5 Small Business Loans for Startups: A 2025 Guide

Our top 5 small business loans for startups

We’ve compiled a list of our current top startup business loans for 2025. That said, loan programs from Community Development Financial Institutions (CDFIs) may alter due to shifts in government funding. Check out the CDFI Briefing for updates if you receive funding from one of their institutions.

1. Small Business Administration (SBA) 7(a) loans

The Small Business Administration (SBA) doesn't directly provide loans, but does offer programs that pair small business owners with approved lenders in their network. You can use their lender match tool to connect with an organization that aligns with your business and funding goals.

SBA 7(a) is the organization’s primary loan program, offering both short- and long-term financing options for small businesses. The loans take more time to process and apply for and are harder to obtain than online lenders, but are vetted, guaranteed, and typically have lower interest rates. Generally, it's safer and more cost effective for startups to go with an SBA loan, despite the arduous application process and stricter eligibility criteria.

• Best for: Financing large, fixed assets on favorable terms
• Loan amount: Up to $5 million
• Term: Up to 10 years, or 25 years for real estate
• Interest rates: Vary by loan. The base maximum fixed rate is 7.5%. Rates may adjust as a percentage added to this base.
• Eligibility: For-profit businesses that have operated for one year or more with a solid business plan and proven ability to repay the loan.

Pros

• Competitive interest rates
• Favorable terms for long-term business growth
• Guaranteed loans
• Lower down payments

Cons

• Prepayment penalties for loans with terms 15 years or longer
• Application process is long and complex
• May require collateral

2. SBA microloan program

SBA designed their microloan program to support early-stage businesses and under-served communities. For that reason, the eligibility and credit score requirements tend to be more lenient than other SBA programs, although generally still stricter than an online lender.

On their website, SBA provides a list of microlenders in various locations across the U.S. You can use this list to find an intermediary lender in your area and contact them for information on how to apply.

• Best for: Smaller startup loans for equipment or operational expenses
• Loan amount: Up to $50,000
• Term: Up to seven years
• Interest rates: Typically start at 8%
• Eligibility: Varies by lender

Pros

• Generally low interest rates
• Good for a variety of business needs
• Lenders are often nonprofit organizations that provide guidance and support to their borrowers
• Typically more lenient credit approval

Cons

• Often require a personal guarantee or collateral
• Stricter eligibility requirements
• Longer enrollment process

If you're not SBA ready, it may be worth slowly building your business' credit score and finances before applying for a term loan. Some of the following options, such as a business line of credit, are one way to work towards that goal while still obtaining the necessary capital to grow your business. 

3. Community Development Financial Institutions (CDFI) funds

Similar to SBA, the U.S. Department of the Treasury doesn't directly offer government loans. But they do fund financial institutions that, in turn, support small, local businesses. These intermediary lenders are called Community Development Financial Institutions (CDFIs). They provide funds to entrepreneurs who struggle to obtain traditional business loans.

Thanks to government funding, CDFIs can provide financial support to underserved small businesses without focusing as heavily on credit scores, time in business, or other requirements. In 2024, the CDFI fund gave nearly $789 million in awards and even more in tax credits and bonds. 

CDFIs can be credit unions, banks, loan funds, or venture capital funds and offer a variety of financial services, depending on their type. Check out the Department of the Treasury's program website to find a CDFI in your community.

• Best for: Small to large loans for businesses that struggle to access funding
• Loan amount: Up to $25,000 or more, depending on the loan
• Term: Usually up to 10 years, or 15 to 20 years for real estate
• Interest rates: Generally 4% to 9%, depending on the type of loan
• Eligibility: Varies by lender, but requirements often focus on the size of the business, industry, and/ or demographic.

Pros

• Flexible overhead requirements
• Wide range of business financing options
• Even businesses with bad credit may qualify
• Focus on underserved populations
• Some CDFIs also provide mentorships

Cons

• May require collateral or a guarantee
• Eligibility may be reserved for target groups
• Processing times may be longer than an online lender

4. American Express business line of credit

A business line of credit is somewhere between a traditional loan and a business credit card. It allows companies to borrow money that they'll return through monthly payments (with interest), but companies can draw only as needed and pay interest just on the amount used, instead of the full available sum.

American Express offers a business line of credit that's especially tailored to startups. It has lenient minimum eligibility requirements, flexible financing options, and no prepayment penalties. Companies can apply online through American Express' website with generally short processing times.

• Best for: Fast, ongoing access to business capital
• Loan amount: From $2,000 to $250,000
• Term: Six-, 12-, 18-, or 24-month loans
• Interest rates: Generally range from 3%–9% for six-month loans, 6%–18% for 12-month loans, 9%–27% for 18-month loans, and 12%–18% for 24-month loans.
• Eligibility: Recipient must be 18 years or older, have a minimum of one year in business, a FICO score of 660 or higher, and an average monthly revenue of $3,000 or more.

Pros

• Low overhead requirements
• Flexible financing options
• No prepayment penalties
• Shorter processing times

Cons

• Requires collateral to secure the loan
• Conducts a hard credit check
• Higher interest rates, especially for long-term loans

5. Wells Fargo Small Business Advantage 

Business lines of credit can be either secured or unsecured. A secured line requires the borrower to provide some type of collateral to back up the loan, while an unsecured line doesn't. That said, unsecured lines often ask for a personal guarantee, which means that the individual signing the agreement is still personally liable for repaying the loan if the business defaults.

Wells Fargo offers an unsecured business line of credit tailored to startups. It requires a personal guarantee, but waives annual and other fees. Businesses that meet SBA requirements can apply for the loan online or at a Wells Fargo location.

• Best for: Long-term access to funds to supplement your cash flow
• Loan amount: From $5,000 to $50,000.
• Term: Five years
• Interest rates: 12%
• Eligibility: Have operated your business for under two years and own less than $500,000 in personal assets. 

Pros

• No annual fee or review
• No fees for ATM, over-the-counter transactions, transfers, checks, and bill pay
• Only pay interest on what you draw
• Long-term access to business capital

Cons

• Requires a personal guarantee
• Lower credit limits may be insufficient for higher startup costs
• Requires credit approval