How to Get a Loan for a New Business
by: Dan Domino & Josh Bohlke
Updated - March 5, 2026
Launching a business takes vision, grit—and capital. But getting a loan to fund your startup isn’t like borrowing for a business that’s already up and running.
Traditional banks look for revenue, collateral, and time in business—three things most startups don’t yet have. That means if you’re just starting out, you’re asking a lender to take a risk not just on your idea, but on your ability to pull it off.
That doesn’t mean it’s impossible. It just means you need a strategy. In this guide, we’ll walk through the best types of loans available for startups, how to build a fundable loan request from scratch, what documents you’ll need, and the mistakes to avoid if you want your application taken seriously.
Startup Loans Are a Different Animal
If you’re trying to get a loan to start a business, you’re already in a tougher spot than someone with an existing, profitable operation. Why? Because lenders aren’t just betting on your idea—they’re betting on your execution. And without any revenue yet, the bank’s biggest question is: How will you pay this money back?
Here’s what makes startup loans different from typical business loans:
- No operating history: You haven’t proven your model works yet. That means lenders rely heavily on projections, your personal finances, and your plan.
- No business credit: If your business is brand new, it doesn’t have credit of its own. So your personal credit (and sometimes your assets) take center stage.
- Higher risk for lenders: Startups are statistically more likely to fail than established businesses. Lenders know that, and they tighten up accordingly.
That doesn’t mean you can’t get a loan—it just means you need to approach it differently. You’re not just filling out a form and waiting for approval. You’re making a case. You’re showing the lender why you are a smart bet—even without history.
We'll get into the specifics of how to do that next.
What Kinds of Loans Are Available to Startups
If you’re just getting started, you won’t qualify for a traditional bank loan with minimal paperwork and a handshake. But that doesn’t mean there aren’t solid options out there. The key is understanding which products fit your situation—and how to approach them.
Here are the most common loan options for startups:
- SBA 7(a) Loans (Startups Eligible): These loans are backed by the Small Business Administration and can be used for working capital, equipment, or buying a business. If you’re applying as a startup, you’ll need strong personal credit, a clear business plan, and an equity injection (usually 10–20% of total costs). Some banks may require a co-signer or additional collateral.
- SBA Microloans: These are smaller loans—typically up to $50,000—offered through nonprofit lenders. They’re more accessible for startups, especially if you’re working with a local SBA resource partner like a Women’s Business Center or SCORE mentor. Expect a lot of hand-holding and support, which can be a plus if you’re new to this.
- CDFIs and Community-Based Lenders: Community Development Financial Institutions (CDFIs) often have more flexible credit standards and are mission-driven. They may lend to early-stage businesses that traditional banks pass on, especially if you’re in an underserved area or launching a business that creates jobs locally.
- Specialty Equipment Financing: If you’re starting a business that requires specific tools or vehicles—like a landscaping business, food truck, or mobile service company—you may be able to finance just that equipment. These loans are secured by the asset itself, which can make approval easier even if your business is brand new.
Each of these has pros and cons. The right one depends on your credit, collateral, business model, and how much money you actually need. In the next section, we’ll walk through how to build a loan request that gets taken seriously—even as a startup.
How to Build a Loan Request That Works
When you’re just starting out, the strength of your loan request isn’t in your history—it’s in your preparation. Lenders know startups are risky. Your job is to reduce that risk in their eyes by showing that you’ve thought through the details and you’re ready to execute.
Here’s how to make your case:
- Know Exactly How Much You Need (and Why): Be specific. “I need $75,000 to purchase equipment, hire two employees, and market the launch of my mobile detailing business.” That’s a lot better than “I need some startup capital.”
- Show the Use of Funds: Lenders want to see where the money is going. A simple breakdown of expenses—equipment, working capital, inventory, buildout costs—goes a long way. It helps them understand your priorities and whether the request makes sense.
- Have a Business Plan or Executive Summary: You don’t need a 40-page binder, but you do need to explain how your business will make money. Who’s your customer? What problem are you solving? How will you deliver your product or service—and what makes you different?
- Include Financial Projections: This is a must. Show 12–24 months of expected revenue and expenses. Highlight when you’ll break even and how you’ll repay the loan. These numbers don’t need to be exact, but they should be logical and backed by real assumptions.
- Explain Your Background and Experience: If you’ve worked in the industry, run a similar business, or have relevant skills, now’s the time to highlight that. Lenders want to know you’re not figuring this out from scratch.
- Contribute Equity or Show Skin in the Game: Most startup-friendly lenders will expect you to bring something to the table—cash, collateral, or both. If you’re not personally invested, they won’t be either.
A well-prepared request doesn’t guarantee approval—but it does show you’re serious, thoughtful, and ready to run a business. That alone puts you ahead of a lot of applicants.
Documents and Plans You’ll Need
Before anyone will lend you money to start a business, they need to see exactly what you’re planning—and how you plan to make it work. Here’s what to have ready:
- A Business Plan That Goes Beyond the Dream
Passion is great, but it’s not enough. Your business plan should clearly explain what you’re selling, who your customers are, how you’ll reach them, and what your operating model looks like. It doesn’t need to be lengthy—just detailed, grounded, and logical. - 12–24 Month Financial Projections
Show how the business will perform in its first couple of years. Include revenue, costs, margins, profit, and cash flow. If you can pinpoint when you’ll reach breakeven, that helps. The numbers don’t need to be perfect—but they should make sense and align with your story. - Personal Financial Statement and Tax Returns
Since your business may not have a financial track record, your personal finances will come under the microscope. Be prepared to submit a personal financial statement outlining your assets, debts, income, and monthly obligations—plus at least two years of personal tax returns. - Your Resume or Background
A strong track record in your industry (or something closely related) adds credibility. If you’re switching fields, highlight transferable skills and explain why this move is strategic, not random. - Lease, Purchase Agreements, or Vendor Quotes
When asking for funding, you need to show where the money’s going. If you’re securing a space, buying equipment, or stocking up on inventory, bring the paperwork. It helps the lender assess how realistic your request is and whether the costs align with your projections.
Treat this like your loan pitch. The more thought, clarity, and documentation you bring to the table, the more likely you are to be taken seriously. It’s about showing that you’re not just ready to launch—but ready to succeed.
Common Mistakes First-Time Borrowers Make
Starting a business is exciting—but when it comes to borrowing, rushing in can do more harm than good. These are the most common mistakes new entrepreneurs make when trying to get a startup loan:
- Applying Too Early
Walking into a bank with an idea and no plan is a fast track to a “no.” Lenders need more than enthusiasm—they need details. Applying before your plan is fully baked wastes your time and theirs. - Not Having Any Money to Contribute
If you’re not putting in your own funds, why should anyone else? Lenders expect you to have “skin in the game.” Even a small equity injection—cash, equipment, inventory—can make a big difference. - Underestimating Startup Costs
Many first-time founders lowball their launch budget. Then they burn through cash too fast and hit a wall. Be realistic about what it will actually take to get the doors open and keep them open. - Being Vague About Repayment
Saying “the business will grow and pay the loan back” isn’t enough. You need to show how and when that happens. If your revenue takes three months to ramp up, how will you cover the first few payments? - Assuming the Lender Will Fill in the Gaps
It’s your job to make the case. Don’t assume the banker will do the math, interpret your ideas, or guess at your projections. Spell it out—clearly and confidently.
Avoiding these mistakes won’t guarantee approval, but it will put you in a much stronger position. The more prepared you are, the easier it is for a lender to say yes.
Conclusion
Getting a loan to start a business is never easy—and that’s a good thing. If funding were easy to grab, it wouldn’t force you to sharpen your plan, tighten your numbers, or think through what you’re really building.
As a startup, your success with lenders depends less on your credit score or your resume—and more on your preparation. Know what you need. Show exactly how you’ll use it. And build a story that a lender can say yes to without hesitation.
If you’re not ready yet, don’t rush it. Tighten up your plan, build some traction, and revisit when your story is stronger. The loan isn’t the win—the business is. Use the loan to build something that lasts.
About the Author:
About the Author:
Dan Domino
Dan Domino
Founder of Jay Street Group
Founder of Jay Street Group
With 24 years of experience in finance and entrepreneurship, Dan Domino is the founder of Jay Street Group and is dedicated to helping small businesses thrive. Before launching Jay Street Group, Dan worked in financial markets at Citigroup and Deutsche Bank. He earned his MBA from Columbia Business School and brings a deep understanding of practical solutions to the real world challenges that business owners face.
Dan lives in Austin, TX with his wife, Lisa, and their two sons. When he's not helping founders, you'll find him on the Town Lake running trail chasing his kids on their bikes.
With 24 years of experience in finance and entrepreneurship, Dan Domino is the founder of Jay Street Group and is dedicated to helping small businesses thrive. Before launching Jay Street Group, Dan worked in financial markets at Citigroup and Deutsche Bank. He earned his MBA from Columbia Business School and brings a deep understanding of practical solutions to the real world challenges that business owners face.
Dan lives in Austin, TX with his wife, Lisa, and their two sons. When he's not helping founders, you'll find him on the Town Lake running trail chasing his kids on their bikes.
About the Author:
About the Author:
Josh Bohlke
Josh Bohlke
Small Business Finance Advisor
Small Business Finance Advisor
With over 20 years of experience in finance and entrepreneurship, Josh Bohlke has built his career around helping small business owners get the resources they need to succeed. He has served as a business loan officer and underwriter, a CFO, and a trusted advisor to entrepreneurs across multiple industries. Josh is passionate about demystifying the funding process and equipping business owners with the knowledge and strategies to grow with confidence.
Josh lives in Kennewick, Washington with his family.
With over 20 years of experience in finance and entrepreneurship, Josh Bohlke has built his career around helping small business owners get the resources they need to succeed. He has served as a business loan officer and underwriter, a CFO, and a trusted advisor to entrepreneurs across multiple industries. Josh is passionate about demystifying the funding process and equipping business owners with the knowledge and strategies to grow with confidence.
Josh lives in Kennewick, Washington with his family.