How to Get a Business Loan for Your Startup: Simple Steps

Published Friday 2 January 2026

Table of contents

• Assess your borrowing needs
• Loan requirements
• How to get a startup business loan
• How to apply for a business loan
• Alternative startup financing
• Getting your business finances ready for loan success
• FAQs on startup business loans

Key takeaways

• Calculate your total funding needs by adding startup costs (equipment, inventory, licences) and operating expenses for 6-12 months, then create a detailed cash flow forecast to demonstrate how you'll repay the loan on time.
• Strengthen your loan application by investing significant personal money into the business, offering security such as property or equipment as collateral, and maintaining a strong personal credit history.
• Prepare a comprehensive business plan that includes market analysis, financial projections, and risk assessment, as lenders require solid evidence of your ability to succeed without a proven track record.
• Explore alternative financing options like angel investors, peer-to-peer lending, or crowdfunding if traditional bank loans aren't available, especially given the current tightening of credit conditions for small businesses.

Assess your borrowing needs

Before you approach a lender, know exactly what your business needs. A clear plan shows you've thought things through and gives lenders confidence in your idea. Start by figuring out how much you need to borrow and how you'll pay it back.

Decide how much to borrow

Calculate your startup costs, which are one-off expenses like equipment, and your operating costs for the first few months, such as rent and wages. This will give you a clear loan amount to request.

Show how you'll repay the loan

You need a cash flow forecast. A cash flow forecast projects the money you expect to come in and go out of your business. This demonstrates to lenders that you'll have enough cash to make your repayments on time.

Loan requirements

Startup loan requirements are stricter than for established business loans because you lack a proven track record of profitability. With an expected change in loan demand suggesting more competition for funding, banks need solid evidence you can repay the loan.

Lenders prefer startups with:

• Previous business experience: Track record of running a successful business
• Personal investment: Significant amount of your own money invested
• Security: Assets like property or equipment to guarantee the loan
• Good credit history: Strong personal credit score and payment history

These factors make it much easier to secure a traditional bank loan.

How to get a startup business loan

The startup loan application process involves three key preparation steps that significantly improve your approval chances:

1. Get your financial requirements and business plan together

Financial planning: Calculate your total funding needs including:

• Startup costs: Equipment, inventory, licences, and initial marketing
• Operating expenses: Rent, utilities, wages, and supplies for the first 6-12 months
• Working capital: Cash buffer for unexpected expenses and slow revenue periods

Business plan preparation: Create a comprehensive plan that includes:

• Market analysis: Target customers, competition, and growth opportunities
• Financial projections: Revenue forecasts, profit margins, and break-even timeline
• Risk assessment: Potential challenges and how you'll address them

2. Show how you intend to repay the loan

Repayment planning is the most critical factor lenders evaluate. Create a detailed repayment schedule showing:

• Monthly payment amounts: Based on loan terms and interest rates
• Cash flow projections: How revenue will cover loan payments
• Payment timeline: When payments start and end

3. Let them know if you have any security

Security options can significantly improve your loan terms:

• Property: Home equity typically offers the lowest interest rates
• Vehicles: Cars, trucks, or equipment as collateral
• Business assets: Inventory, equipment, or accounts receivable
• Unsecured loans: Available for amounts under $50,000 with higher interest rates

How to apply for a business loan

Once you've done your homework, you're ready to apply. The application process is your chance to make a great first impression on a lender. Having your information organised makes the process smoother for everyone.

You'll typically need to provide:

• A detailed business plan
• Financial projections, including a cash flow forecast and budget
• Personal financial statements and your credit history
• Details of any security you can offer

Many banks have business specialists who can guide you through the application. Ask for their help if you need it.

Alternative startup financing

Alternative financing options provide backup funding when traditional loans aren't available:

• Angel investors: Provide capital in exchange for equity, plus mentorship and industry connections
• Family and friends: Offer flexible terms but require written agreements to protect relationships
• Crowdfunding: Raises funds from multiple small investors, ideal for consumer-focused businesses. Find out how crowdfunding works.
• Peer-to-peer lending: Connects you with individual lenders at competitive rates, with regulations allowing businesses to borrow a maximum of $2 million in any 12-month period. Get an introduction to peer-to-peer (P2P) lending.
• Bootstrapping: Uses personal savings and credit, maintaining full business control

Getting your business finances ready for loan success

Strong financial management increases your loan approval chances and sets your business up for long-term success. Try Xero for free to track cash flow, generate financial reports, and demonstrate the financial control lenders want to see.

For more detailed guidance, explore our comprehensive guides on how to start a business and financing your business.

FAQs on startup business loans

Below are common questions small business owners ask about startup loans.

How much can I borrow for a startup?

The amount you can borrow depends on your business plan, personal credit history, and any security you can provide. Lenders will assess the risk and your ability to repay the loan before making an offer.

What is a typical monthly payment on a business loan?

Monthly payments vary based on the loan amount, interest rate, and loan term. For example, a $50,000 loan over five years at a 7% interest rate could have monthly payments of around $990. Use a business loan calculator to estimate your payments.

Can I get a business loan with no revenue?

Yes, it's possible, but lenders will look more closely at your plan, projections, credit score and any security you can offer. Lenders will focus heavily on your business plan, financial projections, personal credit score, and any personal assets you can use as security to offset the risk of lending to a business with no track record.