Starting a business often begins with a good idea, but turning that idea into reality also requires funding. Before finding your first customers, you may need to purchase equipment, buy stock, rent business premises or invest in marketing. At the same time, a newly established company may not yet generate enough revenue to cover all its expenses.

One possible solution is a business loan for a new business. However, obtaining one can be more difficult than securing financing for an established business, as lenders have no long-term trading history or previous financial results to assess.

What funding options are available to new entrepreneurs? What should you consider when applying for a loan, and when might borrowing be a sensible choice?

What Is a Business Loan for a New Business?

A business loan for a newly established company is financing used to establish a business or cover expenses during its early stages of operation. It does not necessarily have to be a separate loan product. A newly established company may be able to apply for a standard business loan if it meets the lender's requirements.

Loan funds can be used, for example, to:

• purchase equipment, machinery and tools;

• buy stock or raw materials;

• furnish or adapt business premises;

• develop a website, online store or marketing activities;

• hire employees;

• cover the company's initial operating expenses.

The permitted uses of a loan depend on the specific product. Before applying, it is therefore worth checking which expenses can be financed and whether the lender requires proof of how the funds are used.

Can a New Business Get a Loan Without Revenue?

Yes, this may be possible, but it depends on the lender and the individual business. If a company has not yet started generating revenue, it is more difficult for a lender to assess whether it will be able to repay the loan.

A good business idea alone may therefore not be enough. You need to demonstrate how the company plans to generate income, what costs are involved in starting operations and how the loan repayments will be covered.

A lender may assess factors such as:

• Business plan. What products or services will the company offer, who are its customers and how does it plan to generate revenue?

• Financial forecasts. What are the expected revenues, expenses and cash flow during the first years of operation?

• Entrepreneur's experience. Does the founder have previous experience in the same industry or the knowledge required to run the business?

• Own contribution. How much of their own money is the entrepreneur prepared to invest in the business?

• Existing financial commitments. Does the company or, where relevant, its owner have other financial obligations that could affect its ability to repay the loan?

• Collateral or personal guarantee. Does the lender require additional security or a personal guarantee from the owner?

Requirements vary between lenders and loan products. Therefore, a lack of revenue does not necessarily rule out getting a loan, but neither should you assume that a newly established business will automatically qualify for financing.

What Funding Options Are Available to a New Business?

A loan is not the only way to obtain the funds needed to start a business. Before taking on a financial commitment, it is worth comparing different options.

1. Business Loan

A business loan may suit a company that needs funding for a specific investment, equipment purchase or operating expenses. The terms depend on the company's financial situation, the loan amount, available collateral and the lender's assessment.

Some lenders also offer unsecured business loans. This means that the loan is not secured against property such as real estate. However, other requirements may still apply under the agreement, including a personal guarantee.

When applying for a loan, compare the interest rate, arrangement fees, repayment period and total cost of borrowing. You should also check whether the specific product is available to companies without an established trading history.

2. Leasing

If you need funding to purchase a specific vehicle, machine or piece of equipment, leasing may be an option.

Leasing is linked to a specific asset, which may itself serve as security for the agreement. This can be a practical solution for entrepreneurs who do not need general financing for operating expenses but want to acquire a particular business asset.

Before making a decision, check the required down payment, monthly instalments, any personal guarantee requirements and the terms that apply at the end of the agreement.

3. Personal Funds or a Loan from the Business Owner

A business can be funded using personal savings or a loan provided to the company by its owner.

The advantage is that the company does not necessarily need to apply for external financing. However, it is important to consider how much of your personal savings you can reasonably invest in the business and whether the company will still have enough funds to cover its initial operations and unexpected expenses.

If the owner lends money to the company, the transaction and agreed terms should be properly documented.

4. Grants and Government Funding Programmes

New entrepreneurs should also explore grants, guarantees and other business financing programmes. These may be particularly useful for companies that do not have sufficient collateral or an established financial history.

It is important to check whether a particular programme is currently open and what its requirements are. For example, the EIS Start-up Loan programme stopped accepting new applications on 31 December 2023. It should therefore not be considered an option that is currently open for applications. The application round for the EIS Start-up Grant closed on 14 August 2026 because the available budget had been fully allocated, although applications already submitted may still be processed.

Before preparing a business plan around a particular funding programme, check whether applications are currently being accepted and what the applicable requirements are.

How to Prepare for a Business Loan Application

The better you understand your company's funding needs, the easier it will be to assess whether a loan is necessary and what amount would be appropriate.

1. Prepare a Realistic Business Plan

Describe what your company will offer, who its customers are, how you plan to reach them and what makes your business different from its competitors.

A business plan does not have to be a lengthy document, but it should provide a clear overview of the business model and explain how the company intends to generate revenue.

2. Calculate How Much Funding You Need

Make a list of the expenses that are essential to getting the business started. Separate one-off investments from recurring operating costs.

The loan amount should be based on your actual funding needs, not simply on the maximum amount a lender is willing to offer.

3. Prepare a Cash Flow Forecast

Estimate when the company will start generating revenue and when the first payments are likely to arrive. Also consider what would happen if sales grow more slowly than expected or customers pay late.

Your forecast should show whether the company can afford the loan repayments even during a less favourable period.

4. Prepare the Required Documents

Depending on the lender, you may need to provide a business plan, financial forecasts, the company's bank account statement, an annual report or information about existing financial commitments.

A newly established company may not have all these documents yet. In that case, ask the lender what alternative information or documents can be provided.

5. Compare Loan Offers

Do not focus only on the interest rate or how quickly the funds can be received. Also compare arrangement fees, the repayment period, monthly instalments, the total cost of borrowing and any additional obligations.

If a personal guarantee is required to obtain the loan, make sure you understand the potential personal liability if the company experiences financial difficulties.

When Is a Business Loan for a New Business a Sensible Choice?

A loan may be a sensible choice when the company has a clear funding need, a realistic plan for generating revenue and a reasonable expectation that it will be able to afford the repayments.

For example, a loan could help purchase equipment that is essential for providing a service or buy the stock needed to fulfil a large order.

However, caution is advisable if the business model has not yet been tested, there are no customers or the entire business depends on uncertain future sales. A loan cannot replace a viable business model, and the repayment obligation remains even if the company does not achieve the expected results.

Before taking out a loan, ask yourself:

• Is this expense genuinely necessary to start or grow the business?

• Will the investment help generate revenue or reduce costs in the future?

• How will I make the loan repayments if sales are initially lower than expected?

• Have I taken all borrowing costs into account?

• Have I compared the loan with other funding options?

Having clear answers to these questions makes it easier to assess whether a loan will support the company's development or create too much financial risk.

Frequently Asked Questions About Business Loans for New Businesses

Can a newly established company get a business loan?

It may be possible, but this depends on the lender and the company's circumstances. Some lenders may require previous revenue or a trading history, while others may assess the business plan, financial forecasts and other factors. Before applying, check whether the loan product is available to newly established companies.

Can a new business get a loan without revenue?

A lack of revenue does not rule out every financing option, but it can make obtaining a loan more difficult. The lender will want to understand how the company plans to generate income and how the loan repayments will be covered. A business plan, financial forecasts, the owner's own contribution and possible collateral may all be relevant.

How much can a newly established company borrow?

There is no standard amount. The available loan amount depends on the lender's requirements, the company's funding needs, the assessment of its ability to repay and any collateral requirements. It is sensible to apply for an amount that the company actually needs and can realistically repay.

Can a new business get an unsecured business loan?

Some lenders offer unsecured business loans. However, this does not necessarily mean that no personal guarantee or other additional requirements will apply. Before signing an agreement, check whether the lender requires a personal guarantee from the company's owner or management board member.

Can a business loan for a new company be used to cover company formation costs?

This depends on the specific loan product and its terms. Some loans are intended for investments and operating expenses, but not all costs may be eligible. Before applying, check whether the expense you want to finance is among the permitted uses of the loan.

Are there government grants available for new businesses?

Estonia has various programmes to support entrepreneurship, but their terms and application periods change. Before planning your funding, check the official information provided by EIS and other relevant organisations. A grant and a loan are different forms of financing: a grant generally does not have to be repaid in the same way as a loan, but it may come with specific conditions and obligations.

Plan Your Business Financing Carefully

When starting a business, it is important to find the right balance between necessary investments and financial risks. A loan can help get a business off the ground or make essential purchases sooner, but before making a decision, you should assess your funding needs, ability to repay and alternative financing options.

If your company needs additional funding, explore the terms of the Laen.ee business loan and check whether the product is also suitable for newly established companies. Compare the total cost of borrowing and make sure the financial commitment is in line with what your business can afford.