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Money is the biggest issue possible when starting up a small business. Many alternative lenders have established themselves for small business loan options. But the hardest possible thing is to get a startup loan. Who wants to lend money to a small business that has no revenue yet? Virtually no one.
Since you don’t have a business started up yet, you likely have to borrow money based on your financial record. For example, if you have a strong personal credit score (700 or more), it’s possible to get financing based off your personal ability/track record of paying back your loans.

SBA loans

The U.S. SBA has microloan programs which offer up to $50,000 for small businesses. The average SBA microloan is for $13,000. This is a microloan, so it might not provide enough funding. The 7(a) loan program also offers financing that borrowers can use to start up their business – but they are hard to get. You usually need collateral, like a physical asset (i.e. real estate or equipment) which the lender can sell if you default.

Friends and family

The most common form of financing is going to your family and friends. If your credit is bad, this is the best way of getting financing. The potential cost of failure in this case isn’t just financial, it’s personal. It’s important to speak to people who understand your plans, and are comfortable with the risks involved.

Credit cards

Most small business owners use credit cards for funding. If your credit isn’t amazing, you could be limited to secured credit cards. They typically have higher fees than regular credit cards. It’s important to know that credit cards are an expensive way of financing a small business, especially with bad credit. Research has shown that small businesses which rely heavily on credit card financing fail.

Personal business loans

Many new business owners get financing through personal loans, often via online lenders. Like credit cards, personal loans have high APRs. Personal business loans are a fantastic option, but should be considered an option of last resort.


Crowdfunding has become a popular method for small businesses to raise money. Sites like Kickstarter and Indiegogo, which lets you get funds from online campaigns. Instead of paying back your donor, you give them gifts. This system is called rewards crowdfunding. Crowdfunding is good for entrepreneurs who have a product, and want to test the market. There is no credit necessary.


Small businesses grants from private foundations, and agencies, are a great way to raise funds for your small business. They’re not easy to get, but free capital can definitely justify the work you’ll have to put into the process. For example, if you served in the US military, you can get small business grants for veterans.

Words of wisdom from other thought leaders


Bryan Clayton

I’m Bryan Clayton CEO of GreenPal which is best described as Uber for Lawn Care. Our business is profitable, self-funded and will surprise $15 million in revenue this year. Debt can magnify mistakes however when used wisely it can be a powerful fulcrum.
When we launched our business two years ago we had no money and no outside capital to get started with.

Like most tech start ups we went on the fundraising circuit talking to angel investors and venture capitalists begging for money to get started. However our vision was just too broad in scope and luckily we got turned down and told no over 40 times.

I was fortunate enough to solid personal credit and this enabled my team to secure an unsecured line of credit for $85,000 to get our business started. We paid that off in the first year and this year we’re going to surpass $15 million in annual revenue.

David Resicher, ESQ
Most small business grants are primarily open to companies in the science, technology, or medical fields. There are some business grants that are available to provide business-based training and technical assistance to low-income and very low-income entrepreneurs but they are not easy to receive funding. Federal grants are very difficult to receive an award whereas many state-level small business grants that target a particular state’s social or economic concerns can be easier to receive if certain criteria are satisfied.

For the most part, foundations do not make grants to for-profit enterprises. Government also do not usually make grants to for-profit enterprises because the taxpayer subsidizes the efforts.

Its is very helpful for a business to have non-profit 501(c)(3)status in order to obtain a business grant. While not necessarily conclusive in receiving a grant, a 501(c)(3) status will demonstrate to the foundation or government agency that the endeavor is a legitimate non-profit. There are other tax exempt status paperwork that can sometimes be submitted that can increase the odds of receiving funding. There is no cookie formula for applying for a grant. All grants are unique and require careful review of the instructions to apply.

It is important to do research and fully understand the issues when writing a grant. The proposal in the grant should present a logical solution to a problem. It is always necessary to convince the funder that you know what you are doing. Make sure to tell the story of your non-profit in the budget and the proposal narrative. Many business owners do not properly follow the instructions to secure a business grant. If the guidelines say they want 2 pages then do not write 3. If the guidelines give a date for submission then get the submission in on time. Every detail in a submission must be perfect.

Consider meeting with the funding source. Sometimes, it is possible to set up a meeting with a foundation staff person to explore your idea before writing or delivering a proposal. If a person cannot get a person-to-person meeting, then maybe try to at least get guidance over the telephone.

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