The phrase “young entrepreneur” typically applies to people under the age of 35 who start their own business. The definition is an important one to understand, because young entrepreneurs are playing an increasingly visible role in the small-business landscape. According to a 2026 report from Gusto, Gen Z entrepreneurs started more businesses than Baby Boomers in 2025 for the first time on record. Luana Lopes Lara, the CEO and founder of the prediction firm Kalshi®, founded the company when she was only 18, and in 2025, she became the youngest self-made female billionaire in history. Getting access to the capital they need is often an important part of finding success for many young entrepreneurs.
Challenges for young entrepreneurs
According to a CNBC study, running out of cash is a common reason startups fail. Access to financing may be especially challenging for young entrepreneurs who have new businesses and limited financial and credit history.
When evaluating a business loan application, lenders typically consider factors such as time in business, revenue, cash flow, credit history, and the business’s ability to repay. A newer business may have less financial history for a lender to evaluate, which can make it more difficult to demonstrate an established track record.
The challenge is generally not the entrepreneur’s age itself, but the age and financial history of the business. A limited business credit history does not automatically make a young entrepreneur ineligible for financing. Depending on the lender and loan program, lenders may also review factors such as the owner’s personal credit, tax returns, financial statements, and other documentation when evaluating an application.
Personal loans
Personal loans may be a viable option for business owners who need a relatively small amount of capital, especially when a business is new and hasn’t built a lengthy credit history. Depending on the lender and loan terms, personal loans may provide a lump sum that may be repaid through regular installments, and some lenders may allow the funds to be used for business purposes. However, entrepreneurs should confirm that business use is permitted under the loan agreement before applying. It's also important to note that personal loans are tied to the business owner's personal finances, not the company's, which may make them a riskier choice for young entrepreneurs.
Credit cards
There may be some benefits of using a personal or business credit card to help fund business expenses. Credit cards provide a revolving credit line, but they do come with some potential downfalls. Interest rates on credit cards will often be higher than those associated with loans, which makes paying them off quickly an important part of managing cash flow. However, they may also allow you to build your credit history quickly, since every monthly repayment serves as a positive mark on your credit report.
Business term loans
A business term loan is a lump sum of money paid back through regular payments at a fixed interest rate. The term is the repayment length of time, typically one to five years. The interest rate, term length, and loan size depend on your credit rating and business revenue.
SBA 7(a) loan
If you qualify, SBA 7(a) loans may offer longer repayment terms and higher loan amounts than some other types of small business financing, depending on the loan and use of proceeds.
An SBA 7(a) loan may be used for a variety of purposes, including:
- Working Capital: Cover working capital needs, purchase inventory and supplies, support operations, or fund other eligible business expenses.
- Business Debt Refinancing: Refinance certain existing business debt when the loan meets SBA requirements.
- Equipment and Other Business Assets: Purchase and install machinery and equipment, including eligible AI-related expenses, as well as furniture, fixtures, and supplies.
- Business Acquisition: Finance a complete or partial change of ownership when the transaction meets SBA requirements.
SBA 7(a) loans may offer several advantages over other forms of business financing, although specific terms depend on the borrower, lender, loan amount, and use of proceeds. Potential advantages include:
- Higher loan amounts
- Repayment terms of up to 25 years for qualifying real estate financing
- Financing for a wide range of eligible business purposes
- Interest rates subject to SBA maximums
- Options for working capital, equipment, real estate, debt refinancing, and business acquisition
- Potentially lower monthly payments when a longer repayment term is appropriate
- Availability through participating lenders nationwide
Requirements to apply for an SBA 7(a) loan
The SBA establishes baseline eligibility standards for its 7(a) loan program, including requirements related to business size, location, creditworthiness, and ability to repay. Individual lenders may also have their own underwriting and eligibility criteria, which can include minimum credit scores, financial history, documentation, and time in business. Requirements for an SBA loan may include:
- Typically, businesses must be operational for at least three years.
- The business owner’s personal credit score must be above 660
- The business must be U.S. based and owned by a US citizen or a Lawful Permanent Resident who is at least 18-years old or legally allowed to sign a contract in their state
- No outstanding tax liens
- No bankruptcies or foreclosures in the past three years
- No recent charge-offs or settlements
- Current on government-related loans
How to apply for an SBA 7(a) loan
Step 1: Check your eligibility.
Before you even begin your application, make sure your business is eligible. Visit the SBA website for a list of eligible businesses. You must also meet the requirements listed above.
Step 2: Talk to a lender early.
Speaking with a lender early in the process may help you better understand eligibility requirements, available loan options, and the documentation you may need to provide.
Step 3: Review requirements and gather paperwork.
The more organized you are, the swifter the application process will move.
Step 4: Choose a lender.
The lender that you choose plays a direct role in how smoothly your loan gets funded. SmartBiz Bank® has worked with countless young entrepreneurs to get them the funds that they need for their companies.
In conclusion
Young entrepreneurs may face unique challenges when seeking business financing, particularly when their personal and business credit histories are limited. Still, there are several financing options worth exploring, including SBA loans, business term loans, credit cards, and, in some cases, personal loans.
As your business grows, reviewing your financial profile and speaking with a lender may help you better understand which financing options and eligibility requirements may apply to your situation.
Find out if you pre-qualify for a loan from SmartBiz Bank® here.
FAQs
Can young entrepreneurs get a small business loan?
Yes. Being a young entrepreneur doesn’t automatically prevent someone from getting a small business loan. Lenders generally evaluate factors such as personal and business credit, revenue, cash flow, time in business, the intended use of funds, and the business's ability to repay the debt. For some young entrepreneurs, the challenge may be that both the business and the owner have limited credit histories. A newer business may not yet have established business credit, while a younger owner may also have a shorter personal credit history for a lender to evaluate. That does not automatically make someone ineligible for financing, but it may affect which loan options are available and what documentation a lender requests.
How old do you have to be to get a business loan?
Typically, you must be at least 18 to obtain a small business loan. Federal lending rules generally prohibit creditors from making credit decisions based on age alone, although a lender may consider whether an applicant is legally old enough to enter into a contract under applicable state law. Individual lenders and loan programs may also have their own eligibility requirements. Instead of focusing solely on age, young entrepreneurs should review the specific lender's requirements for credit, time in business, revenue, documentation, and repayment ability.
Can a young entrepreneur qualify for an SBA loan?
Yes, they may qualify for an SBA loan. The SBA doesn’t make age the central eligibility test for its 7(a) program. Eligible businesses generally must operate for profit in the United States, meet SBA size requirements, fall within an eligible industry, demonstrate creditworthiness and a reasonable ability to repay, and meet other program requirements.
What are the best loans for young entrepreneurs?
The right financing typically depends more on the business's financial profile, funding needs, and stage of growth other than on the owner's age. An established young business may consider an SBA 7(a) loan or a traditional business term loan for a larger, longer-term investment. A line of credit may be better suited to recurring working-capital needs, while an SBA microloan may provide up to $50,000 for qualifying smaller funding needs. Young entrepreneurs should compare interest rates, fees, repayment terms, borrowing limits, collateral requirements, personal guarantees, and eligibility standards before choosing a financing option. Keep in mind that a loan that appears to be the most affordable on a month-to-month basis may not always be the best fit for your specific business needs.
How can a young business owner build business credit?
Start by establishing a clear business identity and keeping business and personal finances separate. Depending on the business structure, that may include obtaining an EIN, opening a business bank account, and establishing accounts that report payment activity to commercial credit bureaus. With those tools in place, use credit wisely and make payments on time to further build your business credit score.
How can young entrepreneurs prepare for a business loan application?
Start by determining exactly how much financing the business needs and how the funds will be used. Then review personal and business credit, organize financial statements and bank records, and prepare financial projections or other documentation the lender may require. Being able to clearly explain how the financing will support the business may also strengthen the application. Having all of the required documents in place at the beginning of the process may help streamline the loan underwriting process.
