How to get a startup business loan: Requirements, options, and tips

Published Friday 17 October 2025

Table of contents

• What is a startup business loan?
• Types of startup business loans
• Startup business loan requirements
• How to get a startup business loan
• What can you use a startup business loan for?
• Alternative startup financing
• Getting your startup business loan approved
• FAQs on startup business loans

Key takeaways

• Prepare comprehensive documentation including a detailed business plan, financial projections, and clear repayment strategy to demonstrate your business viability and funding needs to lenders.

• Strengthen your loan application by contributing personal funds to the business, maintaining excellent personal credit history, and offering security such as property or equipment when possible.

• Explore alternative financing options like equity investors, friends and family funding, or crowdfunding platforms if traditional bank loans prove challenging for your startup.

• Calculate your exact funding requirements by determining initial setup costs, operating expenses for 6-12 months, and working capital needs before revenue begins.

What is a startup business loan?

"Startup loans" are marketing terms rather than specific loan products. Banks don't offer dedicated startup financing – instead, you'll use standard business loan types to fund your new venture.

You can use any business loan as startup funding, including:

• Term loans: Fixed amounts repaid over set periods
• Lines of credit: Flexible access to funds as needed
• Equipment financing: For specific business purchases

Types of startup business loans

Term loans provide a lump sum upfront that you repay over a fixed period. You'll pay interest at either fixed or variable rates, with lower rates available if you provide security.

Lines of credit work like business credit cards but with lower interest rates. You access funds as needed up to your approved limit. However, these typically require an established business track record, making them less common for true startups.

Startup business loan requirements

Startup loan approval is challenging because new businesses lack revenue history, and data shows that since the Royal Commission, about a third of small business owners have had their loan applications rejected. Banks need evidence you can repay the loan.

Your approval chances improve significantly if you have:

• Previous business success: Track record of running profitable ventures
• Personal investment: Substantial personal funds invested in the business
• Security: Assets like property or equipment to secure the loan
• Strong credit history: Personal credit score demonstrating financial responsibility

If you have at least one of these factors, you are more likely to secure traditional bank financing. The Australian Banking Association reports that 94 per cent of loan applications from small businesses to member banks have been approved.

How to get a startup business loan

Prepare comprehensive documentation to demonstrate your business viability and funding needs.

1. Get your financial requirements and business plan together.

Calculate your funding requirements: Determine exactly how much you need for:

• Initial setup costs (equipment, inventory, licenses)
• Operating expenses for the first 6-12 months
• Working capital before revenue begins

Create a detailed business plan that shows:

• How your business will generate revenue
• Market research and competitive analysis
• Financial projections and break-even timeline
• Honest assessment of risks and mitigation strategies

2. Show them how you intend to repay the loan.

Include a budget that shows how and when you will make repayments. Lenders want to see how you will repay the loan with interest.

3. Let them know if you have any security.

You can use your home, vehicle or other personal assets as security. You may be able to get an unsecured loan if you only need to borrow a small amount.

What can you use a startup business loan for?

You can use a startup loan for many initial business expenses, such as:

• Purchasing inventory or raw materials
• Covering rent for an office or retail space
• Funding marketing and advertising campaigns
• Buying essential equipment and technology, which may be eligible for a 20% bonus deduction to support digitisation
• Paying employee salaries in the early stages

Alternative startup financing

Alternative startup financing offers multiple paths when traditional bank loans aren't available.

Equity investors provide funding in exchange for business ownership:

• Benefit: Access to expertise, networks, and mentorship
• Consideration: You'll give up partial control and future profits
• Potential: May buy back shares as business grows

Friends and family funding offers flexible terms and personal support:

• raise funds from a crowd of investors through crowdfunding platforms. Eligible companies can raise up to $5 million in any 12 – month period. Learn how crowdfunding works
• borrow from individuals through peer-to-peer lending. You may need security for larger amounts. Read an introduction to peer-to-peer lending
• fund your business yourself using savings, personal credit cards, personal loans or by refinancing your home. This approach carries more personal financial risk

Getting your startup business loan approved

Show lenders you are a good investment by presenting a strong case for your business.

• Create a detailed business plan: A solid plan shows you've thought through your strategy, market, and financials.
• Prepare financial forecasts: Show lenders how you expect the business to perform and how you'll make repayments.
• Contribute your own funds: Investing your own money shows you're committed and share the risk.
• Maintain a good credit history: Your personal credit score often plays a big role in the decision.

Organise your financial information in Xero accounting software to quickly create the reports and forecasts you need for your application.

Ready to manage your startup’s finances effectively? Try Xero accounting software for free to streamline your bookkeeping from day one. You can track expenses, manage cash flow and prepare financial reports for future funding applications.

For comprehensive guidance on business planning and additional financing options, explore the complete guides to starting a business and financing your business.

FAQs on startup business loans

If you have questions about getting a loan for your new business, find answers below.

Can I get a startup business loan with no revenue?

Yes, you can get a startup business loan with no revenue. Lenders will focus on your business plan, personal credit history and any personal assets you can offer as security. Government – backed loan program can also be an option for businesses without a trading history.

How much can I borrow for a startup?

The amount varies widely depending on the lender, your business plan, and your financial situation. Small unsecured loans might range from $10,000 to $50,000, while larger, secured loans can be significantly more.

What is the easiest loan to get for a startup?

No single loan is the easiest for startups. However, a personal loan for business use, a government – backed startup loan, or borrowing from friends and family often have fewer hurdles than a traditional bank loan for a new business with no track record.

Getting startup funding requires preparation, persistence, and often exploring multiple options. While traditional bank loans can be challenging for new businesses, success comes from strong documentation, meeting lender requirements, or pursuing alternative financing paths.