Guide · Whether you'll qualify
You have no revenue yet. Who will fund a business before it opens?
By Alex Makowski Published
Not a revenue-based funder, including the ones Business Loans for America works with: they lend against bank deposits a business that has not opened does not have. Before revenue, the realistic sources are your savings and people you know, an SBA microloan of up to $50,000 through a nonprofit lender, a CDFI loan, and equipment financing on your personal credit.
In this guide
- 01Why revenue-based funding is closed until you have deposits
- 02Who does fund a business before it opens
- 03The SBA microloan, in plain terms
- 04What to do in the months before you can apply here
- Won't affect your credit
- Free, no obligation
- Up to $500K
01
Why revenue-based funding is closed until you have deposits
A merchant cash advance or a working capital loan is sized from your business bank statements: how much comes in each month and how steadily. With no statements there is nothing to size it from, and six months of deposits is the floor at nearly every revenue-based funder.
That includes the funders in our network. We would rather say so on this page than take an application that cannot be placed. Open a business account on the first day, put every dollar of revenue through it, and at six months the products we place start to open up.
02
Who does fund a business before it opens
Each of these lends against something other than your deposits: your plan, your personal credit, the asset, or your relationship with the lender. None is placed by us.
| Source | Open before revenue? | Typical size | What it rests on | Do we place it? |
|---|---|---|---|---|
| Your savings, family and friends | Yes | What you and they can spare | Trust; put any loan from family in writing, with a repayment schedule | No |
| SBA microloan | Yes; the program exists to help businesses start up and expand | Up to $50,000; the average is about $13,000 | The intermediary lender's own requirements; it makes the credit decision and sets the terms | No |
| CDFI loan | Often, depending on the lender | Varies by lender | A plan and a fit with the lender's community mission; many pair the loan with advising | No |
| Equipment financing | Sometimes, through startup programs | The price of the equipment, less the down payment | The equipment, a larger down payment, your personal credit and your experience in the trade | Yes, though a business with no history is the hardest file to place |
| Merchant cash advance or working capital loan | No | Sized from months of deposits | Your business bank statements | Yes, from about six months of deposits |
03
The SBA microloan, in plain terms
SBA does not lend the money itself. It funds nonprofit, community-based intermediary lenders, and they lend up to $50,000 to businesses that are starting up or expanding. SBA puts the average at about $13,000, rates generally between 8 and 13 percent, and the longest term at seven years.
The money can go on working capital, inventory, supplies, furniture, fixtures, machinery and equipment. It cannot be used to pay existing debts or to buy real estate. Because each intermediary sets its own requirements, the first step is finding the microlenders that serve your area and asking what they need.
04
What to do in the months before you can apply here
Six months of steady deposits changes the answer. That is when a working capital loan or an advance becomes possible, and an application here can go to funders that write your trade in your state.
- Open a business bank account before the first sale, and keep personal spending out of it. Those statements are your future application.
- Finance the equipment you need against the equipment, so working capital is not spent on it later.
- Ask your landlord about a tenant improvement allowance or a rent-free period before you sign the lease, not after.
- Talk to your local Small Business Development Center about a plan and the lenders near you that fund startups.
- Keep your personal credit clean. Before the business has a history, it is most of what a lender can read.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Can I get a merchant cash advance before my business opens?
- No. An advance is a purchase of future sales and is sized from your bank deposits, so a business with no sales has nothing to advance against. Most funders want about six months of deposits.
- Does the SBA lend to startups?
- Through its programs, yes. SBA microloans of up to $50,000 are made by nonprofit intermediary lenders to businesses that are starting up or expanding; the lender, not SBA, decides and sets the terms.
- Is it a red flag if someone offers funding to a business with no revenue?
- Look hard at it. A legitimate lender needs something to lend against. If the offer rests on nothing but an upfront fee, it is the pattern of an advance-fee scam.
Guides
More on whether you'll qualify
The revenue floor
Around $10,000 to $15,000 a month in deposits opens most doors. Under that, one product still does.
Overdrafts and negative days
More than three returned items in ninety days downgrades a file. The fix takes one clean quarter.
Already have a loan
A bank loan, an SBA loan or an equipment note rarely blocks you. A second advance is a different question.
After a bankruptcy
Banks want three to five years. Revenue-based funders look at a discharged case after one to two.
Reading your statements
Seven things, in the order they are checked. Most declines are decided by the third.
Under six months
Honestly, mostly no on deposits. Equipment financing and the owner's own file are the two doors that open.
Sources
- U.S. Small Business Administration — MicroloansSmall loans the SBA funds through nonprofit, community-based intermediary lenders. An option we do not place.
- U.S. Treasury CDFI Fund — CDFI CertificationWhat makes a lender a certified Community Development Financial Institution, from the Treasury office that certifies them.
- FTC — Report FraudWhere to report advance-fee and business-funding scams.
One application, every lender we work with
Find out what you qualify for before you need it.
Eleven questions, about two minutes. You see offers side by side and take one, or none.
- Won't affect your credit
- Free, no obligation
- Decisions usually inside 24 hours
- Up to $500K