5 Tips to Securing Your First Startup Loan in 2026

Boost Your Credit Score

Figuring out how to get a loan to start a business with weak credit is much harder, and will likely cost you a lot more, than if you go into the application process with a healthy credit history. And if you don’t have a business credit history, most lenders will look to your personal credit score as primary proof of your creditworthiness.

A score of 700 or above not only may make it easier to get credit approval for business financing but also may unlock some of the best financing options, like competitive rates or better down payment requirements. Having a score below 680 won’t knock you out of the running but it will narrow your choices, and usually means higher interest rates and origination fees. A credit score below 600 puts you in the territory of high-cost alternative lenders; this isn’t ideal for a business just getting started, but could be your only option.

If your credit score needs work before you start looking at how to get a loan to start a business, there are some things you can do. These include:

• Paying down revolving credit card balances, since credit utilization is one of the biggest scoring factors.
• Not opening any new accounts in the six months before applying, as each hard inquiry drops your score slightly and new accounts lower your overall average age of accounts (AAoA).

• Checking your credit report for errors; mistakes can happen, so getting your full report at com (the only government-approved site) and removing any errors you find can raise your score quickly.

• Keeping old accounts open, as credit history length matters and closing accounts (even if you don’t use them) shortens it.

Spending three to six months focusing on your credit can really make a difference in what loan programs you qualify for and what interest rate you're offered. That time is worthwhile as it can save small business owners hundreds (if not thousands) over the course of their loan repayment.

Have a Solid Business Plan

The business plan you need for underwriting is different from the one you'd want to send to investors. Lenders don't necessarily need to know your five-year vision, they just need answers to a few specific questions: Can your business generate enough cash flow to repay the loan? What happens if things don't go as planned? and, Do you know what you’re doing?

In 2026, AI tools have made it faster and easier than ever to create a polished, well-structured business plan. But this also means that lenders are seeing more of them and getting better at spotting the lackluster ones.

A plan focused on getting a loan to start a business includes things like:

• A clear description of your business model. This means explaining what you sell, who buys it, and why they'd choose you.

• Realistic financial projections. At minimum, this means projecting monthly cash flow for year one and annual targets for years two and three.

• How the loan will be used. Lenders want specifics here. Putting that you’ll use the cash for “working capital,” “business needs,” or “growth” isn’t usually enough. Instead, include actual line items like equipment purchases or renovations.

• Market research. Is there real demand for your business? Try to show more data than simply optimism.

• Relevant experience. When applying to get a loan to start a business, lenders are betting on you as much as your business idea. If you have experience in this particular industry, talk about it.

• Your repayment plan. When you’re freshly starting a business, you don’t have the revenue to cover a new loan yet. So instead, show how this debt fits into your projected cash flow (and what you plan to do if that cash flow doesn’t pan out).ds

Decide What to Borrow

It’s important to know how much loan you can get to start a business before you start making plans and submitting applications. And the answer is, it depends on factors like your credit, collateral, business type, and the lender you choose.

That said, there are some general benchmarks to keep in mind. For instance, SBA microloans provide up to $50,000 to eligible startups and early-stage businesses. Other loans backed by the U.S. Small Business Administration (SBA), like SBA 7(a) loans, offer much more (up to $5 million) but startups without collateral or revenue may have trouble qualifying.

The amount you can borrow with a small business loan or business line of credit often reaches up to $300,000 or more. This funding is available through online lenders, traditional banks, and alternative business lenders, which may have faster decision times than SBA loans but higher interest rates. While many lenders offer term loans and lines of credit to startups and new businesses, others will want to see some history of revenue or ask you to wait until you’ve been in business for at least six months before you apply.

No matter where you choose to borrow, applying for more than your business can afford is a common mistake. Lenders assess something called debt service coverage, which is the ratio of your projected cash flow to monthly payments. If it's too low, they'll decline your application regardless of your credit score. So a big part of how to get a loan to start a business is picking the right loan amount.

Pick the Right Lender

Here's how you can apply to get a loan to start a business and which options actually work for startup borrowers in 2026.

SBA microloans

Administered through non-profit intermediaries, SBA microloans are specifically designed for startups that can't yet qualify for conventional financing. Loan amounts go as high as $50,000 and interest rates range between 8% and 13% on average.

Eligibility is a lot more flexible with these smaller microloans than traditional SBA loans, and borrowers with credit scores below 700 may qualify.

CDFIs

Community Development Financial Institutions, or CDFIs, are non-profit lenders designed to help the borrowers that traditional financial institutions overlook: startups, underserved communities, and borrowers with a limited credit history. The underwriting process with a CFDI is more flexible than traditional banks and they can have better rates than alternative online lenders.

The Opportunity Finance Network maintains a free directory search tool to help you find member CDFIs in your area. For women-owned, minority-owned, or rural startups, a CDFI is often worth looking into when asking how to get a loan to start a business.

SBA 7(a) Loans

The SBA small business loan program backs loans of up to $5 million through partner lenders. These loans are available to eligible business borrowers and have competitive interest rates. ee

Works best for businesses with at least two years of operating history. As a startup, you can qualify, but you'll need strong personal credit (700+), some collateral, and a solid business plan. The application process is longer and more involved than a Microloan or CDFI. Budget two to three months from application to funding.

Online Lenders

Faster and more flexible than banks or SBA programs. The tradeoff is cost — higher interest rates, shorter repayment terms. For a startup that needs capital quickly and can support the payments, they're viable. For a startup trying to minimize borrowing costs, they're a last resort rather than a first choice.

If Your Credit Isn't Ready

Not every first-time entrepreneur can qualify to get a loan to start a business right away. But building up your credit history takes time. If you’re waiting for your credit to improve in order to get a loan to start a business, here are some other things you can do in the meantime to improve your odds.

• Spend three to six months improving your credit score. Don’t just wait for your score to passively improve; while it will definitely grow over time if you’re responsibly managing your accounts, a focused effort for a few months can do a lot more to move you toward an approval. This means paying down debt, increasing credit limits, making payments on time, and avoiding any new accounts.

• Open a business checking account. Even if you don’t have any business revenue yet, having a business checking account establishes your business banking history. This helps your overall financial picture when trying to get a loan to start a business, and also gives your eventual lender somewhere to deposit that lump sum once you’re approved.

• Use a business credit card responsibly. Responsible business credit card use builds your score, but be careful. You don’t want to rack up debt, carry over a balance, or open a new card, all of which can actually hurt your score.

• Build some revenue (if possible). It can be hard to get your business going without a loan, but getting a loan to start a business without any revenue is also hard. If you’re stuck waiting anyway, try to spend the next few months earning some actual sales. Even if those numbers are small, it takes your application out of the “speculative” pile and also makes you eligible for certain loans where lenders want to see you in business for a few months first.

Final Thoughts

At some point, most new entrepreneurs find themselves asking, how can I get a loan to start a business? Thankfully, there are more lenders, more programs, and more borrowing flexibility for first-time business owners than there were a decade ago… so you have a lot of options.

That said, the competition is real. There are also more entrepreneurs trying to get a loan to start a business, so lenders can afford to be selective on who they approve for these loans, the loan options they offer, and the rates they give out. If you want to be a small business that stands out and improves your odds of approval (even without a strong business or revenue history to stand on), preparation is key.

Boosting your credit score, writing a loan-ready business plan, asking for a realistic loan amount, and submitting a clean application will all improve your chances so you can get a loan to start a business in no time.