work with borrowers with past credit issues.
The qualification process for SBG funding begins with a one-page online application. The information required for the process includes your business legal entity, business name, federal tax identification number, date of birth, contact information, and address of the business.
While applying for SBG funding, you might also be required to provide financial information about your business. When you apply for SBG loans, they usually respond within 12 to 48 hours.
Once they provide you with a feed, funding usually follows in a short time.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Term Loan | $5,000 to $5 million | Starting from 1.75% | 6 months to 5 years (biweekly payment is also allowed) |
| Line of Credit | $5,000 to $150,000 | Starting from 1.75% | 6 to 24 months |
| Equipment financing | Up to 100% of the cost of purchase | Starting 3.75% | 12 months to 7 years |
| Invoice | – | 0.25% factor rate |
#3. Fundera by Nerdwallet: Best SBA Microloans Solution
- Interest rate: starting at 4%
- Loan amounts: starting from $2,500 to $5 million
- Types: line of credit, Term loans, etc.
- Minimum credit score: 550-680 (depending on loan type)
- Funding time: within 1 to 2 days
Fundera by Netwallet is a lending marketplace with a lot of similarities with Lendio. Fundera also provides you with the opportunity to access and compare different marketplaces.
However, their list includes SBA microloans and other options not covered by Lendio.
SBA microloans refer to small government-assisted loans of up to fifty thousand dollars. SBA loans have very low-interest rates and the repayment terms are usually long.
They are more easily assessable and also have a shorter funding time. For business owners in need of a soft loan, SBA funding is ideal.
Fundera is also ideal for those looking for other types of funding including personal loans for business purposes. Fundera provides numerous opportunities and can meet various kinds of needs.
However, you might take more time browsing through the loan options for what best suits your business needs.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Term Loan | $25,000 to $500,000 | Not Specified | 1 to 5 years |
| Line of Credit | $10,000 to $1 million+ | Starting from 7% to 25% | 6 months to 5 years |
| SBA loans | $5,000 to $5 million | Starting 7.75% | 5 to 25 years |
| Invoice | 85% instant payment and 15% later | Not specified | Automatically paid when the customer pays outstanding invoice |
| Equipment Financing | Up to 100% of the value of the equipment | Depending on the value of the equipment | The expected life of the equipment |
#4. Balboa Capital: Best Choice for Easy Approval
- Interest rate: starting at 1.1 to 1.2 (factor rate)
- Loan amounts: starting from $5,000 to $250,000
- Types: small business loans, line of credit, equipment financing, etc.
- Minimum credit score: 500
- Funding time: Same day funding is possible
Getting business finances is easy and very fast with Balboa Capital. The application process is very easy with Balboa and does not include a complicated application process of submission of documents online.
The decision about your loan application can be done in as little as an hour with Balboa Capital. In some cases, companies receive their funding within the same day of application.
However, Balboa requires you to be in business for at least one year and have annual revenue of $300,000 to be eligible to apply for a loan.
Repayment terms are usually starting from three months to eighteen months. For business owners who need a bridge loan for a marketing campaign or purchase of inventory, this type of loan can be very useful.
However, the term of the loan is very short and as such, not suitable for financing expensive projects. Nonetheless, you can also apply for equipment financing and a line of credit with Balboa Capital.
To qualify for a Balboa Capital Equipment loan, you must have an annual income of $100,000, with at least one year of experience in the business.
For a line of credit and short-term loan, annual revenue of $300,000 is required with at least one year of experience in the business. Some industries are restricted from accessing Balboa loans. They include:
- Companies that deal in oil and gas extraction
- Boating business
- Lottery business /investment in lottery
- Adult movies/ entertainment
- Casino and gambling businesses
- Aviation and durable medicine
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Short-term Loan | $5,000 to 250,000 | 1.1 to 1.2% | 3 to 18 months |
| Line of Credit | $5,000 to $250,000 | 1.1 to 1.2% | 6 to 18 months |
| Equipment Financing | Up to 250,000 | Not specified | 2 to 5 years |
#5. Fundbox: Best Option for Budding and Small Businesses
- Interest rate: starting from 4.66% (draw rate)
- Loan amounts: $150,000+
- Types: Line of credit
- Minimum credit score: 500
- Funding time: one to 2 days
Fundbox is notable for its line of credit. However, unlike other companies that offer a line of credit, Fundbox is willing to work with budding and young businesses.
To access a line of credit from Fundbox, you only need two to three months of experience in the business. Therefore, if you own a start-up business and have difficulties accessing a loan, Fundbox is your best option.
Notwithstanding that Fundbox, just like other lenders prefer working with an already established business that is more than six months old, is also willing to work with start-up businesses that are only three months old.
However, you must be successful in other borrower requirements to be successful. Fundbox may not have the cheapest line of credit, however, it is very affordable and the best for start-up businesses that do not have the necessary qualification for low-interest loans.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Line of Credit | $1,000 to $100,000 | 4.66% to 8.99% | 12 to 24 weeks |
| Term Loan | Up to $100,000 | 10.1% to 79.8% (APR) Weekly payment | 24 to 52 weeks |
#6. BlueVine: Best Choice for Easy Fund Disbursement
- Interest rate: starting from 4.8%
- Loan amounts: +/-$5 million (transfer fee of 2.9% may apply)
- Types: Line of credit, invoice financing, etc.
- Minimum credit score: 530 (invoice factoring) and 650 (line of credit)
- Funding time: Same day
Now and then, small businesses require urgent loans to take care of pressing needs.
Therefore, a lender that can provide instant cash comes in handy. BlueVine provides same-day funding to businesses that apply for its line of credit. Through invoice factoring, they provide next-day financing for businesses.
The process is simple and begins with an online application. Once you submit the required information and documents to BlueVine, the decision about your loan application will be taken almost instantly.
Funds follow in just a few hours of your application, however, a small wire transfer may be required. For late application, funds usually come in the next day via ACH transfer.
Beyond the fast funding advantage, BlueVine offers two types of funding options—invoice financing and line of credit.
When it comes to application requirements, BlueVine is more lenient in its approach. All you need for your line of credit is three months’ experience in business and a 530 credit score to access invoice financing.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Line of Credit | $5,000 to $25,000 | 4.8% | 1 to 12 weeks |
| Invoice financing | $ 5,000 to $5 million | 0.25% per week | 1 to 12 weeks |
Read: How To Become A Business Loan Broker In 2022| Expert Guide
#7. Crest Capital: Best Financing Solution for Accessing Equipment Financing
- Interest rate: starting from 5%
- Loan amounts: +/-$500,000 to 1 million
- Types: Equipment financing
- Minimum credit score: 650
- Funding time: within 1 day + (depending on fund amount)
If you are looking for a lending company that can offer you up to 100% financing for equipment, Crest Capital is your best option. Crest Capital also offers flexible loan terms, with a simple application process for loans less than $250,000.
However, for funds higher than $250,000, the process may be a little more difficult. More documents and financial credibility become necessary. Funding may also take longer to disburse. You can also get approval for loans of up to 1 million with Crest Capital once you meet the requirements. Some of the financing options available at Crest Capital include:
- $1 purchase agreement
- Equipment finance agreement
- 10% purchase option
- Fair market value
- First Amendment lease
- Guarantee purchase agreement
- Operating lease
Crest Capital loans are available for only businesses with 2+ years of experience.
Loan Application Process
- Evidence of ownership of the business
- Reference letter from a bank
- Quotation of equipment
- Contact information of the equipment seller
- Company’s financial statement for 2 years (for financing more than $250,000)
- Company’s tax returns for two years (for financing over $250,000)
- Financial statements of all 20%+ owners (for financing over $250,000)
- Evidence of recent leases and loans (for financing more than $250,000)
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Equipment financing | +/- $250,00 to $500,000 | Flexible rates depending on the type of loan agreement | 2 to 7 years |
#8. Kiva: Best Loan Service for 0% interest
- Interest rate: starting from 0% interest
- Loan amounts: $1,000 to $15,000
- Types: Microloans only
- Minimum credit score: N/A
- Funding time: within 1 month
If you are looking for a small loan, Kiva offers exclusively microloans. While many small businesses will require a large loan amount to function, if you need a microloan to deal with minor issues then Kiva is a good choice.
However, the funding process is tasking and requires your family and friends to start the funding process while the remaining portion comes from crowdfunding.
Yet, the interest rate of 0% makes it the perfect choice for small business loans. However, you need to exercise some patience to get funded.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Microloan | $1,000 to $15,000 | 0% | Up to 3 years |
#9. Accion: Best Financing Option for Microloans
- Interest rate: Flexible
- Loan amounts: $300 to $15,000
- Types: Microloans only
- Minimum credit score: N/A
- Funding time: May vary according to location
Accion provides as little as $300 and as much as $150,000 making it ideal for small and start-up businesses seeking microloans.
One fine factor about Accion is that they provide all kinds of assistance to start-up businesses. They provide them with opportunities to network, business training, coaching and mentorship, and educational materials.
Applying for loans from Accion is simple and takes about 15 minutes to complete. You can apply using the Mobile App or online platform, or you can visit the office and apply in person.
Accion assigns applicants with experts to work with and help determine the best loan form for each individual.
To be eligible for Accion loans, you need to be a functional business for at least one year with a minimum sales of %50,000 per annum. The annual revenue amount is not difficult to arrive at, even for small and start-up businesses.
Microloans are useful to kickstart a business, increase working capital, and invest in growth opportunities.
Accion makes funding easy even for those with bad credit scores and low sales turnover. In many cases, Accion will recommend that the loan amount be guaranteed.
To qualify for Accion loans, you must meet the following criteria:
- You must not be more than 30 days late on any payments, loans, bills, and credit cards. However, a balance under $3,000 can be overlooked
- You must not have any mortgage rate adjustments that are due within the term loan
- You must not have any record of bankruptcy declaration within the past 12 months
- No record of foreclosure within the last 24 months
- Must be prompt on rent or mortgage payments the previous years
- For start-ups, your past-due debt must not be more than $3,000
Some of the documents required by Accion for loan processing include
- Financial documents
- Business documents
- Personal documents
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Microloan | $300 to $15,000 | 7% to 34% | Flexible/ Tailored according to business capability |
Read: Great Lakes Student Loan Services Reviews 2022
#10. Lender: Top for Advance Merchant Cash Funds
- Interest rate: starting from 12% (Merchant cash advance) and 0.5 to 5% (invoice financing)
- Loan amounts: $5,000 to $500,000
- Types: Merchant cash advance, invoice factoring
- Minimum credit score: N/A
- Funding time: May vary according to location
Merchant cash advances and invoice financing come at a higher cost and has a short loan term. However, the credit requirement to access these kinds of loans is usually very small. With Lendr’s reviews, it is one of the best options for accessing Merchant Advance Loans.
To be eligible for Lendr financing, applicants must have at least $10,000 minimum revenue.
The business must also be functional for at least one year. companies with existing lien exceeding 40% of the funding amount or $40,000 are not eligible for this kind of loan.
The lender does not work with public trades companies and companies located in Alaska or Hawaii. Other sectors that are not eligible for Lendr loans include:
- Automobile industries
- Adult entertainment industries
- Financial and lending companies
- Credit restoration industries
- Gambling industries
- Law firms
- Oil and natural gas industries
- Religious bodies
Funds from Lendr are usually disbursed within 24 to 48 hours of application.
| Loan Type | Minimum/ Maximum Loan Size | Lowest Listed Loan Rate | Repayment Terms |
| Merchant cash | $5,000 to $500,000 | Starting from 12% | 4 to 14 months |
| Invoice factoring | +/-$1 million | 0.5% to 5% on each invoice | 14+ months |
Conclusion
Before borrowing funds for your business, it is essential to draw a plan of how much funds you need, the exact time you need the funds, and for what purpose you need the funds.
It will help you determine if you need short-term, long-term, or quick funding options. it is essential to also go through all the terms and conditions to ensure they are suitable before applying for a loan from any lender.
Ensure that the loan you are applying for is one you can pay back with ease. With a clear understanding of what you want and the loan requirements, decision-making becomes clearer and more informed.
References
- https://www.fundera.com/
- https://www.businessnewsdaily.com/
- www.business.com/
- https://loans.usnews.com/
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