Startup Business Loans in 2024
Startup Business Loans in 2024
SBA Startup Loans
Startup business loans is a popular loan purpose in SBA lending. While it varies by year, startup loans account for just under 20% of all SBA 7(a) loans and nearly 40% of the franchise funded loans over the last year.
Banks vary greatly in experience and appetite for startup business loans. However all banks like strong borrowers and a borrower’s net worth, available collateral, and business experience carries the most weight with most banks when approving startup loans. The required down payment can also be influenced by the borrower’s PFS (personal financial statement) with the weaker the PFS the higher the percentage required.
Generally speaking a franchise startup is viewed more favorably than a non-franchise in terms of SBA lending. Over the last trailing 12 months there were 47,338 SBA 7(a) loans funded of which 3,680 were franchise branded. Of the 6,817 funded startup loans over this period a total of 2,133 were franchise startups. So while franchises accounted for 8% of the total funded loans franchises accounted for 31% of the funded startup loans.
Bank Experience With Startup Loans
Securing a loan as a startup can be particularly challenging. Traditional lenders often hesitate when it comes to startups. Some lenders won’t even lend to startups. Most borrowers have no idea which banks are startup friendly with their business lending. LoanBox takes care of this for you.
SBA 7(a) Startup Loans in FY 2024
752 banks funded 6,817 startup loans in 465 industries. Of these 292 lenders funded 2,133 startup franchise loans for 744 different brands in 170 different industries.
SBA startup loans were funded in all 50 states with borrowers from 2,498 cities. 48 states had a funded franchise SBA loan for borrowers from 1,085 different cities.
For FY2024 startup loans represented 17% of all funded dollars and 39% of franchisee funded dollars.
59% of banks who funded a loan in last 12 months funded a startup loan but only 23% funded a franchise startup.
Average loan amount for a startup in FY2024 was $518,633 with the average franchise funded at $480,290.
772 startup loans funded over $1 million with 160 startup franchisee loans over this amount.
Top Industries for SBA Loans to Startup Businesses
FY2024: There were 465 industries having a funded loan to a startup business over 2 years old and 170 industries for franchise startups.
Geography of SBA Funded Startup Loans
SBA startup loans were funded in all 50 states with borrowers from 2,498 cities. 48 states had a funded franchise SBA loan for borrowers from 1,085 different cities.
Top 20 Franchise Brands for Startup Loans
For all funded franchise startup loans in FY 2024 there were 2,133 loans to 698 different franchise brands with an average loan amount of $480,290.
Out of State Lenders Dominate Startup Loans
85% of startup franchise dollars are funded by out of state lenders.
57% of non-franchise startup loan dollars are funded by out of state lenders
66% of all startup loan dollars are funded by out of state lenders
85% of startup franchise loan dollars are funded by out of state lenders.
90% of startup franchise loans under $150K are out of state bank funded
77% of franchise startups over $1M are funded by out of state lenders.
Startups and down payments for startup loans
While the SBA previously mandated a minimum 10% equity injection for startups, this requirement was waived in 2023. However, despite the SBA's allowance for 100% financing for startups, not all lenders have adopted this policy. Many lenders will require a minimum 10%, 20% or 30% equity injection (down payment) for startups. For franchises this amount is often offset by the franchise and legal fees already paid. Down payments are typically paid from a borrower’s savings, from a family member gift, and if applicable (and appropriate for the borrower) a ROBS plan type program where you utilize a retirement account to fund a new business launch.
This article is authored by Darin Manis, founder of LoanBox.
Source: All SBA 7(a) data shared is based on all SBA lending from all sources and not from SBA lending through LoanBox. SBA data and reports are not from the SBA but from SBA data from the lending analytics platform developed and maintained by SBADNA Analytics. SBADNA and LoanBox are both owned by the same parent company FuseSync LLC. LoanBox and SBADNA does not validate or verify the data released by the SBA and provides no warranty of data accuracy or completeness.
Top Lenders Targeting Startup Businesses and Franchise Startups
LoanBox has the top franchise lenders startup loans for hundreds of franchise brands. For qualified non-franchise startups when you complete your loan package the LoanBox algorithms go to work and you instantly see the SBA and conventional lenders you match 100% of their dozens of criteria variables.
Select one or all of the lenders to access your LoanBox package from their LoanBox. Receive loan proposals, select the winner and continue the process to closing, receiving alerts whenever the loan advances to the next process stage.
Or you can have a LoanBox Advisor handle everything for and with you navigating the process to funding.
Use LoanBox to get your big small business startup loan done right with the right lender the first time around.
