How to Get Funding for A Start-up

Table of Contents

• Executive Summary:

• Traditional Funding Paths: SBA Loans, Personal Loa …

  • Creative Capital: Crowdfunding, Auto Refinance & C …

    • Your Inner Circle: Friends, Family & Personal Guar …

      • Investor Money & Retirement Accounts: Venture Capi …

        • Final Thoughts: What this means for SMBs

Executive Summary:

Starting a business often begins with a critical question—how do you fund it? This blog explores the many funding options available to new entrepreneurs, from traditional SBA loans to modern crowdfunding strategies. Each method comes with its own set of benefits and drawbacks, depending on your credit history, business goals, and personal resources. Whether you're bootstrapping or aiming for investor backing, this guide outlines the best options for turning your business idea into reality.

Traditional Funding Paths: SBA Loans, Personal Loans & Home Equity

Creative Capital: Crowdfunding, Auto Refinance & Credit Cards

If you are a new business or considering starting a small business for yourself, you might be online researching the different ways to get funding for your start-up. I am pleased to say there is a range of different ways to finance a start-up.

If you are just starting out, you might find this article outlining the different steps you need to take to start up a business to be of use.

Below are the different options for you to consider if you are trying to work out how to get funding for a start-up. There are pros and cons to each of these options, and while one might not suit your specific needs, it could be ideal for another person. Your individual circumstances, credit history, loan amount, and your business plan are just a few of the key factors which all impact upon which finance options will be right for you and your new company.

SBA Loans

My personal favorite, as you would expect is an SBA Loan. The repayments terms are longer than other financing options, the interest rates are lower, and they are also strictly government regulated as well. An SBA loan is not ideal for who may have less than desirable credit records, nor is it the quickest way to get funding for a start-up.

Personal Loans 

Sometimes the very notion of putting up your own personal capital can be a huge motivator. Self-financing is an option used by many who review how to get funding for a start-up. Typically, you are limited to 50k for this type of funding for a new business.

Home Equity Loan 

This is often a very quick way to secure funding for a start-up. It is only an option for those who have a home and generally offers good rates of interest and favorable terms. You will need to have more than 20% equity in your home which would then permit you to borrow up to 90% of your present equity value.

Your Inner Circle: Friends, Family & Personal Guarantees

Crowd Funding

This is not something that is suited to all people, but for those with a strong brand presence or following, it can be a good option if you have no revenue and a compelling business proposition.

Auto Refinance 

There are precise stipulations on the vehicle age and condition, and this type of financing will typically carry a higher interest rate.

Family and Friends

If you have family or friends and are looking at how to get funding for a start-up, there could be wealthy individuals within your circle who would be willing to invest in your new business.

Credit Cards

If you can find the right credit card with a good interest rate, this is a good way to get short-term cash for your start-up business. Credit limits will dictate how much you can borrow. Some credit card companies, such as AMEX have good cashback schemes in place which can help you to recoup some of the money you are spending.

Investor Money & Retirement Accounts: Venture Capital & ROBS

If you are willing to take on a partner, this can be a good option for those looking to scale their business quickly. If you are considering VC funding, you need to be prepared to give up a stake in your business.

Also referred to as ROBS, this is suited for those people who have more than $50k in a tax-deferred retirement account. There will be no penalties for the early withdrawal of these funds.

Personal Guarantee 

If you want to borrow beyond what your credit profile dictates, you could always opt to use a personal guarantee. This reduces the level of risk for the lender, and if you are looking for a large amount of funding, it would be wise to expect that this could be requested.

Final Thoughts: What this means for SMBs

This is just a brief summary of the options available to those who are trying to establish how to get funding for a start-up. I have also compiled a more comprehensive blog about the alternative sources of business capital for those who are not eligible for an SBA loan.

Now that you know how to get funding for a start-up, you need to get yourself ready to apply for a small business loan. In this article, I outline seven steps to getting a small business loan to help you get things in order before you apply.