How to Get Startup Funding for Your Small Business

What’s the most challenging thing about starting a business? You guessed it; it’s financing! We totally get the excitement that comes with a business idea and the frustration that follows when you can’t finance it.

The longer you take to find your startup funding, the more you lose your enthusiasm and motivation for the business. So how do you keep this from happening?

We have just the answer for you! In this guide, we’ll review some of the best startup funding options and show you how to get funding for a startup. We’ll walk you through each option and help you make an informed decision.

Using Personal Loans for Startup Funding

The good thing about personal loans is that you can use them for almost anything you want. If you have a good credit score, you may be able to get enough money to start your business. The next good thing about personal loans is how easy and straightforward they are.

Personal loans generally have lower interest rates and easy repayment plans compared to most other loans. The thing is, though, that it’s not going to be classified as a business loan, but rather a personal loan. If your business fails, you’ll still be fully responsible for paying back the loan.

SBA Microloans

Initially, SBA microloans were created to make startup funding easily accessible to small businesses, veterans, minorities, and women.

The program usually partners with non-profit, intermediary, and community-based lenders to provide borrowers with a maximum of $50,000. These microloans do come with desirable interest rates, but they have a distinction from other types of loans.

SBA lenders are unique in the aspect that they are specifically chosen by the Small Business Administration. They work face-to-face with the startups as mentors, which is one of the advantages of the loan. If you go for an SBA microloan, you’ll not only get the startup funding you need, but an advisor for your business marketing, finance, and overall management.

The downside of these desirable perks is that the competition for these loans is exceptionally high. This makes both application and approval tedious, complicated, and very long. You see, both borrowers and lenders need to ensure they are getting in the right deal and are compliant with the program requirements.

A Business Line of Credit

When looking for the best startup funding option, borrowers who want more flexibility can go with a business line of credit. Business lines of credit are similar to traditional business loans and credit cards because they are established with a maximum credit limit by the lender.

It’s a predetermined loan amount where you can draw as much as you need as long as you don’t exceed the maximum limit amount established.

One of the most significant benefits of getting this type of startup funding is that you only pay interest on the amount you borrow and not on the available loan amount. For instance, if the lender established a maximum loan amount of $40,000 but you only withdraw $15,000, you’ll only pay interest on the $15,000.

Beyond that, these loans are advantageous for the fact that they are more accessible to borrowers with lower credit scores, and they are a great way to start rebuilding their credit history. Additionally, you can withdraw the money whenever you want.

Invoice Financing

How much do you know about invoice factoring?

This is the kind of loan you can get within a short period of time because you’ll gain access to money as an advance on your business’s outstanding invoices.

While most lenders won’t require you to have been in business for a long time, you will need to have unpaid invoices to use as collateral for the loan.

Equipment Financing

If your main goal for taking out a loan is to purchase equipment for your business, you can get an equipment loan. One of the best things about equipment financing is that it’s self-secured, since the equipment will be the collateral.

For this reason alone, equipment financing is quite easy to get. Most lenders won’t be too strict about how long your business has been operating.

Business Credit Cards

If you can leverage your personal credit history with a good credit score, you should have no problem getting business credit cards. You may be able to secure unsecured credit as startup funding. There is no time limit as to how long your startup needs to have been open, but the higher your personal credit score is, the more credit card limit you’ll get.

One good thing about going this route is that most business credit cards offer a 0% intro APR period. This essentially means that for the first month or so of the loan, you’ll get an interest-free rate on the open balance.

After the first month (or few months), you’re charged a monthly rate based on an annual percentage rate (APR). This will vary depending on your creditworthiness and Prime Rate.


There are several crowdfunding options that you can take advantage of, and, depending on your business idea, you may be able to get quite a hefty amount. You’ll have multiple people contributing to your startup funding account, and some will even invest in it.

The next best thing about crowdfunding is that your business will also get exposure since many people will be looking at your business proposal.

On the downside, crowdfunding rarely generates tons of money, and it could take a long time before all the contributions are enough to meet your needs. Unless, of course, it’s an exciting business idea that will trend all over the internet. If the money you get is not enough, you may have to use your personal savings the rest of the way.

Small Business Grants Can Help Startup Funding

When you get a small business grant, you won’t have to repay a loan or give up any of your business’s equity. This is the closest thing you can ever get to free money when it comes to business financing. Unless, of course, you have a family member willing to support your business (and even that has its fair share of risks).

These loans are also industry-specific, so you need to write your grant application proposal, so it specifically meets the program’s needs. Additionally, there are different types of grants, like small business grants for women or minorities, so you should apply accordingly.

How to Get Startup Funding for a Small Business

Being a startup can somewhat limit your business’s available funding options. However, these are some of the most accessible startup funding loans. Even if your business has a limited credit history, these types of loans should help you get the startup funding you need.

Are you looking for a business startup loan? Your FundingTree is ready to work with you. We’ll connect you to the best industry specific lenders who will help your startup business grow.

Apply today and get funding as soon as the next business day after being approved by your new lender.