Businesses under two years old face the widest price spread in the market. The same owner can be quoted single digit rates on a secured asset and triple digit annualised costs on an advance in the same week.
Approximate 2026 cost
From single digits on secured deals to well over 100 percent on advances
Approximate 2026 spread across products available to young businesses.
Terms vary by product, from a few months to seven years.
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.
How startup financing is priced
With little operating history, lenders price on whatever they can verify: the owner's personal credit, collateral, deposit activity and any guarantee behind the deal. Products backed by an asset or a personal guarantee price far lower than products backed only by future revenue.
That is why the answer for a startup is rarely one product. It is a stack: the cheapest secured option for asset purchases, a modest revolving facility for timing gaps, and everything else avoided until the numbers support it.
Typical 2026 cost range by option
Equipment financing on a new asset with a personal guarantee runs roughly 7 to 30 percent effective APR. Business credit cards run in the high teens to high twenties with an interest free window if paid in full. Online term loans for young businesses cluster at the upper part of their 8 to 30 percent band.
Invoice financing runs about 15 to 65 percent depending on collection speed. Revenue based financing repays about 1.3 to 1.5 times the advance, with an annual cost that rises with growth speed. Merchant cash advances run from about 40 percent to well over 200 percent effective APR at factor rates of 1.15 to 1.5.
SBA 7(a) is available to some startups with strong projections and collateral, at rates capped well below the private alternatives, but expect a longer process and an equity injection requirement.
What moves you within the range
Personal credit score does more work than anything else at this stage, followed by months of clean business bank statements and consistent deposits. Collateral and a co signer move pricing further than any pitch about future growth.
Taking the fastest available money early is the most common expensive mistake. A cash advance on the books usually blocks or reprices every cheaper option for the next year.
When to borrow at all
Borrowing fits when the money buys a specific asset or input with a return you can measure, and when the payment schedule still works if revenue comes in twenty percent below plan.
Borrowing fits poorly as a substitute for revenue. If the business is not yet covering its costs, expensive debt shortens the runway rather than extending it.
Before you sign
Compare every option on effective APR, never on monthly payment
Exhaust secured and guaranteed options before revenue based products
Model your payment schedule against a downside revenue case
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.