In short
- Most lenders want to see operating history. The lenders in our network need at least 1 year in business and about $20,000 or more in average monthly deposits.
- True start-ups have real options: SBA microloans in the US, the CSBFP in Canada (which covers start-ups), public and non-profit lenders, equipment financing with a down payment, and personal savings.
- Business grants exist but are narrow; they rarely fund the general cost of starting a business.
- Use the first year to build the record lenders look for, so better options open up sooner.
If you are starting a business, or have only been open a few months, you have probably noticed that most business financing is built for companies that already have a track record. That is not a judgment on your idea. It is how lenders measure risk: they look at what a business has already done, and a new business has not done much yet.
We would rather tell you that plainly than let you apply for things that will not work. This guide explains why history matters so much, what options genuinely exist for start-ups in the US and Canada, and what you can do now so that more options open up later. It is general information, not legal, tax or financial advice.
Why lenders want a track record
Most business lenders make decisions from evidence: bank deposits, tax returns, financial statements and payment history. Our guide on how much your business can borrow shows how they size an offer from revenue and cash flow. A business with no revenue history gives them nothing to size from, so the risk falls back on the owner's personal credit and savings.
In practice, many lenders want to see 6 to 12 months of steady revenue before they will consider a business. The lenders in the CELER Funding network set the bar at at least 1 year in business and about $20,000 or more in average monthly bank deposits, among other criteria such as credit. Each lender sets its own rules, but if you are below those levels, we will say so rather than waste your time.
That still leaves real paths. They are just different paths.
Options in the United States
SBA microloans
The SBA's microloan program is one of the few federal programs explicitly aimed at helping small businesses start up and expand. According to the SBA:
- Loans go up to $50,000, and the SBA says the average microloan is about $13,000.
- They are made by intermediary lenders: nonprofit, community-based organizations that also offer management and technical help.
- They can pay for working capital, inventory, supplies, furniture, fixtures, machinery and equipment, but not existing debts or real estate.
- The maximum repayment term is seven years, and the SBA says rates vary by intermediary, generally between 8% and 13%.
Because the intermediaries also provide coaching, a microloan can come with useful support. Expect them to ask for a business plan and to look at your personal credit and experience.
SBA 7(a) loans
The SBA's 7(a) program is mainly used by established businesses, but it can finance a business purchase or a well-prepared new venture where a lender is willing. A new business will usually need a strong plan, relevant industry experience, good personal credit and a meaningful contribution of its own money. See our guide on SBA 7(a) vs 504.
Local help
The SBA's local assistance network, including district offices and resource partners, offers free or low-cost counselling on business plans and financing. It is a good first stop before you approach any lender.
Options in Canada
The Canada Small Business Financing Program
The CSBFP is unusual in that start-ups are expressly eligible. According to ISED's program FAQ, most start-ups and existing small businesses in Canada with gross revenues of $10 million or less can apply, farming excepted. Loans are made by banks, credit unions and caisses populaires, which decide who gets one. The program can finance equipment, leasehold improvements, real property and, within limits, working capital and intangible assets such as franchise fees. Our guide on the CSBFP explained covers the limits, rate caps and fees.
A start-up still needs to convince the lender: expect to present a business plan, projections, your own contribution and your personal credit history.
Public and non-profit lenders
Canada has public and non-profit organizations that work with new businesses. BDC, the federal Crown corporation for business development, and Futurpreneur, a national non-profit focused on young entrepreneurs, both publish financing and mentoring programs for newer businesses. Their eligibility rules, amounts and terms change, so check their official sites directly for current details. Regional development agencies and community futures organizations may also have programs in your area.
Options that work on both sides of the border
Personal savings and your own contribution
Almost every start-up is funded at least partly by the owner. Lenders see your own money in the business as a sign of commitment, and most start-up loans require some contribution. Keep business and personal money separate from day one: open a business bank account and run all revenue through it.
Equipment financing with a down payment
Equipment financing is sometimes possible for newer businesses, because the equipment itself secures the loan. Expect the lender to lean on your personal credit and to ask for a larger down payment than an established business would pay.
An illustrative example: a new landscaping business wants a $60,000 truck and trailer. The lender asks for 20% down, which is $12,000, and finances $48,000. At an illustrative 14% a year over 48 months, the payment is about $1,312 a month, or about $62,960 in total. Before signing, the owner should be confident the business can cover $1,312 a month even in a slow month, because the payment starts whether or not the customers do. Our guide on equipment financing vs leasing covers the choice between owning and leasing.
Grants
Grants are real, but narrow. The SBA's own grants page states that the SBA does not provide grants for starting and expanding a business; its grants go to areas like research and development, exporting and organizations that support entrepreneurs. Canadian grants work similarly: most are tied to a specific purpose, industry, region or group, such as hiring, research, exporting or training, and many require you to spend first and be reimbursed. They are worth searching for, but rarely enough to fund a launch. Be wary of anyone who charges a fee to "guarantee" a grant.
Customer and supplier terms
Deposits from customers, supplier credit terms and pre-orders are not financing products, but they are how many new businesses fund their first months without borrowing. Negotiating 30-day terms with a supplier is, in effect, a free short-term loan.
What to avoid
- Putting the whole launch on personal credit cards. Rates are high, and the debt stays with you if the business struggles.
- Anyone who promises guaranteed approval for a start-up. No legitimate lender can promise that before seeing your file.
- Upfront fees to a broker. CELER Funding never charges business owners a fee. Be cautious with anyone who asks for money before you are funded.
- Borrowing to cover ongoing losses. If the business loses money every month, borrowing makes the hole deeper.
What to do in the meantime
The most useful thing you can do in your first year is to build the record lenders will ask for. When you reach a year of history, you want every document to tell a clean story.
- Register properly. Get your EIN (US) or Business Number (Canada), and your NEQ if you are in Quebec. See our documents checklist.
- Run all revenue through one business bank account. Lenders size offers from business deposits. Cash that never reaches the bank does not count.
- Avoid overdrafts and returned payments. They are the first thing a lender notices on a statement.
- Keep monthly bookkeeping. A current profit and loss statement and balance sheet make a first loan much easier.
- File taxes on time and keep remittances current.
- Protect your personal credit. For a young business, the lender is largely lending on you.
- Build small credit relationships. A small business credit card or supplier account, paid on time, starts a history.
- Know your numbers. Lenders in our network look for about $20,000 or more in average monthly deposits. Tracking your own average tells you when you are getting close.
When you are ready
Once you have a year of history and steady deposits, far more options open up: working capital, lines of credit and term loans. Our guide on line of credit vs term loan can help you decide which comes first.
CELER Funding is a free referral service, not a lender. If you are close to our network's minimums, or you are not sure, tell us about your business anyway. We will say honestly whether we can help now, and if not, what to work on. The lender makes every credit decision and sets the terms. We never charge you a fee; lenders may pay us a referral fee. See compare, or apply to get matched.