Aug 28, 2025
Introduction: Funding a Startup Beyond Equity
Starting a business is exciting — but funding it is often the biggest hurdle. While venture capital gets most of the attention, it’s not always the best or most accessible option for early-stage founders. Many entrepreneurs overlook an essential part of the funding mix: startup loans.
Loans offer a way to finance growth without giving up equity. But navigating Europe’s startup loan ecosystem can be tricky. Which lenders support startups? What programs exist at the national or EU level? And how can you increase your chances of approval?
In this guide, we’ll break down the types of loans available for startups, how they compare to grants and VC funding, the risks involved, and how tools like Cogrant can help you identify and secure non-dilutive financing options — tailored to your business.
Why Consider Loans as a Startup?
Loans aren’t just for traditional businesses — they can be a strategic tool for startups, especially when used to fund R&D, bridge to a grant, or support early product development.
Advantages of Startup Loans:
Non-dilutive: You retain full ownership of your business
Predictable terms: Fixed repayment schedules help with planning
Faster access: Some loan schemes have faster decision times than equity rounds
Complements other funding: Can be used alongside grants or equity
Of course, loans require repayment and may involve interest, but for many founders, the trade-off is worth it compared to giving up equity too early.
Types of Startup Loans Available in Europe
Startup loans come in many forms — public, private, and hybrid. Here are the most common types founders should know:
1. Government-Backed Loans
Several EU and national governments offer startup loans with favorable terms:
European Investment Bank (EIB): Offers indirect funding through intermediaries for innovative SMEs.
National Startup Loan Programs: Countries like Germany (KfW), France (Bpifrance), and the Netherlands (RVO) offer low-interest startup loans.
Innovation Loans: Some programs, like InnovFin, focus on R&D-intensive businesses.
These often feature:
Lower interest rates
Grace periods before repayment
No collateral (or limited guarantees)
Pro Tip: These loans often require a solid business plan and may be easier to secure if combined with a successful grant application.
2. Bank Loans
Traditional banks sometimes offer startup-specific products — but getting approved is tough without revenue or assets. Many banks still see startups as high-risk. That said, fintech lenders and neobanks are changing the landscape with faster, more flexible options.
3. Microloans and Local Schemes
Microfinance institutions offer small loans (€5k–€50k) for early-stage entrepreneurs. These are especially helpful in the ideation or MVP phase.
4. Revenue-Based Financing (RBF)
A growing trend in Europe, RBF loans allow you to repay based on your monthly revenue. Great for SaaS and e-commerce startups with recurring income.
The Risks of Taking on Startup Loans
While loans can provide valuable capital, they also come with risks — especially for early-stage startups without steady cash flow. Key risks include:
Repayment pressure: Even with a grace period, monthly repayments can strain your runway.
Personal guarantees: Some loans may require founders to personally guarantee repayment, increasing financial exposure.
Overleveraging: Taking on too much debt too early can limit flexibility or lead to default.
Unfavorable terms: Without careful review, you might commit to interest rates or covenants that hurt long-term growth.
Startups should carefully assess loan terms and ensure realistic repayment plans. This is why expert support — like that provided by Cogrant — can make a critical difference.
Cogrant Helps You Navigate Non-Dilutive Funding (Including Loans)
At Cogrant, we specialize in helping startups access non-dilutive capital, including grants and loans from European and national programs. Here’s how we support founders:
Discovering funding options: Our AI-powered tool identifies relevant loans and grant schemes.
Preparing business plans and documents: We guide you through the paperwork and ensure your application aligns with lender expectations.
Strategic advisory: We help you combine grants, loans, and equity for a balanced funding strategy.
Connecting with public and private lenders: We link you to trusted programs backed by the EU or national innovation agencies.
Loan applications are stronger when backed by previous grant success — and Cogrant helps you build that credibility.
When to Consider a Loan (vs. a Grant or VC)
Choosing between a loan, grant, or equity depends on your situation. Here’s a quick comparison:
Grant Funding
Pros: Non-dilutive capital (no equity loss), no repayment required, strong signal of innovation credibility.
Cons: Highly competitive and often time-consuming to apply for; success rates can vary by program.
Best For: Research and development (R&D), early-stage innovation, deep tech, and prototype development.
Startup Loans
Pros: Fast access to capital, flexible use cases, predictable repayment structure, non-dilutive.
Cons: Requires repayment (with interest), potential cash flow pressure, may involve personal guarantees.
Best For: Operational costs, bridging between funding rounds, or scaling after early validation.
Venture Capital (VC) Equity
Pros: Large funding amounts, access to strategic guidance, and valuable networks.
Cons: Requires giving up equity, potential loss of control, longer negotiation processes.
Best For: Rapid scaling, international market expansion, and high-growth business models.
Many successful startups combine all three. For example, a founder might use a grant to build a prototype, a loan to support operations, and VC to scale globally.
5 Tips to Secure a Startup Loan in Europe
Build a strong business plan — include realistic financials and market research.
Demonstrate commitment — show personal investment or previous traction.
Apply for grants first — success can improve your loan approval odds.
Choose the right lender — public programs may offer better terms than banks.
Get expert help — platforms like Cogrant simplify the process and improve your chances.
Conclusion: Loans Are a Valuable Part of the Funding Mix
Startup loans are often overlooked — but they can be a powerful funding tool when used strategically. Whether you're bridging to a larger round, financing early growth, or building credibility, loans offer flexibility without dilution.
But like any funding tool, they require careful planning. The right loan at the right time — backed by a clear plan and complementary grants — can set your business up for sustainable growth.
Cogrant helps you find and win non-dilutive funding, including grants and loans across the European ecosystem. We make it easier to navigate the landscape, prepare your materials, and unlock the right capital for your next stage.
Need help finding startup-friendly loans or grants? Book a free consultation or try our funding tool to get started today.
FAQ: Startup Loans in Europe
Q: Are startup loans available for pre-revenue businesses?
A: Yes, especially from public programs. Government-backed or innovation-focused loans often support early-stage companies, especially with a strong business plan or grant success.
Q: What interest rates do startup loans usually carry?
A: It varies, but public loans often offer lower rates (2–5%) compared to commercial banks. Some include grace periods or partial guarantees.
Q: Can I combine a startup loan with EU grants?
A: Absolutely. In fact, winning a grant can improve your loan application by showing third-party validation and reducing lender risk.
