Starting a new business is exciting—but it also comes with financial challenges. One of the biggest hurdles entrepreneurs face is securing enough funding to cover initial costs like equipment, marketing, hiring, and working capital. While bootstrapping and investor funding are options, business loans for startups remain one of the most reliable ways to secure capital in the USA.
In this guide, we’ll cover the types of startup business loans, top lenders, eligibility requirements, interest rates, and tips to improve your approval chances in 2025.
Why Startups Need Business Loans
A startup often has limited revenue in the early months. Without external funding, it’s difficult to:
- Pay for office space, inventory, and technology
- Hire staff or contractors
- Launch marketing campaigns
- Cover daily operations before profit begins
A well-structured loan provides financial stability and allows founders to focus on scaling the business rather than worrying about cash flow shortages.
Types of Business Loans for Startups (2025)
1. SBA Loans (Small Business Administration Loans)
- Best for: Entrepreneurs looking for low-interest, long-term financing.
- SBA doesn’t lend money directly—it guarantees loans issued by approved banks and credit unions.
- Popular programs:
- SBA 7(a) Loan – up to $5 million for working capital and expansion
- SBA Microloan – up to $50,000 for small startups
- SBA 504 Loan – for buying equipment, land, or buildings
Pros: Low interest rates, flexible repayment terms.
Cons: Requires strong credit history and detailed paperwork.
2. Term Loans (Traditional Bank Loans)
- Fixed amount borrowed and repaid with interest over time.
- Useful for buying equipment, expanding inventory, or large startup costs.
- Interest rates are typically 6%–12%, depending on credit score and collateral.
Best for: Established startups with some revenue or strong financial projections.
3. Business Lines of Credit
- Flexible borrowing option similar to a credit card.
- You can withdraw money as needed and only pay interest on the amount used.
- Good for managing cash flow, seasonal expenses, or unexpected costs.
Best for: Startups with fluctuating cash needs.
4. Equipment Financing
- Specifically designed for buying equipment (computers, machinery, vehicles, etc.).
- Equipment itself serves as collateral.
- Interest rates are competitive, often 5%–10%.
Best for: Businesses in manufacturing, transportation, or tech.
5. Business Credit Cards
- Easy approval compared to traditional loans.
- Useful for building credit history and managing small purchases.
- Many offer rewards, cashback, and 0% APR introductory periods.
Best for: Very new startups with limited credit history.
6. Online Lenders & Alternative Financing
- Companies like Kabbage, Fundbox, OnDeck, and BlueVine provide fast approvals.
- Loans can be approved in 24–72 hours with minimal paperwork.
- Interest rates are higher, but they’re more accessible to new entrepreneurs.
Best for: Startups that need quick funding without traditional banking requirements.
Average Loan Amounts & Interest Rates (2025)
- SBA Microloans: $10,000 – $50,000 | ~8%–13% interest
- SBA 7(a) Loans: $350,000 – $5,000,000 | ~6%–10% interest
- Bank Term Loans: $50,000 – $500,000 | ~6%–12% interest
- Online Lenders: $10,000 – $250,000 | ~10%–30% interest
- Business Credit Cards: Up to $50,000 | 15%–25% APR (after promo period)
Eligibility Requirements for Startup Loans
To qualify for a business loan, lenders usually check:
- Credit Score: Minimum 650+ for SBA or bank loans; 600+ for online lenders.
- Business Plan: Clear strategy with revenue forecasts and repayment ability.
- Collateral: Some loans require assets (property, equipment).
- Time in Business: Many lenders prefer at least 6–12 months, though SBA Microloans may allow brand-new startups.
- Annual Revenue: Higher revenue increases chances, but some lenders work with pre-revenue startups.
Best Business Loan Lenders for Startups (2025)
- U.S. Small Business Administration (SBA) – Best overall for affordable financing.
- Chase Bank – Reliable for traditional term loans and credit lines.
- Wells Fargo – Offers startup loans with flexible repayment.
- BlueVine – Best online lender for quick approvals.
- OnDeck – Great for short-term loans and working capital.
- Fundbox – Easy approval for lines of credit.
- Kabbage (American Express) – Excellent for digital-first startups.
Tips to Improve Loan Approval Chances
- Boost Your Credit Score: Pay off debts and keep utilization under 30%.
- Prepare a Strong Business Plan: Include financial projections, market research, and growth strategy.
- Show Proof of Cash Flow: Even small revenues can strengthen your application.
- Offer Collateral if Possible: Lowers risk for lenders and increases approval odds.
- Compare Multiple Lenders: Don’t just apply to one bank—explore SBA, credit unions, and online lenders.
Alternatives to Business Loans
If traditional loans aren’t an option, startups can also explore:
- Angel Investors & Venture Capital – Equity-based funding.
- Crowdfunding Platforms (Kickstarter, Indiegogo) – Raise money from supporters.
- Grants & Competitions – Government and private grants for innovative startups.
- Friends & Family Loans – Informal but useful in the early stages.
Final Thoughts
Getting a business loan for your startup in 2025 can be the difference between struggling to stay afloat and scaling successfully. From SBA loans with low interest rates to fast online funding, there are options for every type of entrepreneur.
- If you want low-cost financing with long repayment terms, go for SBA loans.
- If you need quick cash with minimal paperwork, try online lenders.
- If you’re making small purchases or building credit, a business credit card can help.
Ultimately, the right loan depends on your business stage, credit history, and funding needs. With the right preparation, your startup can secure the financial foundation it needs to grow.