Finance & Legal

Your Practical Guide to Securing Startup Business Loans in Europe

Written by

Enrico Tan

Published on

March 17, 2024
How to get a Startup business loan - loans calculation
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Startup business loans are a way to either bridge the time between bootstrapping and your first funding round, or can be a great addition to your funding round without losing direct equity. This isn't just about finding money; it's about finding the right kind of money. In this article, we'll deep-dive into the critical aspects of startup business loans in Europe, exploring the diverse funding sources that align with the unique needs of your entrepreneurial journey. Buckle up; we're about to embark on a thrilling ride through the world of European startup financing, where every decision can make or break your business dream.

Types of Startup Business Loans

When it comes to startup business loans in Europe, the options are as diverse as the continent itself.  Each of these options comes with its own set of pros and cons, and you need to weigh them carefully to find the best fit for their European startup dreams.

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Traditional Bank Loans

First up, traditional bank loans – the old-school, tried-and-tested route. They are a solid choice for those with strong business plans and financial histories.


  1. Stability and Reputation: Banks have been around forever, right? They’re like that seasoned player in the game everyone knows and trusts. This means a bank loan often brings a sense of credibility and stability to your business.
  2. Lower Interest Rates: Compared to some wild west options out there, banks usually offer lower interest rates. This is huge because it means less financial strain on your startup as you’re growing.
  3. Structured Repayment Plans: Banks are all about structure. They set up clear, predictable repayment plans. This helps you budget and plan for the future without any nasty surprises.


  1. Strict Eligibility Criteria: Here’s the kicker – banks can be super picky. They often want to see a solid credit history, a bulletproof business plan, and sometimes even collateral. For a startup, that’s like climbing a mountain in flip-flops.
  2. Lengthy Application Process: Time is money, and bank loan applications can eat a lot of it. The process is often wrapped in layers of bureaucracy, making it slow and sometimes frustrating.
  3. Risk of Over-Leveraging: Banks can give you a decent amount of cash, but there’s a catch. If your business doesn’t go as planned, you could find yourself in deep water trying to pay back a hefty loan.
How to get a Startup business loan strategy

Government-Backed Loans and Grants

Next, we've got government-backed loans and grants, a real game-changer for startups. These options often come with lower interest rates and more favorable terms, perfect for those who meet the criteria.


  1. Favorable Terms: Think of these loans like a comfy cushion. They often come with lower interest rates and more lenient terms compared to traditional loans. It's like getting a leg up from the government to kickstart your dream.
  2. Support for High-Risk Ventures: If your startup is in an innovative or risky sector, these loans can be a useful. The government is like that friend who believes in your crazy ideas and is willing to back them up.
  3. Non-Dilutive Funding: Grants are especially sweet. Why? Because it's basically free money! You don’t have to give up any equity in your company. It’s like winning the lottery but for your business.


  1. Complicated Application Process: Getting your hands on this money can be like running an obstacle course. The application process is often layered with red tape and requires detailed proposals. It's not for the faint-hearted.
  2. Strict Usage Restrictions: This money comes with strings attached. The government will want you to use the funds in specific ways, and you’ll need to keep detailed records.
  3. Limited Availability: These funds aren’t an endless well. They're often targeted at specific sectors or regions, and competition can be fierce.

Convertible loans

A CLA (Convertible Loan Agreement) is a way of giving money to a company that has a new and exciting idea, but needs some help to make it happen. Sometimes, when you give money to a company, you get a part of the company in return. This part is called a share, and it means you own a little piece of the company. The more shares you have, the more you own.

But sometimes, you don’t get a share right away. Instead, you get a promise that you will get a share later, when the company is more successful and has more money. This promise is called a CLA, and it is like a special kind of loan. A loan is when you lend money to someone and they pay you back with some extra money, called interest. A CLA is different because you don’t get paid back with money, but with shares.

The difference between a CLA and a SAFE is that a CLA is a loan that has to be paid back or converted into shares by a certain date, while a SAFE is not a loan and does not have a date. A CLA also has an interest rate, which means the company has to pay you more money over time, while a SAFE does not have an interest rate.


  • They are simple and fast to arrange, without needing a lot of paperwork or a lawyer.
  • They avoid the problem of valuing the company too early, when it is hard to know how much it is worth.
  • They give the company some flexibility and freedom to work on its idea and find more investors.
  • They give the investor a chance to own a part of the company at a lower price and with better terms than other investors.


  • They are uncertain and complicated, because they depend on future events that may or may not happen.
  • They can create conflicts and confusion between the company and the investor, or among different investors, about how much they own and what they can do.
  • They can be expensive and risky for the company, because it may have to pay more interest or give away more shares than it expected.
  • They can be disappointing and risky for the investor, because they may get fewer shares or lower returns than they hoped.
Startup business convertible loans

Alternative Lending Platforms

Don’t overlook alternative lending platforms, offering more flexible lending criteria and faster turnaround times. Lending platforms make getting loans more accessible, efficient, and often more personalised than traditional bank loans. Great examples are Funding Circle and BlueVine.


  1. Speed and Accessibility: These platforms are like the high-speed trains of financing. They're fast, efficient, and accessible. You can often get funding within days, not months, which is a game-changer for fast-moving startups.
  2. Less Stringent Requirements: Unlike the traditional banks with their strict criteria, alternative lenders are more like that cool teacher who gives you a break. They often have less stringent credit and revenue requirements, making them a solid option for newer or less conventional businesses.
  3. Flexible Terms: These platforms can offer more innovative and flexible terms. It's like having a tailor-made suit instead of an off-the-rack one – designed to fit your specific business needs.


  1. Higher Costs: Here's the catch – convenience and accessibility come at a price. These loans can have higher interest rates and fees. It's like ordering fast food; it's quick and easy but can cost you more in the long run.
  2. Shorter Repayment Terms: Many alternative lenders set shorter repayment terms. This can be a double-edged sword, offering less long-term debt but also requiring quicker payback, which can strain your cash flow.
  3. Less Personalized Service: While traditional banks offer relationship managers, alternative platforms are more hands-off. It's a more impersonal experience, which can be a downside if you value a close banking relationship.


  1. Funding Circle: Picture a global connector. Funding Circle links up small businesses with investors for peer-to-peer loans. They're big on transparency and have a solid track record, making them a reliable player in the market.
  2. OnDeck: OnDeck is like the reliable workhorse of the group. They provide short-term loans and lines of credit with a focus on speed and simplicity.
  3. BlueVine: BlueVine is like the Swiss Army knife of lending – versatile and handy. They offer invoice factoring, lines of credit, and term loans, focusing on small businesses. It's about giving businesses flexibility and multiple options.
  4. Prosper: Prosper is a bit like the people's champion of lending. As a peer-to-peer platform, it lets individuals apply for personal loans funded by investors. It's about democratizing the lending process.

Revenue based financing

Lastly, revenue-based financing is gaining traction, a method where repayments are tied to your business's income, offering a more dynamic and growth-oriented approach.

RBF is like a finance partner who's in tune with your business's heartbeat – your revenue. Instead of fixed monthly payments, you repay the loan based on a percentage of your monthly income. It's dynamic, adapting to your business's ups and downs. When you're raking in cash, you pay more; when sales are slow, you pay less. You can find a list with the best revenue-based financing companies here.


  1. Alignment with Your Revenue: RBF is like a smart, adaptable funding partner. It scales with your revenue, which means when you’re doing well, you pay more, and when times are tough, your payments shrink. It’s like having a financial buddy who’s in sync with your ups and downs.
  2. No Equity Dilution: This is a biggie. With RBF, you keep full control of your company. There’s no giving away a piece of your pie. It’s all about the cash flow, not the control flow.
  3. Quick Access to Capital: RBF providers usually make funding decisions based on your revenue and business model, not just credit scores. This means faster cash with less hassle. It’s like the express checkout for business funding.


  1. Higher Repayment Amounts Over Time: The flip side of flexibility is that you might end up paying more overall. Since payments are tied to revenue, successful periods could lead to higher costs. It’s like paying for convenience – it's great in the short term but costs you more in the long run.
  2. Not Suitable for All Business Models: If your revenue is unpredictable or you have long sales cycles, RBF might not be your best bet. It’s like having a dance partner who’s great for fast songs but can’t keep up when the tempo slows down.
  3. Limited Amount of Capital: RBF amounts are usually tied to your current revenues. This means you might not get as big a cash injection as you would with equity financing. It’s like filling up your tank with just enough fuel to get going but not enough for a long journey.

When to Apply for a Startup Loan

When is the best time to apply for a startup business loan? That depends on your specific situation and goals.

If you plan to raise a larger round of funding from investors, but you think your runway is too short, a startup loan can help you extend your cash flow until you secure more capital. However, be careful if you use a convertible loan agreement (CLA), which means that your loan will convert into equity at a later date. This will dilute your ownership and might affect the valuation of your business. The next investor will also pay attention to your debt level. A small loan might be okay, but a large one could be risky.

If you want to bootstrap your business and avoid giving up equity or control to investors, a startup loan can help you stretch your own resources and grow organically. This way, you can avoid the hassle and pressure of raising rounds and focus on your customers and product.

If you have a high-margin and scalable business model, such as e-commerce, you might want to take a look at revenue-based lending. This is a type of startup loan that is repaid as a percentage of your monthly revenue, rather than a fixed amount. This can be a good alternative to a traditional round of funding. Revenue-based lending can offer more flexibility and alignment with your growth, as you pay more when you earn more, and less when you earn less.

The availability and cost of startup funding can vary depending on the market conditions and the demand and supply of capital. If the market is tight and investors are not investing much, you might have to look for other options, such as loans. On the other hand, if the interest rates are low, loans can be more attractive, as you can borrow money at a cheaper rate. High interest rates, however, can make loans more expensive and harder to repay. But keep in mind, for the right startups, there is always VC money available, whatever the market does.

Ultimately, the best time to apply for a startup loan is when you find the right fit for your business. This means that you have a clear purpose and plan for using the loan, you can afford the repayments, and you can qualify for the loan based on your credit score, revenue, and time in business.

The Why: Advantages of Startup Loans

If you have a new and exciting idea for a business, but you need some money to make it happen, you might consider getting a startup loan. There are many advantages of getting a loan, such as:

  • You can buy yourself some time for the next round. A startup loan can give you enough money to work on your idea and find more investors who are interested in it. This way, you can avoid running out of cash or giving up on your dream too soon.
  • You don’t give away too much equity. Equity is the part of your business that you own. When you get a startup loan, you don’t have to give away any equity right away. You only have to pay back the loan with some extra money, called interest. This means you can keep more control and ownership of your business.
  • Startup business grants, another form of financing, are a great option to bootstrap. Grants are money that you don’t have to pay back. They are given by governments, organizations, or individuals who want to support your idea. Start up business grants are a great way to bootstrap, which means to start your business with little or no money. However, grants are not easy to get. You have to apply for them and compete with many other applicants. You also have to follow some rules and report your progress.
  • With a SAFE/CLA, it’s technically an investment when it converts, and you do bring in the expertise of the party providing the cash. A SAFE (Simple Agreement for Future Equity) and a CLA (Convertible Loan Agreement) are two types of startup loans that can turn into equity later. This means that when your business gets more money from other investors, the people who gave you the startup loan will get a part of your business instead of paying back the loan. This way, you can benefit from their expertise and network, and they can benefit from your success.

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The How: Step-by-Step Guide to Applying for Startup Loans

How to get a startup business loan? The answer is: it depends. Different types of startup business loans have different application processes. Some are easier and faster than others. Some require more documents and information than others. Some have more rules and conditions than others. You need to make clear choices based on the type of loan you want and the amount of work it takes to prepare for it.

Before you apply for a startup loan, you should have a clear and realistic idea of how much money you need, what you will use it for, and how you will pay it back. You should also have a solid business plan that shows your market research, your product or service, your target customers, your competitors, your marketing strategy, your financial projections, and your milestones. You should also have your personal and business financial statements, such as your income, expenses, assets, liabilities, and tax returns. You should also have your personal and business credit reports, which show your credit history and score. You should also have any other documents or information that the lender or provider may ask for, such as your resume, your business license, your insurance, your references, or your pitch deck.

If you find the application process too difficult or confusing, don’t worry. There are local companies that can help you out with the process. These companies are experts in applying for startup loans and they know the best practices and tips. They can help you prepare your documents, write your business plan, and negotiate your terms. Some of them even work on a no cure no pay basis, which means they only charge you if you get the loan. This makes them a no-brainer option for most startups.

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Man searching for small business start up loans

Startup business loans in the UK

Government-Backed Startup Loans

The British Business Bank (BBBank) and the Start Up Loans Company (SLC) are two prominent government-backed organizations that provide startup business loans. The BBBank offers a variety of financing options, including loans, grants, and equity investments, while the SLC specializes in providing loans to underserved groups and individuals.

Private Lending Institutions

In addition to government-backed options, a host of private lending institutions also cater to the needs of startups. High-street banks, such as Barclays, HSBC, and NatWest, offer business loans, while alternative lenders, such as Funding Circle and Kabbage, specialize in providing fast and flexible financing solutions.

Application Process

The application process for startup business loans in the UK is generally straightforward and can be completed online or in person. Lenders will typically require detailed information about your business, such as your financial projections, business plan, and personal creditworthiness. You can apply here.

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Startup Business Loans in the Netherlands

Startup Loan Programs by Government


The RVO is like your personal funding guru, helping you navigate the world of government grants and subsidies. They've got a wide range of programs to support startups, scaleups, and established businesses across various industries, from tech and life sciences to agriculture and tourism.

Don't be intimidated by the jargon; the RVO makes it easy to understand the eligibility criteria and application process for each program. They're here to guide you every step of the way, ensuring you get the funding you deserve to make your business dreams a reality.

So, if you've got a game-changing idea or an innovative product ready to disrupt the market, don't hesitate to reach out to the RVO. They're your allies in the fight for success, ready to unleash your entrepreneurial potential. Here are for instance their early phase financing program and their proof-of-concept program.


Qredits is like your personal funding coach, offering a tailored approach that goes beyond just numbers and credit scores. They dig deep into your business plan, market analysis, and potential for growth to assess your true risk profile.

This means you're not just a statistic to them; you're a visionary entrepreneur with a promising future. Qredits recognizes the value of your ideas and is willing to invest in your success.

So, if you're seeking funding that's not based on your past but on your future potential, Qredits is your go-to choice. They're the disruptive force in the lending market, ready to support ambitious entrepreneurs like you.

Banking Options and Alternative Lenders

In the Netherlands, startups are swimming in a sea of financial opportunities, each with its own flavor. Dutch entrepreneurs are spoiled for choice when it comes to banking options and alternative lenders. The traditional banking sector, like ING, ABN AMRO, and Rabobank, offers the reliability and comprehensive services you'd expect from established institutions. They’re like the seasoned coaches in the startup game, providing tried-and-tested financial solutions. But the Dutch scene isn’t just about tradition; it’s also about innovation. Enter the world of alternative lenders – the agile, tech-savvy disruptors. Platforms like CapitalBox, and Funding Circle NL are changing the game, offering fast, flexible financing tailored to the modern startup.

Applying for Startup Loans in the Netherlands

Applying for business loans as a startup in the Netherlands can be challenging, but it is not impossible. There are a number of factors that will affect your chances of approval, including your business plan, financial history, and credit score.

Traditional banks are generally more conservative in their lending practices and may be less likely to approve loans to startups with limited financial history. However, they may offer lower interest rates and fees than alternative lenders.

Alternative lenders are more flexible and may be willing to consider startups with limited financial history. However, they may charge higher interest rates and fees than traditional banks. You can apply here for a Qredits loan.

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Startup Business Loans in Germany

Government-Supported Loan Programs:

KfW Bank is the German state-owned development bank that provides financing and support to startups and small and medium-sized enterprises (SMEs). KfW Bank offers a wide range of programs to support startups:

  • ERP-Gründerkredit – StartGeld (ERP Start-Up Loan): This loan is tailored for fledgling startups and businesses with less than five years of operations. It offers up to 125,000 euros in funding over a five- or ten-year period, with the KfW mitigating 80% of the credit risk. Startups need not possess any equity capital to qualify for this financing option.
  • ERP-Förderkredit KMU (ERP Development Loan for SMEs): Designed for small and medium-sized enterprises (SMEs) and freelancers, this loan provides up to 25 million euros in credit. The repayment period spans 3 years with no payments, followed by a 20-year repayment schedule. To be eligible, SMEs must employ fewer than 250 individuals and generate an annual turnover below 50 million euros.
  • KfW-Förderkredit großer Mittelstand (KfW Development Loan for Large and Medium-Sized Businesses): This loan targets companies with at least 250 employees and an annual turnover of up to 500 million euros. It is intended for investments and ongoing costs, offering up to 25 million euros in financing.
  • ERP-Digitalisierungs- und Innovations­kredit (ERP Digitisation and Innovation loan): This loan is specifically designed for companies actively engaged in innovation and digitalization during their startup phase. It is geared towards innovative endeavors and businesses, such as those developing new products or services, and those exhibiting above-average company growth or significant investments in research and development. Loans ranging from 25,000 to 25 million euros are available.
  • ERP-Mezzanine für Innovation (ERP Mezzanine Financing for Innovation): This loan, amounting to up to 5 million euros, serves the purpose of funding the development of new products, processes, or services. It is aimed at businesses and freelancers with at least two years of operation and a maximum annual turnover of 500 million euros.

Local and International Banks Offering Startup Loans

In the heart of the German startup ecosystem, local and international banks play a crucial role in fueling the ambitions of aspiring entrepreneurs. These financial institutions offer a range of startup business loans and financing options tailored to the specific needs of early-stage businesses. With a deep understanding of the German market and a commitment to supporting innovation, local banks like Deutsche Bank, Commerzbank, and HypoVereinsbank provide valuable insights and guidance to help startups navigate the complexities of funding. International banks like BNP Paribas, Citibank, HSBC, and Santander bring a global network of resources and expertise, offering more flexible terms and conditions to support startups' growth aspirations.


Securing a startup business loan in Germany ain't no piece of cake, but it's not impossible. A strong business idea is key, so make sure yours is rock-solid. Experience and track record are also crucial. If you've got a history of success, lenders will be more likely to trust you. Financials matter, too. Show them you know how to manage money. Diversify your funding sources, and don't be afraid to network. Having a German bank account will help you get the loan faster. With the right approach, you can secure the funds to make your startup dreams a reality. You can apply here for a Deutsche Bank loan.

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Startup business loans for new technologies

Getting business loans for new technology startups can be challenging due to a lack of collateral, short track record, unproven technology, and inability to meet credit requirements. Limited access to traditional lenders and limited funding options further complicate the process. Despite these hurdles, there are organisations who offer alternative financing solutions.

Loans for Blockchain Projects

Blockchain technology, poised to transform industries across the board, requires robust funding to sustain its disruptive trajectory. Blockchain loans emerge as the financial lifeline that supports the development of innovative blockchain platforms, the infrastructure that powers this transformative technology, and the capital that blockchain businesses need to flourish.

One of the most well-known lenders in this space is ConsenSys Capital. ConsenSys Capital offers a variety of venture capital and debt financing options for blockchain startups. The company also provides advisory and consulting services to blockchain companies.

Another popular lender is Parity Technologies. Parity Technologies offers a variety of lending products, including term loans, revolving loans, and asset-backed loans. The company also offers a lending program for blockchain developers.

Alternatively, you can look for grants within the specific ecosystem of a blockchain project. For instance, Hedera hashgraph has its own foundation providing grants to ecosystem projects.

Innovative Novel Loan Options

Revenue-based financing (RBF) emerges as a game-changer. With RBF, you repay the loan based on a percentage of your company's revenue, eliminating the burden of monthly payments until you generate substantial income. RBF is tailor-made for high-growth startups with limited cash flow. Re:cap is one example of a revenue-based financing provider.

Tokenization disrupts the status quo by transforming your company's assets into tradable tokens on the blockchain. These tokens can then be sold to investors, providing you with the capital you need without diluting your ownership stake. Tokenization proves invaluable for startups seeking funding without relinquishing control.

Cloud86: The Hosting Titan Funded by re:cap

In the dynamic web hosting world, Cloud86 stands tall, delivering blazing-fast speeds, exceptional uptime, and top-notch customer support. Founded in 2019, this Dutch startup has mastered the essentials, attracting over 20,000 customers.

To fuel their ambitious growth plan, Cloud86 was funded by re:cap, a modern financing solution. It enabled Cloud86 to acquire new servers, expand their marketing reach, and hire the best support staff.

Now Cloud86 is poised to become the premier hosting provider, leaving a lasting mark on the industry.


If you favor a more democratic approach to funding, crowdfunding is the right path. This method empowers a vast community of supporters to contribute to your startup's success. Dedicated crowdfunding platforms, such as Kickstarter and Indiegogo, cater specifically to technology startups. Read here how Sarah Towle kick-started her business.

Crowdfunding expands your reach to a global audience of potential investors who share your vision. If your project resonates with the crowd, you could raise significant capital to fuel your growth trajectory.


In conclusion, start up business financing is a game-changer. But it's not just about finding money; it's about finding the right kind of money. I'm talking about startup business loans that can help you bridge the time between bootstrapping and your first funding round. Or loans that can add fuel to your fire, propelling your business to new heights. So if you're ready to take your business to the next level, it's time to start exploring the world of startup financing. And remember, every decision you make from here on out can make or break your business dream. So make sure you're making the right ones. Don’t you only want money, but also a team of entrepreneurial winners on your side? Send us your pitch.

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