Start up business loans

You can still apply for a start up business loan even if you don’t have any revenue yet.

Are you eligible for a start up business loan? Find out here

Expert overview: What you need to know

  • It can be tricky to get a business loan for a startup. Generally, your business will already need to be making money to qualify, but there are options.
  • You don't need residential or commercial property to be approved with an alternative business lender, but you usually will with a bank.
  • If you don't qualify for a business loan yet, you can consider a credit card, angel investor or even crowdfunding.

Startups often have rapid early growth, but they also have the same financing needs as other businesses. This includes funding:

  • To develop the product/service. This is one of the most common funding needs for startups. Developing the initial business idea into a market-ready product or service is expensive, and generally happens at a time when the business has no revenue.
  • For operational expenses. Startups often need to hire staff, lease business space such as coworking space and pay the salaries of staff and founders. This requires funds, and the larger the business and the more staff that are hired, the more funds the startup will need.
  • To market the product. Acquiring customers is a common startup hurdle, and marketing is generally your best option. Whether it's online, through social media or using an old-school letter drop, these activities need time and money.
  • To expand the business. This is a positive step forward for any startup – expanding the business. Due to the uncertain cash flow in startups, it's common to use external funds to expand.

What types of funding options are available to startups?

Startups have little to no internal funds – that is, profit. Because of this, these companies have a choice between two types of finance: debt or equity. Debt finance involves borrowing money, so the business takes on debt, whereas equity finance involves the business acquiring funds from investors or a public float in return for a share of the company.

Here are some options startups have when it comes to debt and equity finance:

Debt financeEquity finance
  • Loans from traditional lenders

Banks and credit unions offer loans to people looking to start small businesses. The application process usually requires detailed business plans and you may need to put up security.

  • Angel investors

These are individual investors who help to finance your startup, usually in exchange for a partnership stake. You can find these individuals yourself or through startup hubs, meetups or investment groups.

  • Loans from online and alternative business lenders

The number of online and alternative business lenders has increased in the last few years. You can apply for business loans online and receive funding quickly, sometimes within 24 hours.

  • Venture capitalists

This is a specific type of equity capital that involves individuals or venture capital firms providing funds for startups and early-stage businesses. Your business needs to demonstrate potential revenue and a solid business strategy.

  • Business credit cards

If you only need a small loan or require access to an ongoing line of credit, a credit card may be an option to consider. You can opt for a card that gives you 0% interest p.a. on purchases for up to 12 months.

  • Public float

This involves you listing your company on the stock exchange so that people can purchase shares. Keep in mind that doing this will involve a higher degree of transparency with your business than if you remain a private company.

Picture: Shutterstock
businesss-startup-meeting

How to compare startup loans

Finding the right finance for your new company is important, and it all starts with comparing your options. Here are a few points to keep in mind:

  • How much do you need to borrow?
    You will be offered a loan that is based on the details that you provide in your application. However, you may be able to see the minimum and maximum amounts on offer, depending on the lender. This is more likely with online and alternative lenders and also with credit cards.
  • How long do you need to repay the loan?
    It may be difficult to determine how much you'll be able to repay if your business isn't off the ground yet, which is where having a sound business plan comes into play. Work out an approximate budget and don't apply for a loan you can't afford.
  • Do you need access to ongoing credit or a lump sum amount?
    Will you need continued access to finance? Consider whether an ongoing line of credit or a loan that offers a redraw may be a better option for you. Remember to take your repayments into account when budgeting your startup financials if you opt for a lump sum loan.

Useful financial guides for startups

  • Finding finance as a fintech startup

How long does my business need to be in operation for a startup loan?

These are the criteria for lenders featured on Finder in regards to how long your business needs to have been in operation for:

Business lenderHow long you need to have been operatingRevenue criteriaFind out more
Max FundingNo minimumNo minimum
More Info
Banjo Loans2 years$500,000 per year
More Info
Bigstone9 months$250,000 per year
Business Fuel1 year$10,000 per month
More Info
Capify6 months$10,000 per month
More Info
GetCapital9 months$10,000 per month
More Info
Kikka1 year$10,000 per month
More Info
NAB12 monthsNo minimum
More Info
MiFananceNo minimumNo minimum
More Info
Moula12 months$5,000 per month
More Info
OnDeck12 months$100,000 per year
More Info
Prospa6 months$6,000 per month
Spotcap12 months$100,000 per year
More Info
ThinCatsNo minimumNo minimum
More Info

Loan sorted? Learn about your insurance options.

What if I own an early stage business?

An early stage business is generally one in its first year of operation, but has progressed past the initial startup phase.

However, early stage business owners face similar issues to startups when it comes to getting finance. If you don't meet the minimum turnover and trading history requirements of a particular lender you are unlikely to be approved for a loan, regardless of how promising your business is.

You should instead consider finance from lenders with no minimum business requirements, or look into alternative finance options, such as invoice finance or a business line of credit.

What regulations should I be aware of?

The startup sector is becoming more regulated as time goes on, making it easier for people to turn ideas into companies and for startup founders to access finance. The largest regulatory changes were announced in the Federal Government's innovation agenda, which detailed various changes to be rolled out in 2016 and beyond. Notable funding-related regulations include:

  • From 1 July 2016 investors who support innovative startups will receive a 20% non-refundable tax offset on investments capped at $200,000 per year, per investor.
  • From 1 July 2016 investors who support innovative startups will receive a 10-year capital gains tax exemption for investments held for three years.
  • Already in place are changes to crowdsourced equity funding (CSEF) schemes to allow entrepreneurs to raise up to $5 million per year in funds from a large number of individuals in return for equity in their company.
  • Companies that went public to access CSEF have a five-year exemption from normal reporting and exemption requirements.
  • From 1 July 2016 partners in a new Early Stage Venture Capital Limited Partnership (ESVCLP) will receive a 10% non-refundable tax offset on capital invested during the year. Funding size will also be increased from $100 million to $200 million.

Frequently asked questions

Elizabeth Barry's headshot
Lead Editor

Elizabeth Barry was the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review. See full bio

Elizabeth's expertise
Elizabeth has written 211 Finder guides across topics including:
  • Banking
  • Personal finance
  • Investing

More guides on Finder

  • Business car loans

    If you're after a business car, compare your vehicle finance and car loan options and get your business on the road.

  • Caveat Loans

    Need quick finance for your business? Find out how caveat loans work and if they're right for your business.

  • Unsecured business loans

    Are you looking for a business loan but don't have an asset to offer as security? You still have loan options available. Find out what you need to know about unsecured business loans and how to compare them.

  • BOQ Cash Flow Finance Loan

    As well as bridging financial gaps, BOQ’s Cash Flow Finance funding grows alongside your business’s profit margins and capacity. Receive up to 80% of the value of outstanding invoices to keep your business moving.

  • Do you know your business credit score?

    This guide will take you through what a business credit score is and show you how to get it for free.

  • Spot factoring

    Is your business in a cash flow squeeze? Find out how spot factoring can ease your cash flow troubles in as little as 24 hours, even if you have no collateral.

  • How to split profits in a small business partnership

    What you need to know about dividing profits in a small business partnership.

  • Business loan requirements – how banks assess your application

    Want to be approved for a business loan from a bank? This is how a bank will assess your application.

  • Compare loans to buy an existing business

    Find out how to achieve your small business dreams by getting funding to buy a small business.

  • Purchase order finance

    Using your purchase orders to secure funding helps your business supply customers while increasing production capacity.

Ask a question

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms Of Service and Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

10 Responses

    Default Gravatar
    AnonymousDecember 20, 2018

    In your opinion who is the most accommodating lender for people with fair credit, minimal security, no co-borrower and approved business plan that doesn’t want to go through a seed incubator? In other words not just wish washy words they type in their product descriptions to attract leads but actually look at your business plan and financials and treat you as a person not just another automatic quote coming through?

      AvatarFinder
      MayDecember 21, 2018Finder

      Hi Startitup,

      Thanks for reaching out.

      Well, different lenders have their own loan application processes and requirements. Basically, they outline what they require in their product review or application page. It’s also common for lenders to check your creditworthiness, so this may also be critical in considering your application. For business loans, yes, they will also check your business financials and plan.

      If you’re in the market for a lender that offers business loans, you can use our comparison table to help you find the lender that suits you. You can compare the brands based on the loan term, fees, loan amount, etc. In case you’ve chosen a lender, best to contact the lender first and confirm your eligibility and options before submitting your final application. When you are ready, press the “Go to Site” button to apply. Practical as well to check their T&Cs and PDS before you consider it’s the right product for you.

      I hope this somehow helped.

      Cheers,
      May

    Default Gravatar
    RicDecember 14, 2018

    Which lender would be good to buy an existing business? $40’000

      AvatarFinder
      JohnDecember 17, 2018Finder

      Hi Ric,

      Thank you for leaving a question.

      The page we are on provides an extensive review on getting a business loan. While we do not provide specific product recommendations, we can help guide you through the process of comparing options. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” or “Enquire now” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!

      Cheers,
      Reggie

    Default Gravatar
    MattMarch 6, 2018

    Hi, I am looking for a loan but want to know what contribution would be expected from me. Assuming the loan company won’t give me 100%, what percentage should I expect to put in myself?

      AvatarFinder
      MayMarch 7, 2018Finder

      Hi Matt,

      Thanks for your question.

      Not really sure what you meant by “contribution” coming from you. If you are looking to apply for a business loan with a bank, you may need to present your business plan to them. As for security or guarantee, that must depend on the lender you apply with, although you have to option to present a security/guarantee. It is always best that you check the overall requirements and eligibility criteria before applying for any loans so you might know what you need to provide and you’re able to gauge your chances of approval.

      Cheers,
      May

    Default Gravatar
    AnneJune 14, 2017

    Hi,

    We are a start-up looking for a company that will provide finance to our customers rather than us. Any recommendations. We are happy to cover the purchase and have finance go through on delivery of product for security to customer and financier.

    Any insight would be great.

    Thanks.

      AvatarFinder
      MayJune 14, 2017Finder

      Hi Anne,

      Thanks for reaching out.

      As we are a comparison website, I’m afraid we can’t recommend a specific lender to you. Nevertheless, you may directly get in touch with any of the business loan companies we’ve listed above, which may be keen to talk partnerships with you. This should give you an overview of the financial trend affecting businesses.

      Hope this helps.

      Cheers,
      May

    Default Gravatar
    BernardJanuary 24, 2017

    Hi,

    I am looking to be put in touch with lenders that can help me with finance to purchase an existing business.

    Any details will be very helpful thank you.

      AvatarFinder
      DeeJanuary 24, 2017Finder

      Hi Bernard,

      Thanks for your question.

      If you are looking to purchase an existing business, please check the list of loans to buy small businesses featured on our website.

      Cheers,
      Anndy

Go to site