6 Startup Loans for New Businesses

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Where Do I Begin if I Need a Business Loan for a Startup?

I need a business loan for a startupYou’ve got a great idea for a business that you want to bring to life. Now you just need to figure out how to get funding. This is an important step in starting a successful new business. So, to help, we’ve put together information on six types of startup loans for new businesses. Read about different business loans and some funding options you can choose from to help you start your business.

1. Small Business Administration (SBA) Loans

The Small Business Administration (SBA) has various loans that can help business owners pay for working capital or fixed assets. Some of the types of loans you can get are:1
  • 7(a) loans: The SBA’s most common loan program, which includes financial help for businesses with special requirements.
  • 504 loans: These loans have longer terms and a fixed rate. They’re good for purchasing or repairing real estate, equipment or other assets.
  • Microloans: The SBA’s smallest loan program, providing $50,000 or less to help businesses start or grow.
These small business startup loans aren’t funded through the SBA. Instead, the agency works with lenders to provide loans to small business owners. Some of the benefits of an SBA loan include:2
  • Competitive terms, so you may get a loan with rates and fees that are comparable to non-guaranteed loans.
  • Counseling and support to help you start and run your business.
  • Unique benefits, like lower down payments, flexible overhead requirements and no collateral needed for certain loans.
There are guidelines for loan eligibility that you’ll have to meet for certain types of funding. This includes:3
  • Being a for-profit business
  • Doing business in the U.S.
  • Business owners having equity through invested time or money
  • Exhausted other financing options

2. Other Microlenders

Another type of financing option you can use to start your business is through microlenders. The difference between microlender loans and traditional business loans is that they don’t come from a bank or credit union. Microlenders are typically nonprofit organizations or individuals. Because you don’t have to go through a typical financial institution, you can get a loan through a microlender if you have a newer credit history or lower credit score.

3. Friends and Family

Don’t forget about your friends and family when trying to fund your startup. This can be a good option if you don’t want to go to a bank to apply for a loan. Some business owners will use their personal finances to fund their startup. If that’s not enough, they will often ask friends and family for additional capital. Depending on the situation, this type of funding can be a gift or through personal loans.

4. Business Credit Cards

Business credit cards can be an option if you need cash fast for everyday operations. It also lets you build credit, which can help you secure a business loan from a bank. Like a personal credit card, it’s important you make payments on time or you may find yourself paying interest and fees. And late payments can also result in bad credit.

5. Crowdfunding

Crowdfunding involves raising capital from a large amount of people. Online platforms allow you to create a campaign where people can contribute small amounts of money. Depending on the campaign time and number of people that participate, crowdfunding can raise enough money to help cover working capital costs and other expenses.

6. Grants

Federal and private organizations and professional associations may offer small business grants that you can use for startup costs. Be aware that some grants may only be available for certain types of businesses. For example, the Halstead Grant is only available for jewelry businesses, while the Wells Fargo Community Giving grant is meant for nonprofits and educational organizations.

What Do You Need to Get a Startup Business Loan?

Need loan for startup businessRequirements for a startup business loan vary depending on the lender. There are certain documents and pieces of information you may need, such as:
  • A business plan
  • Statements
  • Business registration
  • Employer identification number (EIN)
  • Personal credit reports and scores
Having the necessary documents can save you time when trying to secure startup funds and loans.

How Much Can I Get for a Startup Business Loan?

Startup business loan amounts vary and depend on the type of loan you get. Most 7(a) loans have a maximum amount of $5 million.4 SBA Express loans have a maximum amount of $350,000.5 Be aware that the more funding you request, the more information your lender may require.
1,2,3 Small Business Administration, “Loans”
4,5 Small Business Administration, “Terms, Conditions, and Eligibility”
La información contenida en esta página no debe interpretarse como asesoramiento legal, de Recursos Humanos, financiero o de seguros específico, y no es una garantía de cobertura. En el caso de una pérdida o reclamación, las determinaciones de cobertura estarán sujetas al lenguaje de la póliza, y cualquier pago de reclamación posible se determinará luego de que se investigue la reclamación.
Game Plan
After you know how much business financing you need, it’s a good idea to gather important business documents that a lender may need. This means you’ll want to review your business plan and make sure it’s realistic and accurate.
In addition, you’ll want to give your startup the best opportunity for success. So, don’t forget to:
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