How to Get a Startup Loan with No Revenue as a New Business

If you are a brand new business and you’re looking to get a startup loan, you don’t have any revenue yet. You might think you’re not able to get approved for business credit. But believe it or not, you can.

Have you heard this before? You need 100K in revenue first. You need to be in business for 2 years. You can’t get funding if you’re new. All of that is false.

Let’s explore what you do need.

The Real Story Behind Startup Loan Denials

So, the story goes like this. You go into a bank or you apply online and you get denied. You apply at Chase and you get a small credit limit approval.

You think it’s because you’re new or you don’t have any revenue yet, but the real reason is that you’re not talking to the right lenders.

Certain lenders are startup friendly. And what that means is that you can get approved for funding, including business loans with no revenue, even if your business is brand new.

Banks that specialize in this are typically community banks, credit unions, and small local lenders. They look at other things like how your business is set up, what your business credit score is, what your personal credit score is, and what your relationship is with that bank.

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• Real-World Examples of Startup-Friendly Lenders

For example, TD Bank does a $25,000 business loan for brand new businesses that don’t have any revenue. You do need to build up your business credit score and open a business checking account with them prior to making the application.

Another example would be PNC. My friend literally created an LLC that morning, got the formation documents, EIN letter, and walked into the bank, opened the business checking account, and got approved for a business credit card in the same day.

Yes, you could literally start this today.

Step-by-Step Guide to Securing Funding

Let me break down the steps to take.

Step 1: Create and Set Up Your Company Properly

• So, the first thing you want to do if you haven’t already is create your company. LLC’s or corporations work really well.
• Your business needs its own presence. So you need a phone number, an address, and a website. Even if it’s basic for your business.
• Phone number should not be your cell phone, by the way. It should be a separate number.
• What we’re doing is setting up our company in such a way that banks are able to lend to us.
• The big idea here is rather than just apply with national banks; we’re going to apply with what we call backyard banks. They’re a lot easier to get funding with and way more startup friendly.
• So after you have your company created, take your formation documents and your EIN letter, go into a bank and open the business checking account.

Step 2: Boost Your Business and Personal Credit Scores

Now for most people before you apply, we want to go to step two. Step two is to boost up your business and your personal credit score.

A lot of banks use what’s called SPSS score. That’s small business scoring service. That is a blended score between Experian personal and Experian business.

You might have two questions. How do I boost up that score? And how do I check what that score is?

You can do both if you want through a service called Nav. Nav Prime will boost up your business credit score with all three business credit bureaus including Dunham Bradstreet, Experian, and Equifax.

It’ll also tell you how many trade lines you have reporting on your business side and what your SPSS score is.

Now, pay attention, this is how you boost up your scores. Nav Prime also has what’s called NavP Prime card. You can get that card in your business name without a personal guarantee required.

And that card plus the Nav Prime service will both boost up your business credit score, including on Experian. So now you’re paying for one service and it’s giving you two trade lines that boost up your business credit score.

There are other ways to boost up your business credit score, including using services like ECredible or even some net30 vendors that you could use.

• Boosting Your Personal Credit Score

Now, how do we boost up our personal credit score? Assuming we’re not using a credit partner, but we’re actually using our own personal and business credit score to get this business loan.

We want to look at our credit utilization. Now, one way, of course, would be to pay down our debt. That would boost up our score.

Another thing would be transferring our debt over from us to our business. That’ll also open up your personal credit utilization.

But what if you don’t have the money to pay down your debt and you don’t have the business credit yet to make that balance transfer?

What you can do is called the authorized user technique. So when my wife was looking to get some business loans for her new company, I added her as an authorized user to my Amx card has a $0 balance and a $20,000 limit.

What that did was a handful of things.

1. Number one, it opened up her personal credit utilization, which very quickly improved her credit score.
2. The other thing it did is it added a season trade line to her personal credit profile. I’ve had that AMX card for nearly 20 years. So now she has a trade line on her personal credit report that’s nearly 20 years old.
3. And lastly, that credit card that I added her as an AU to has a $20,000 limit. That’s a very high credit limit. So she opened up her utilization. She has a seasoned trade line and she has a high credit limit showing on her personal credit report.

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Step 3: Apply In Person and Build Relationships

A lot of other gurus out there on YouTube are going to be telling you to do credit stacking or apply online. This process simply doesn’t work for startups and new businesses.

You have to shake hands and build a relationship. Get away from the lazy method of applying online at midnight from your cell phone in bed.

Wake up a little bit earlier, dress a little bit nicer than I am today, and go to the bank. You already opened up the business checking account. So, you do have points of contact at this bank.

And typically, you want to find the vice president of business lending or the customer relationship manager for businesses. This person is generally regional and they’re in charge of different branches.

Their job is to meet up with you at the bank, your office, at a coffee shop, and help you grow your business.

Your job is to put forward a good impression and build a long-term profitable relationship with them.

When it comes time to apply, if things don’t go great, you now have a point of contact to talk to that could perhaps turn the decision around if you get denied or share with you what steps you need to take to get approved.

Do you see how if you applied online, you have no point of contact to talk things out with?

Not to mention the biggest benefit of applying in person is you have an advocate at the bank that can help you get approved.

More Startup-Friendly Banks and How to Find Them

• The first bank is Key Bank. Key Bank offers no dock. That means you don’t have to show tax returns or financials. Business lines of credit in business lending that include business credit cards.
• Next up, we have Affinity Federal Credit Union. They also offer no dock business funding.

Now, more important telling you the name of the banks is how did we find those banks? It’s the old teach a man how to fish versus feeding him for a day.

Simple Steps to Find Startup-Friendly Lenders

So, here are some simple steps that you can do to find these startup friendly banks.

Now, you can just go to Google and type in top SBA lenders and then your state.

This is one of the many methods that I like to use because what it’s going to do is show you the top lending banks in your state that are heavily lending to small business owners like you.

Every month, this database is updated from the SBA and it is a gold mine for startup business funding, especially if you don’t have any revenue yet.

For example, you can see Affinity Federal Credit Union is on this list.

But take a look at this as well. We have here the UCEDC. This is the Union County Economic Development Corporation. I know that’s a mouthful, but they have these in every single state.

Their job is to help the small business community get funding. And I don’t hear anyone else talking about this.

Find these types of corporations in your community. Follow them on all the socials. Visit their events. Give them a call and just introduce yourself and listen to the programs that they offer.

Not only do they have a lot of grant programs, but they also do small business lending.

In fact, I’ve had two students that work with me get $50,000 from this exact organization.

As you can see, this works really well. You just need to spend the time to build up your foundation and then network with the right type of lenders.

Read: How To Get A Small Business Loan (Step-By-Step Guide)