What are Typical Startup Bank Loan Terms?

Starting a business from scratch isn’t easy, especially since it takes a lot of money to get things rolling. Unless you’ve got a large amount of personal funds, you’ll probably need external financing to get your startup off the ground. 

Securing a bank loan can be challenging without an established business with years of proven sales. For many lenders, it is a risk to gamble on a business proposition that’s just a good idea with no proven success or established customer base.

But don’t worry! There are still ways for your startup to secure the bank loan you need, with terms that meet your financial needs and goals.

Can Startups Get a Bank Loan?

Yes, startups can get a business loan. However, the process may be much more difficult for brand-new startups than it is for more established businesses. 

Understandably, banks are hesitant to lend to startups without proven sales or a history of profitability. Many lenders prefer to give loans to businesses that:

• Are for-profit and operate in the U.S.
• Lack another source of funding, such as personal savings
• Have a credit score of at least 600
• Have been in operation for at least six months

While you may face challenges trying to get funding as a startup, it’s certainly not impossible.

What is an SBA Loan?

Banks offer several loan options for startups, including SBA loans, traditional bank loans, and lines of credit. Your options depend on your business’s financial needs, credit score, and industry. 

The most common type of loan you’ll come across as a startup is an SBA 7(a) loan. This loan is backed by the U.S. Small Business Administration, which sets the guidelines and guarantees a certain percentage of a loan. It is designed to help small business owners cover expenses and expand operations.

7(a) loans can be used for almost any purpose, making them a great option if you’re looking to develop and grow your startup. They have low interest rates and long repayment terms, helping you avoid unnecessary financial strain in the early stages of your business.

However, they’re not necessarily a quick solution. It could take between one and three months for your application to be processed and funds to be distributed.

You can also consider an SBA Express loan, which disburses funds faster but typically comes with higher interest rates and a lower SBA guarantee percentage. The right choice depends on your current business needs!

What are Typical Startup Bank Loan Terms?

Loan terms vary depending on the lender and the type of loan you’re applying for. In general, terms are based on factors such as your credit history, the type of loan you’re seeking, the industry you’re in, and your company’s financial situation.

Loan Amount

As of 2025, small businesses can get up to $5 million with 7(a) loans, or $500,000 with 7(a) Small loans and 7(a) Express loans. The amount guaranteed by the SBA will depend on the loan program you go with.

Typically, startups can borrow far less than established small businesses. Loan amounts also vary depending on which industry you’re in. To get a clearer picture of your specific situation and industry, we recommend consulting a financial expert—like our team at Finvisor—for personalized guidance tailored to your business needs.

Interest Rates

The interest rate on a bank loan will vary depending on the type of loan, your credit score, market conditions and collateral. Startups with strong credit histories and solid business financials can qualify for lower interest rates. 

In general, SBA loan interest rates are among the lowest you’ll find, helping you save money as you repay your loan. These are based on the prime rate, which has remained under 6% for the past 20 years.

You’ll also need to decide whether you want to go with a fixed or a variable rate loan:

• Fixed interest rates remain the same throughout the loan term, making payments predictable each month. 
• Variable interest rates fluctuate based on the market. While you may start with a lower rate, it can increase over time, leading to higher payments.

Repayment Periods

The repayment period for startup loans depends on the type and amount of the loan.

Large SBA 7(a) loans typically have repayment periods of 5 to 10 years. These loans are meant to give your business substantial funds to expand your business operations.

Smaller loans of $50,000 or less are meant for injections of working capital or to purchase necessary equipment and inventory. These loans have shorter terms, typically 6 years or less.

How to Increase Your Chances of Getting a Bank Loan

Securing a bank loan may seem challenging as a startup, but it’s not impossible. How can you increase your chances of scoring that loan your business needs to expand? There are several ways:

Do Your Research

Securing funding for your business is a major decision that shouldn’t be taken lightly. As a founder, take the time to explore all available financing options. The one you select should meet your long-term financial needs and goals.

Demonstrate Financial Trustworthiness

Lenders want to see that you’re responsible with money. To demonstrate this, you can use your own personal credit score; remember that a good score increases your chances of securing a business loan. 

If you’ve run successful businesses in the past, you can also use that experience to demonstrate your financial trustworthiness. Lenders especially like to see experience within the same industry.

Even if you have poor credit, you may still qualify for certain loans. However, these typically come with higher interest rates, lower borrowing limits, and shorter repayment terms.

Sign a Personal Guarantee

A personal guarantee is a legal agreement that makes you personally responsible for repaying the loan if your business fails. This could put your personal assets, like savings or your home, at risk—so be sure to weigh this option carefully.

Work With a Financial Advisor

Not sure which financing option is best for your startup? Consider working with an expert financial advisor to help you do the research and make informed decisions about loans and financing.

At Finvisor, we have over a decade of experience working with early-stage entrepreneurs just like you. We’re here to help you secure the funding your business needs to grow and succeed. Reach out to our team today and schedule a free introductory call!