Term Loan for a Startup

Direct answer: a brand-new startup usually cannot get a traditional bank term loan, because banks underwrite on two or more years of tax returns, business credit, and proven profit that a new company does not have yet. If your business has started taking in money, the realistic path is revenue-based funding through a marketplace: instead of leaning on time-in-business or a strong FICO, funders look primarily at your business bank-deposit history and monthly revenue. If real money is landing in your account each month, you can often be considered within your first several months of operation, with amounts starting around $10,000, FICO thresholds near 500, and decisions frequently in 24 to 48 hours. Nothing here is guaranteed, but the qualification math is different from a bank's, and that difference is what makes funding workable this early.

Why a traditional term loan rarely fits a brand-new startup

A term loan is a fixed lump sum repaid over a set period with scheduled payments. It is an excellent structure once a business is established, but the underwriting is backward-looking by design. A bank or SBA lender typically wants two or more years in business, filed business tax returns, a documented history of profitability, and often personal credit in the high-600s or better. A company that opened a few months ago has none of that record to show, so the file is declined not because the idea is weak but because there is nothing to underwrite.

There are a handful of genuinely startup-friendly term products worth pursuing in parallel: SBA microloans (up to $50,000, often through nonprofit community lenders), a secured loan backed by collateral or a cash deposit, a loan with a strong co-signer, or borrowing against personal assets. Each shifts the risk off your nonexistent business history and onto something concrete, which is the only way a true term loan works this early. If you want to understand the bank track in full, the SBA loans guide lays out where a new business can and cannot qualify. If none of those fit, revenue-based funding becomes the realistic option because it underwrites the one thing a working startup actually has: recent deposits.

Does this fit? A quick decision framework

Revenue-based funding solves the no-history problem, but it is a specific tool, not a default. Use this to decide before you spend time applying.

This works best when:

• Your business is already operating and depositing real revenue each month, even if you are only a few months in.
• You need capital for a specific, revenue-generating purpose with a short payback — inventory you will sell, equipment that adds capacity, or bridging a known receivable.
• Your deposits are steady enough that a fixed daily or weekly debit would not tip the account negative in a normal week.
• A bank has already declined you for being too new, and speed matters more than getting the lowest possible rate.

Avoid this when:

• You have little or no revenue yet — there is nothing for a revenue-based funder to underwrite, so pursue SBA microloans, a secured loan, or a co-signer instead.
• The money would cover ongoing losses or an open-ended, speculative bet rather than a defined need. Daily debits on top of a shrinking balance compress cash flow fast.
• Your revenue is highly seasonal or lumpy and a slow stretch would leave the debit unaffordable.
• You can wait. A few more months of clean deposit history often unlocks cheaper options, including a real term loan or a business line of credit.

What revenue-based funding looks at instead

A revenue-based or MCA-style marketplace underwrites the present, not the past. The core inputs are your recent business bank statements (usually the last three to six months), your average monthly revenue, and how steady and frequent your deposits are. Your credit score matters far less here: many funders will consider a FICO around 500 or above, because the deposit history is doing most of the work in the decision. For the broader mechanics of how this pricing and repayment model works, the revenue-based financing guide and the merchant cash advance guide go deeper than a single page can.

For a brand-new startup, this is the key unlock. If your business has been operating and depositing for even three to six months, you may have enough of a bank record to be considered, whereas a bank would still see you as too new. The tradeoff is that funders want to see that the money coming in can comfortably support the repayment coming out, so consistent deposits matter more than one big month.

These figures are typical ranges, not promises. Every funder sets its own thresholds, and meeting a minimum is not the same as being approved.

What underwriters actually look at

Because underwriting here runs on your bank statements, it helps to know exactly what a reviewer scans for. The decision is less about your business plan and more about the shape of your account.

• Average monthly deposits. This is the anchor number and roughly sets the amount you can be offered. Many marketplaces look for around $10,000 or more in monthly deposits as a starting point.
• Deposit regularity and count. A funder would rather see steady weekly deposits totaling a modest month than one large deposit followed by silence. Frequency signals that repayment can be supported week to week.
• Negative-balance and overdraft days. Frequent overdrafts or a chronically low balance are among the fastest ways to get declined, because they suggest the account cannot absorb a new debit. A handful of clean months matters here.
• Existing advances (position). If you already have a merchant cash advance, underwriters look at how many and how much is being debited daily. Too many stacked positions is a common decline. If existing debits are the problem, the fix is restructuring to lower the payment, not paying anything off — more on that below.
• A dedicated business bank account. Revenue run through a personal account is hard to read and weakens the file. Route income through a business checking account.
• FICO as a backstop. Credit is secondary, but a very low score or a recent bankruptcy can still limit which funders engage.

On the question of an ITIN: many revenue-based funders can work with owners who file taxes with an ITIN rather than an SSN, because approval leans on the business's deposits rather than a personal credit profile tied to an SSN. Requirements vary, some still require an SSN or extra documentation, and this is not legal or immigration advice. The honest answer is that it is often possible but never universal, so apply and let the funder confirm what they need.

How repayment hits your bank balance

This is where revenue-based funding differs most from a bank term loan, and it is the part a startup owner should model carefully. Instead of one monthly amortized payment, many revenue-based products are repaid through fixed daily or weekly automatic debits pulled straight from your business account, over a shorter term measured in months rather than years.

The practical effect is that repayment shows up on your balance constantly, not once a month. A daily debit means five smaller withdrawals a week, every week, regardless of whether that particular week was busy or slow. For a young business with a thin cushion, that steady outflow is the real constraint — not the headline amount. Before accepting anything, look at your worst recent week, not your best, and confirm the account would still clear the debit and cover payroll, rent, and suppliers on top of it. Pricing is usually expressed as a factor rate rather than an APR, so always ask for the exact debit amount, the frequency, the term length, and whether there is any discount for paying early, then judge it against your slowest weeks rather than an average month.

If you already carry an advance and the daily debits are choking cash flow, the relief move is to lower the payment — restructuring into a longer or smaller debit so more revenue stays in the account. That is a payment-reduction strategy only; it does not pay off, buy out, or settle the existing balance, and any funder who frames it that way is misrepresenting it.

Documents you need and a realistic timeline

The revenue-based process is built for speed, which is part of why it suits a startup that needs working capital now rather than in six weeks. Have these ready as PDFs before you start so nothing stalls the file:

• The last 3 to 6 months of business bank statements (the core document).
• A completed one-page application with basic business and owner details.
• A voided business check or bank verification for funding and debit setup.
• Government-issued photo ID for the owner; an SSN or ITIN depending on the funder.
• Proof of business ownership or registration, and occasionally a recent invoice or processing statement if you take card payments.

A realistic timeline looks like this: submit the application and statements, and underwriting reviews your deposits and average revenue, often returning a decision within a day. If approved, you review the offer, sign, and funds can land in as little as 24 to 48 hours. The variable that most often slows things down is document turnaround on your side — incomplete or missing statements — so gathering everything up front is the single biggest thing you control. A marketplace helps because one application can be reviewed by multiple funders, improving the odds of matching an early-stage file to a funder whose thresholds fit.

Example scenarios and amounts

These are illustrative examples to show how the structure tends to work. They are not offers, quotes, or predictions of what you specifically would receive, and the amounts scale with deposits rather than following any fixed formula.

Read the last column as the thing that hits your balance. The e-commerce shop depositing about $25,000 a month and approved for around $18,000 would see a fixed weekly debit leave the account every week for roughly eight months. The owner's job before signing is not to admire the funded amount but to confirm the business can absorb that recurring debit even in a slow week. Funded amounts generally grow with your deposits, which is why building steady revenue is the most direct way to qualify for more, and cheaper, capital later.

Common mistakes to avoid

Most declined or regretted deals trace back to a short list of avoidable errors. Watch for these.

• Mixing personal and business money. Running revenue through a personal account makes the file unreadable and often kills it outright. Separate the accounts before you apply.
• Applying during your worst month. If you have control over timing, apply after a stretch of clean, regular deposits, not right after a run of overdrafts.
• Judging affordability on an average month. Daily and weekly debits do not care about averages. Model your slowest recent week and confirm the debit still clears.
• Stacking advances to plug a gap. Taking a second or third advance to make debits on the first is how young businesses spiral. If payments are the problem, seek a lower payment through restructuring instead.
• Not asking for the full terms in writing. Get the exact debit amount, frequency, term, factor rate, and any early-payoff terms before signing. Vague answers are a red flag.
• Using short-term capital for a long-term or speculative need. This funding is a bridge for a specific, revenue-generating purpose, not a substitute for equity or a cure for ongoing losses.

The honest tradeoffs and how to strengthen your file

Revenue-based funding removes the no-history barrier, but it is not free money and it is not right for every situation. The balanced view: factor-rate pricing usually costs more than a bank term loan's APR, the daily or weekly debits press on a young account harder than a monthly payment would, and the terms are short so each debit is meaningful. Used well — for a defined, short-payback, revenue-generating need — it also builds the deposit and repayment history that unlocks cheaper options later. Used to cover losses, it compresses cash flow quickly.

Because underwriting is about your statements, a few weeks of preparation meaningfully improves both your odds and your offer:

• Route all revenue through one business account so your deposit history is clean and easy to read.
• Avoid overdrafts and negative-balance days in the months before applying, and keep a small buffer.
• Keep deposits regular rather than letting money pile up outside the account and dropping it in at once.
• Have your last 3 to 6 months of statements ready as PDFs so you can submit without delay.
• Know your real numbers — average monthly deposits and typical daily balance — so you can pick an amount you can comfortably repay in a slow week.

Heading into 2026, more early-stage owners are pairing this route with a business line of credit or working capital facility once they have six to twelve months of clean history, so treat the first deal as a stepping stone, not a destination. A marketplace does not guarantee approval, but for a brand-new startup it is usually the most realistic route to a usable amount of capital in a matter of days.