Starting a new business is hard. You need money to get started. But most banks won't give loans to new businesses. They think new businesses are too risky.
Upstart is different. Upstart uses technology to give loans to new businesses. Upstart looks at more than just your credit score. This guide will explain everything you need to know about Upstart business loans.
What is Upstart?
Upstart is a company that gives loans to new businesses. Upstart started in 2012.
Upstart uses technology to decide who gets loans. Upstart looks at your credit score, income, education, and work experience. This helps them decide who is likely to pay back the loan.
Upstart offers:
- Fast loan decisions - You can get funded quickly in just 1-3 days.
- Loans based on potential - Upstart looks at your future potential, not just your credit.
- Competitive rates - Rates from Upstart are competitive with banks.
Types of Upstart Business Loans
Upstart offers term loans and lines of credit:
Term Loans
- 1-5 year payback terms
- Fixed monthly payment
- Borrow $3,000 to $500,000
Term loans provide a lump sum of cash upfront. You pay back a fixed amount monthly over 1-5 years.
Lines of Credit
- Revolving credit lines
- Borrow as needed
- Borrow $3,000 to $500,000
Lines of credit let you borrow as needed. You only pay interest on what you use. It's revolving credit that renews.
Requirements to Get an Upstart Business Loan
You need good personal credit to qualify for an Upstart loan:
- Personal credit score of 600+
- No recent bankruptcies or public records
- At least 2 years of employment and education history
Upstart also requires:
- Time in business - 1+ years for term loans, 6+ months for lines of credit
- $100,000+ in yearly business revenue
- Company must be based in the United States
Applying for an Upstart Business Loan
Applying with Upstart is fast and easy:
Apply Online - Complete the online form with your info. This takes around 10 minutes.
Connect Your Accounts - Link your business accounts like sales, expenses, and payroll. This helps Upstart review your finances.
Get Your Rate - Upstart will provide a rate offer without hurting your credit score.
Review and Sign - If you accept the offer, review and sign your loan agreement digitally.
It takes 1-3 days to get your loan once you complete the application.
You can also work with an Upstart loan representative for help applying.
Upstart Business Loan Rates and Fees
Interest rates with Upstart may be from 7% to 35%. Your rate depends on your:
- Credit profile
- Income and assets
- Time in business
- Business revenue
Rates start higher for newer businesses. But they can decrease over time as your business gets established.
Upstart charges an origination fee of 1% - 6% of the loan amount. This fee is taken out of the loan amount.
You can get a 0.25% rate discount for enrolling in autopay.
Also Read:
Is a small Business Loan installment or revolving
Sky Small Business Loans: A Complete Guide for SMB Owners
Tips for Getting Approved
Follow these tips to boost your chances of getting approved:
- Have Excellent Personal Credit - This is key for approval with Upstart. Maintain a credit score over 700.
- Show Revenue Growth - Showing rising business revenue growth improves your chance of approval.
- Have Experience in Your Industry - Experience shows you can operate a successful business.
- Make a Large Down Payment - Putting down 20% or more improves your chance of getting approved.
- Take an Upstart Course - Upstart offers online courses that may help you get approved.
Pros and Cons of Upstart Loans
Pros
- Fast funding in as little as 1-3 days
- Focus on future potential, not just credit
- Competitive interest rates
- Easy online application
Cons
- Strict eligibility requirements
- Origination and other fees
- Short 1-5 year payback terms
Alternatives to Upstart Loans
Upstart isn't your only option. Here are alternatives to consider:
Traditional Bank Loans
Banks offer term loans and lines of credit too. But they mainly look at personal credit and time in business. Startups often don't qualify.
SBA Loans
The Small Business Administration guarantees loans made by lenders. But the process is lengthy and you still need good credit.
Invoice Financing
Get a cash advance on unpaid customer invoices. This helps with cash flow but has high rates.
Merchant Cash Advances
These advances provide a lump sum in exchange for a percentage of future sales. The amount depends on monthly sales volume.
Each lending option has pros and cons. Make sure to compare rates, fees, eligibility and funding time.
FAQs About Upstart Loans
How long do I have to pay back an Upstart loan?
Upstart term loans can be paid back in 1-5 years. Lines of credit may have ongoing monthly payments.
Can I get an Upstart loan for a brand new startup?
Most likely not. Upstart wants to see that your business has been operating for at least 6-12 months to qualify.
Does Upstart do a credit check?
Yes. Your personal credit history is an important factor in the approval decision. Checking your credit is part of the process.
Is there a prepayment penalty for paying off an Upstart loan early?
No. Upstart does not charge any prepayment penalties if you pay off your loan early.
What documents do I need to apply for an Upstart loan?
You'll need your Social Security Number, driver's license, and documents that verify your income, expenses, and business ownership.
This covers the key things to know if you need financing to start or grow your business. Upstart offers a unique lending model that looks beyond just credit scores to fund young businesses. Make sure to explore all your options to find the best loan or financing for your needs.
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