Can you get a business loan in your first year?
Sometimes, and the product matters more than it does later. In their first year, our applicants borrow for equipment first, at 37.1%, well ahead of expansion at 22.9%. That matters: a purchase that secures its own financing is one of the few routes that does not depend on a trading history you do not have yet.
What applicants in their first year report
Based on more than 1,000 funding applications to TopFunders.ai, here is the profile of applicants who have been in business under a year:
| Applicants in business under a year | Share |
|---|---|
| Borrowing to buy equipment | 37.1% |
| Borrowing to expand the business | 22.9% |
| Report monthly revenue under $10,000 | 63.1% |
| Place their credit under 600 | 47.9% |
| Ask for more than $50,000 | 49.3% |
Across all applicants, expansion is the top purpose and equipment is second. In the first year the order flips. New owners are buying the truck, the oven or the machine that the business runs on, and that is a different kind of borrowing from topping up cash flow.
Why equipment changes the answer
Most business lending leans on history: how long you have traded, what your deposits show, how you have handled credit. A young business has little of the first two. Equipment financing works differently, because the equipment secures the loan. If the business does not pay, the lender takes the asset back, so the asset carries part of the risk your history cannot.
That is why a first-year business buying a specific, resellable piece of equipment is often a more realistic applicant than one asking for general working capital, even with the same revenue.
What you will likely qualify for, and what you will not
On time in business. Six months is a common minimum across online lenders, and a year or more widens the options considerably. Two or more years typically opens bank and SBA lending. Many online business lenders look for at least 6 months in business, $10,000 or more in monthly revenue, and a personal credit score of 550 or higher.
Likely within reach if you are past six months, report $10,000 a month or more, and are buying equipment. Equipment financing is the strongest fit.
Possible but narrower if you are past six months with steady revenue but no specific asset. Online term loans and revenue-based products are the usual routes, and revenue-based products are the expensive end: they can work out equivalent to 40% to 350% APR.
Below what most of our partners consider if you have been trading under six months. At that stage the SBA microloan program, which sets no minimum time in business, is the main exception.
Hard to reach if you report under $10,000 a month. That describes most of this group: 63.1% report under $10,000 a month. Most online lenders look for $10,000 a month or more before they will consider an application.
Not realistic in most cases: bank term loans and SBA 7(a) loans, which typically want two or more years of trading.
One exception worth knowing. The SBA's microloan program, per the SBA, lends up to $50,000 and sets no minimum time in business. It runs through nonprofit intermediaries and is slower. Our microloan guide covers how it works.
Before you apply anywhere
- Separate the equipment from the rest. If part of what you need is a specific asset, finance that part as equipment. It is usually cheaper and easier to approve than the same amount unsecured.
- Open a business bank account now, if you have not. Lenders read business deposits. Months of clean deposits in a business account are the history a young business can build fastest.
- Ask for what the business can carry. Nearly half of first-year applicants ask for more than $50,000. A smaller request tied to a specific use is easier to place.
- Do not stack applications. Several hard inquiries in a short window can lower the score the next lender reads.
How TopFunders.ai fits
TopFunders.ai is not a lender and not a loan broker. We compare what you tell us against what our vetted funding partners will consider, and introduce you to the partners ready to make your business an offer. Which partners you are put in front of is decided using real approvals from businesses like yours. Checking your options doesn't affect your credit, and we never ask for your Social Security number or Tax ID to match you.
Being matched is an introduction, not an approval. The partner reviews your application, sets any amount, rate and terms, and decides whether to fund you. A match is not guaranteed, and for a business under six months it is unlikely. How we match explains the process.
See what your business qualifies for
Frequently asked questions
Can a startup get a business loan?
Some can, usually through equipment financing, revenue-based products or the SBA microloan program. Without revenue or a trading history, most lenders will not consider the application. An asset that secures the loan is the most reliable way in.
How long do I need to be in business to get a loan?
Six months is a common minimum among online lenders, and a year or more widens your options. Two or more years typically opens bank and SBA lending.
What is the easiest loan for a new business?
Equipment financing, if you are buying a specific asset, because the asset secures it. Revenue-based financing asks less of your history but costs far more. The SBA microloan sets no minimum time in business.
Why do new businesses borrow for equipment?
In our data, 37.1% of first-year applicants are borrowing for equipment, more than for any other purpose. A new business often needs the asset before it can earn, and equipment financing is one of the few routes that does not lean on a trading history.
Will checking my options hurt my credit?
No. Checking your options doesn't affect your credit. A lender may run its own check later, but only if you choose to apply with them.
Figures in the table are shares of applicants in business under a year, from more than 1,000 funding applications to TopFunders.ai. They are self-reported and not verified, and they describe businesses that applied, not businesses that were approved or funded. The overall figures and method are in our small business funding study; this page cuts the same applications to one group. Market rates and requirements are typical ranges, not any lender's published terms. SBA microloan terms are per the SBA.