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9 Min. Read

8 Ways to Get Money to Start a Small Business

8 Ways to Get Money to Start a Small Business

Thousands of Americans dream of starting a small business. Between 2019 and 2020 alone, some 1 million small businesses opened in the United States, according to data from the Small Business Administration (SBA).

There’s one common factor all these businesses needed to start up: money. Raising enough funds is critical for getting a small business off the ground and paving the way for longevity and future success.

In this article, we’ll cover the following way to get money to start a small business:

1. Savings

Most start-up founders use their personal savings to fund their businesses, according to the Gallup Small Business Index.

That said, you shouldn’t drain your bank account to raise funds for your business. Entrepreneurs should set aside enough living expenses (for rent and groceries, for example) to last them for a year. Why? Because many startups aren’t profitable for months after opening.

Smaller, service-based businesses can probably get away with 3 to 6 months of working capital to cover operating expenses.

There are a number of ways you can begin saving to start your small business, including:

  • Decrease credit card debt (call your bank to request a lower interest rate)
  • Set up an automatic deduction to your savings account
  • Get rid of any services you don’t use, like a gym or car-share membership
  • Set up a budget using a service like You Need a Budget
  • Buy used: This includes your car and any other purchases. Look for groups in your area focused on trading or selling used items.

2. Personal Loans

This tactic involves borrowing money from family and friends. To avoid hurt feelings, put the terms of the personal loan in writing. Be clear about how much you need, what the interest rate is and when it’ll be repaid.

3. Credit Cards

You can either use your personal credit card or open a business credit card.

Even if this option is open to you, don’t choose it lightly. Credit cards often have high interest rates that increase your balance monthly. You could end up with a debt balance that is much higher than you planned for, which could cripple your new business.

Still confident that credit cards are the best route for you? Make sure you’re using a card with the lowest interest rate possible and excellent repayment terms. Research Credit.com to find the right card for your business.

4. Bank Loans

Unfortunately, a small business bank loan is not guaranteed. Banks want airtight business plans and excellent credit scores before they’ll consider approving a small business loan.

They may also want you to invest your own money in the business to prove you’re really committed to making your company work.

You can go with your personal bank since they’ll already be familiar with your banking history. Or choose a bank that’s historically known for lending to small businesses.

To improve your chances of getting a loan, choose an SBA-guaranteed lender. (Read more about SBA loan requirements.)

Business Loan Calculator

Estimate how much your small business loan could cost you, using this business loan calculator.

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5. Venture Capital and Angel Investors

Venture capital and angel investing are best suited to high-growth companies or companies that are already profitable with good cash flow. Still, each investor has his or her own specialty in terms of region, industry, and company age.

You’ll need a unique idea and a solid business plan to attract their investment. The SBA can help match you to potential private investors through their SBIC program. Investments are typically made over a 3-year period.

SBIC investments come in 3 forms:

  1. Loans. SBIC loans range from $250,000 to $10 million, which must be paid back (with interest). Interest rates are 9% to 16%.
  2. Equity. SBIC will give you money for your business for a share of ownership (and control). Investments range from $100,000 to $5 million.
  3. Loan and Equity. A combination of the first 2 options. Loans come with interest rates of 10% to 14% and investments are $250,000 to $10 million.

6. Government Programs

Government grants can require some research to find the right one for you. The SBA has offices, called Small Business Development Centers, all over the United States that can coach you on available grants, plus provide business consulting and training. Grants.gov also has information on more than 1,000 federal grant programs.

Some small business grants are available to entrepreneurs facing unique barriers. For example:

7. Corporate Programs

Select corporations offer programs that support small businesses, including low-interest financing. For example, Goldman Sachs has a program that gives affordable loans to businesses that might not qualify at traditional credit sources.

8. Crowdfunding and Crowdlending

Crowdfunding usually involves asking large groups of people for funds on dedicated crowdfunding websites. They usually receive a gift or the product you’re developing in return for their investment. Crowdlending functions much the same way except that your funders expect you to pay them back.

Here are some options:

  • Kickstarter: The most popular choice. You add project details, your funding goal, and your deadline. You can then email family and friends with your page link. Payments to you are made via credit card. If you reach your goal, Kickstarter takes 5% and Stripe (Kickstarter’s payment processor) takes 3% to 5%.
  • Indiegogo: An alternative to Kickstarter.
  • AngelList: Matches you with angel investors.
  • Kiva: Ask for small loans with 0% interest.
  • Accion Microfinance Bank: Loans usually have a 3% to 8% interest rate, plus additional costs.

People also ask:

How Can I Start My Own Business With No Money?

To start a business with no money or very little startup costs, consider these options:

Service-Based Business

Starting a service-based business that’s run primarily over the internet is cheap to start up. Creative services like graphic design, software or app development, or copywriting just require a computer and are essentially free to start up. Other ideas include photography, fitness coaching, and house cleaning, though you’ll need equipment.


This hot business idea means that you sell products that are made, stored, and shipped by a third party such as Alibaba. You can set up your own low-cost online store using sites like Shopify. You then curate the products sold and focus on marketing and excellent customer service to make your shop stand out.

You use products from third parties and customize them with unique slogans or art. T-shirts, mugs, tote bags, cell phone cases, and hats are just some of the items you can customize. Not a designer? Hire one on sites like Fiverr.


It’s simple and free to publish your own eBook or print book using services like Amazon and Draft2Digital. You can hire people to format your book or design covers using sites like 99designs and even hire ghostwriters on Freelancer.com.

Digital Products

Design courses or templates or produce music or graphics that can be downloaded. You can sell digital products on Shopify, as well.

How Much Does It Cost to Start a Business?

Many factors contribute to how much it will cost to get your business off the ground. The amount of money you will need depends on the type of business, the equipment required, office space needed, cost of utilities in your area, team members you employ, the amount of market research and marketing you do, and so on.

It could cost as little as $3,000 to start a small, home-based freelance business, or more than $100,000 for a more complex business.

The SBA has a startup costs calculator to help you estimate your personal startup costs.

How Do I Qualify for a Business Loan?

To qualify for a business loan, Forbes recommends a small business owner needs:

  • Good credit score. Get your credit score and then follow these steps if you need to improve it.
  • Enough cash to cover outstanding loans. Your existing cash must cover not only debts and loans you already have but the new loan as well.
  • Strong assets. You’re more likely to qualify for a business loan if you have enough assets (such as cash and accounts receivable—or money owed by your clients) to cover the loan should you default.
  • Several years in business. This isn’t a given, though. There are funding sources that cater to new businesses.
  • Correct financial statements. Lenders may prefer accountant reviewed financial statements. You’ll need a complete and correct balance sheet, income statement, and cash flow statement.

How Can I Get a Small Business Loan Without Collateral?

Loans backed by the SBA typically don’t need collateral (i.e. property or assets like cash). The SBA guarantees these loans instead so even startups can access funding. Use this SBA tool to find lenders for your specific business.