Loan types
Startup business loans, and the honest list of what actually funds
Before a business has revenue, lenders underwrite you, not it. Here is what really funds at month zero, six, twelve, and twenty four, priced on the same $50,000.
There is almost no such thing as a business loan for a business with no revenue, no assets, and no history. What exists is a set of products that lend against your personal credit, your down payment, or a specific piece of equipment, and then put your company name on the paperwork. Knowing that up front saves you three weeks of applying to the wrong places.
The reason is simple. A lender is buying a repayment stream. A business with no revenue has no repayment stream, so the lender either buys yours, buys an asset it can repossess, or does not lend. Every real startup financing product is one of those three answers. Everything advertised as a no credit check, guaranteed approval startup loan is a lead form, not an offer.
What actually opens up, and when
Time in business is the single most powerful variable in this market, and it moves in steps rather than smoothly. Nothing changes for months and then a whole tier of the market opens on a specific date.
The jump at month six is the one worth planning around. Almost every revenue based product uses a six month minimum, measured by business bank statements with real operating deposits in them. A business that opened its bank account on day one and has been running deposits through it since is eligible on the first day of month seven. A business that ran revenue through a personal account for five months is not, because there is nothing to underwrite. Open the business account before you need it, and read how lenders read bank statements before month six arrives.
The same $50,000, four ways
Assume you need $50,000 and you have a 690 personal score, no business revenue yet, and $10,000 of your own cash. Here is what the four realistic paths actually cost.
| Path | Rate and term | Monthly payment | Total repaid | What it really requires |
|---|---|---|---|---|
| SBA microloan | 10 percent over 60 months | $1,062 | $63,744 | A nonprofit intermediary lender, a business plan, projections, and often a training requirement |
| Equipment financing | 13 percent over 48 months on $42,500 after 15 percent down | $1,140 | $54,725 plus $7,500 down | A specific machine or vehicle with resale value, titled or serialized |
| Personal loan or home equity | 14 percent over 60 months | $1,163 | $69,804 | Personal income that covers the payment on its own, independent of the business |
| Business credit cards | 24.99 percent, paying $1,500 a month | $1,500 | $86,250 over 58 months | A 680 plus personal score, and the discipline not to make minimums |
The credit card row is not a strawman. It is the most common way a startup actually gets to $50,000, and it costs $36,250 in interest if you pay $1,500 a month and never miss. The same money on an SBA microloan costs $13,744. Cards are the fastest and most flexible option on this list and the most expensive by a factor of two and a half. Use them for the gap, not for the plan.
The SBA path, and what it really demands
SBA 7(a) is the best priced money available to a new business, and it is the least understood. A startup can absolutely get one. It just has to look nothing like a startup on paper.
- An equity injection. SBA requires at least 10 percent of total project cost from you for a new business, and many lenders want 20 to 30 percent for a true startup. Borrowed funds usually do not count unless they are on full standby. See the injection requirement.
- Directly relevant experience. The single strongest factor in a startup approval. Ten years running someone else's shop and now opening your own is a fundable story. A career change into an industry you have never worked in generally is not.
- Projections with defensible assumptions. Not a hockey stick. A month by month first year built from unit economics, with the source of every assumption named. See projections.
- Collateral, if you have any. SBA rules say a loan should not be declined for lack of collateral alone when everything else is there, but a lender must take what is available, including equity in your home.
- Personal credit that holds up. Most SBA lenders want 680 or better for a startup file, and will look at the personal financial statement and tax returns closely.
- Patience. Sixty to ninety days from complete application to funding is normal, and complete is doing a lot of work in that sentence.
The SBA microloan program is the softer entry point. It caps at $50,000, runs through nonprofit intermediary lenders rather than banks, and those lenders are explicitly set up to fund businesses banks decline. Approval is slower and the paperwork is not lighter, but the credit standards are more forgiving and the pricing still beats every alternative on the table.
Equipment financing is the underrated answer
If the money is going toward a truck, a machine, a kitchen line, a trailer, or anything with a serial number and a resale market, stop reading about startup loans and go read about equipment financing. It is the one product on this list that does not need your business to have a history, because the collateral does.
- Time in business
- Many lessors write brand new businesses, some with zero months, when the equipment is standard and resellable
- Down payment
- 10 to 25 percent for a startup, sometimes structured as first and last payment instead
- Credit
- 650 and up is workable for most startup equipment programs, with rate rising as the score falls
- Documentation
- Often application only up to $150,000, meaning a one page form and a credit pull with no financial statements
- Rate
- Commonly 9 to 20 percent for a new business, driven by score, down payment, and how liquid the equipment is
- Why it works
- The lessor can repossess and resell the asset, so your lack of history costs you rate rather than the approval
What to do in the six months before you borrow
Almost everything that decides your first approval is set before you apply, and most of it is free.
- Register the entity and get the EIN early. Time in business is usually measured from the state filing date, so file the day you decide, not the day you open.
- Open the business bank account immediately and run every dollar through it. This is the single highest return hour you will spend.
- Protect the personal score. Get utilization under 30 percent on every revolving account, because that alone moves scores materially and fast.
- Build the injection. Documented, seasoned funds in your own account for at least 60 days. Cash that appears the week before closing gets questioned and often disqualified.
- Write the projections properly. Month by month, with named assumptions, and reconcile them to your actual first months once you have them.
- Do not stack applications. Six hard pulls in a month reads as desperation to every underwriter who sees it. See common decline reasons.
What Exp Capital does with this
Exp Capital Solutions is a broker. We do not lend to startups, we do not approve files, and we do not set rates. What we do for a new business is tell you honestly which of these four paths your file can actually clear today, and which one it could clear in six months if you fix two things. Most of the time the right answer for a pre revenue business is equipment financing on the asset, an SBA microloan, or waiting until month seven, and none of those pays us as much as the expensive alternatives. We say it anyway, because a business we help fund badly is not a client twice.