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Where to Get Money to Start a Business

A professional career coach, Marcy has helped hundreds refine their resumes, improve their interviewing skills, and advance their careers.

You don't need to break the bank to get funding for a new business!

You don't need to break the bank to get funding for a new business!

Ways to Get Money and Loans for Small Businesses

Many would-be business owners have great ideas that have a lot of business potential, but they lack the seed money or start-up funds to turn their ideas into reality.

Just because you don't have a fat bank account (or a rich uncle somewhere) doesn't mean your business idea will never see the light of day. There are many ways to secure funding, and some of them don't even require repayment.

Here are places to look for those dollars you need for your dream enterprise.

You Need a Business Plan to Get Start-Up Funding

First, before you start looking for funding, develop an understandable and comprehensive business plan. This will help you as well as a potential lender or investor in determining the amount needed for start-up and the potential revenues for those first critical months and years.

Your business plan should include the following:

  • Description of the business and the products or services it will offer.
  • Resources you have available to invest (including money, equipment, fixtures, staffing).
  • Your expertise in the specific business (do you already know how to perform the service or create the product?).
  • Your history in operating a business (list successes if you have them).
  • Realistic (repeat, realistic) operating expenses for the first year and first five years.
  • Target customer or client base.
  • How you will reach the clients or customers to get their business.
  • Location information—will you be near a good base of customers or clients?
  • Market research—are you locating your business in an area that isn't saturated with the services or products you provide?
  • Realistic growth plans for attracting and building clientele.
  • Realistic revenue projections for the first year and first five years.

These things may sound tedious and they will indeed take time, but the above information will save you many hours and headaches as you go forward. These are exactly the type of questions you will hear from lending officers, potential investors, and other resources that sometimes fund start-up businesses.

Your bank may offer small business loans.

Your bank may offer small business loans.

Business Loans From Banks

Yes, banks still lend money to businesses, even those that aren't yet operating. Banks are there to make money, and one way they can do this in a tight economy is by lending it and getting interest on the loans.

Depending on the nature of your proposed business, your credit rating, your history in the business (is this something you've been doing for years, or something new?), you may be able to borrow some or all of the start-up money you need for the business.

Shop around for rates, but be sure to start with your regular bank or credit union. The reason is that the institution where you already have your accounts knows your history and behavior with money more than any other institution.

Things to consider:

  • Terms and time period of the loan: Can you pay it back early with no penalty?
  • Are the payments manageable for your budget and first year or two of revenue?
  • Do you want an outright loan or a line of credit you can tap into as the need arises? If you defer borrowing until you need the money, you may also be deferring payments.
  • The reputation of the lending agency—check them out with the Better Business Bureau and through other organizations that monitor banking or finance institutions.

Loan rates can be negotiable, so arm yourself with some research on what lending agencies are offering, and start visiting the commercial loan departments in banks near where you live or where you'll open your business.

SBA Loans: Get Money From the Small Business Administration

Encouraging economic growth is a priority for the U.S. government, and in some cases, businesses can apply for funding through the Small Business Administration.

The paperwork for this type of funding is more extensive than some other sources, but you can usually process it through a local lender. The difference in this funding and a regular bank loan is that it is a government program rather than private funding through a regular financial institution. However, those institutions process the loans for the government.

Among the things you'll need to assemble for an SBA Loan application are:

  • The application itself
  • A statement of your Personal History
  • Your Business Financial Statements (including Profit and Loss statements, licenses, loan application histories, revenue projections, overview of your business and other documents).
  • Personal Finance Statement
  • Your Resume (and resumes of others who will be principals)
  • Income Tax Returns

These records and others are needed to apply for an SBA loan. Your financial institution (or another one in your area, if yours does not handle SBA loans) will have staff members familiar with the information you need to include in your application package and they can help you create a comprehensive submission.

Crowd Sourcing and Angel Funding for New Businesses

Angel Funding is money injected into businesses through private investors. Usually, these investors use their personal money to back businesses. The term has become so common in recent years that many areas have local networks or resources for tapping into these investors.

In some cases, there are Angel Investment Groups, organized to bring investors and potential business owners together. Here are a few groups that have gotten high 'marks' from finance analysts in recent years:

  • New York Angels: Has more than 75 members (CEOs, entrepreneurs, business leaders and venture capitalists). The group helps generate investments ranging from $100,000 to $1 million and also coordinates with other groups for larger ventures. The members also provide mentoring and other support to start-ups (or businesses that are expanding) to help ensure success.
  • Pasadena Angels: Based in Altadena, California, this non-profit group does not charge fees and its 100 members have provided start-up investment funds of up to $750,000 for fledgling businesses. The group itself does not invest funds, but it serves to bring prospective investors together with future entrepreneurs to help facilitate funding.
  • Investor's Circle: The 200-plus members in this San Francisco-based group focus their efforts on funding Green businesses and other enterprises that are environmentally savvy. It has generated more than $150 million in funding for 235 businesses and accepts applications year round.
  • Ohio TechAngel Funds: Concentrates on Ohio-based ventures in information technology, medical technology and advanced materials. Entrepreneurs are invited to make presentations at monthly meetings.
  • Tech Coast Angels: Billed as the largest investment organization in the United States, its 300 or so members have injected funds into more than 180 businesses in various technology fields. The group concentrates on Southern California and networks with other angel groups across the country to assess various opportunities for investment.
  • Golden Seeds: Specifically targets businesses founded or led by women. Provides training as well as investments and is one of the largest and most active investment groups in the country.

These are just a few of the numerous Angel Fund Groups operating around the United States. Do a search for funds in your area, or that concentrate on things that are unique about your business (the service you provide, clients or audience you will serve, etc.).

Businesses can sometimes get start-up money through donations.

Businesses can sometimes get start-up money through donations.

CrowdFunding: Start-Ups Funded Through Donations

Yes, you read that right—some businesses have gotten their start through donations! CrowdFunding is a fairly new way of raising money that allows prospective business owners to post information about their dream on a website and get donations from persons who want to help out.

Some entrepreneurs offer small gifts or considerations for donations of certain amounts (such as a dozen cupcakes for donations of $50 or more). The funding available through this method is usually modest, but it also doesn't have to be repaid. And, it generally requires much less paperwork than applying for a formal loan.

Websites offering these opportunities have varying criteria for being accepted into the program. Sometimes there are deadlines for reaching your financial goal. Some sites, however, will allow a business to remain online after the goal is reached and continue getting donations.

Kickstarter is one such group, billing itself as a 'funding platform' that focuses on creative projects. Their website lists topics such as Art, Comics, Dance, Food, Film & Video, Publishing, and more.

Do your research before signing up for this type of funding to make certain there are no hidden tax ramifications or other issues to consider.

Checklist for Business Start-Ups

Examine the choices above and see where you stand in terms of business planning and potential expenses.

Analyze the types of funding you can get, and which are best suited for you and your business. Think about these questions as you consider the options:

  • Are you comfortable making loan payments for a while?
  • How do you feel about owing some of your profits to investors?
  • How well do you handle challenges or failure?
  • What does your family think about this idea?
  • Are you willing to adjust your plans and goals after you review your business plan?
  • Are you prepared to open your books to creditors and investors if you get funding?

Best of luck as you reach for and attain your goals!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.


Marcy Goodfleisch (author) from Planet Earth on July 23, 2013:

Hi, Claudyobcn! Thanks for the comment here, and I am glad you got some ideas for staring your business. Best of luck with it - let us know what happens!

Marcy Goodfleisch (author) from Planet Earth on January 02, 2013:

Hi, Missy! Congratulations on your Start-up loan and grant! Thanks for reading the hub, and I wish you the best of good fortune as you and your sister go forward!

Missy Mac from Illinois on January 01, 2013:

I loved the quiz! Right now my sister and I a 1 month away from opening a developmental daycare center. I was curious about additional funding. We did go to SBA and received a modest loan and grant. Thanks

Marcy Goodfleisch (author) from Planet Earth on June 19, 2012:

Ha! I'm glad to know that!

Randy Godwin from Southern Georgia on June 19, 2012:

Fortunately I am "thick skinned rattled snake!" lol!


Marcy Goodfleisch (author) from Planet Earth on June 19, 2012:

I can't resist teasing our SSSS-Snake here! ;)

Randy Godwin from Southern Georgia on June 19, 2012:

Cold!! :(


Marcy Goodfleisch (author) from Planet Earth on June 19, 2012:

Hi, Randy - thanks for the nice words! Yes, for you I will provide my own private lending arrangement. You should be fine, as long as you don't need more than two dozen paper cups and three packets of Kool-Aid. So happy to help!! ;)

Randy Godwin from Southern Georgia on June 19, 2012:

Darn! I hoped you were offering to loan money for new businesses, Marcy! LOL!

Seriously, this is good info for anyone looking to start up their own business. Rated up!


Marcy Goodfleisch (author) from Planet Earth on June 19, 2012:

Hi, Nettlemere - isn't that a unique concept for a start-up? I know a young woman who is launching a niche bakery through that source of funding. Thanks for reading and commenting!

Nettlemere from Burnley, Lancashire, UK on June 19, 2012:

Very useful indeed; I'd never heard of that crowd funding technique at all.

Marcy Goodfleisch (author) from Planet Earth on June 18, 2012:

What a great tip, Andy! Thanks for letting us know. And good luck with your future business!

Andy Mann from Minneapolis, MN on June 18, 2012:

I have my sights set on opening my own business one day and I will probably check out what the folks at Small Business Administration have to offer.

FYI, if you need help with your business plan, the Small Business Administration's SCORE program is a great resource.

iluvluvluvlucy from San Antonio on June 15, 2012:

Thank you, Marcy. I understand and it is a good hub but so many who start business in debt fail and then owe a lot with no way to pay it back. The majority of small businesses fail within the first 2 years. We were one of the failures about 23 years ago when we opened a VCR repair shop the wrong way. It closed within 6 months as we were losing money each month so that is why I feel it is important for new entrepreneurs to go slowly and build successfully!

Marcy Goodfleisch (author) from Planet Earth on June 15, 2012:

What a nice success story! Thanks for sharing, LuvLucy, and congratulations on succeeding the smart way! I agree, having no debt is even better. This hub was written to give information to those who are curious about start-up funding.

iluvluvluvlucy from San Antonio on June 14, 2012:

Start small and do not go into debt at all to start your small business. Just do a little at a time and whatever you earn, invest back into the business and it will grow over time, debt-free. Start it on the side while you still work your full time job. This is how my husband started his small business, totally debt free and today he paid off the final $9300.00 student loan payment that he took out in 1991-all money he earned this week from his business. He sells garden seeds and products online and business is good this year! We do Dave Ramsey and wish we had found him sooner. No more debt for us!

Marcy Goodfleisch (author) from Planet Earth on June 14, 2012:

Hi, Wayseeker - thanks for your very generous comments! Most of this information is from a lot of research and from workung with or interbieeing business owners as a consultant or as a writer. I admire people who create a business plan, build on their concept and venture out into the world with it! Many thanks, again, for reading and sharing your thoughts.

wayseeker from Colorado on June 14, 2012:

What a gold mine of wonderful information. I have discovered through my life that I am many things, but I will never be a business owner. Okay. Never say never--let's leave it at highly unlikely. I've tried a few business-like jobs and such, and I have utterly failed at all of them. The fact is I'm too much of an artist to have any interest in messing with the technical details--and there's where I fall.

That said, I can clearly see that this would be an invaluable resource to anyone starting a business. They could spend huge hours here! My in-laws are accountants, so I hear about how many businesses fail every year--there's just so much to consider.

Anyone considering starting a business should drop in on this. Great info, Marcy.

Incidentally, how is it that you know all of this? I'm guessing you've started a few businesses of your own?

Voted up and VERY useful.

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Teaches - you are absolutely right about the importance of having a well-developed plan. So many people jump from the basic idea of the business to the launch without going through that process. Thanks for your comments here!

Dianna Mendez on June 13, 2012:

I have helped some with a business start up and they always seem to struggle with the business plan. It's so important and takes time to put together. Great information and excellent advice!

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Amy - isn't it great that we live in a world where people can support a new business idea out of the goodness of their hearts? What an inspiring idea! Thanks so much for reading and commenting.

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Jackie - I'm glad you found the hub useful - let us know if you launch a business! That would be exciting!

Amy Gillie from Indiana on June 13, 2012:

Marcy - this is great information, and easy to read as always. I especially like the attention you gave to entities like Kickstarter - what a great new wave of opportunities!

Jackie Lynnley from the beautiful south on June 13, 2012:

Thank you this will be interesting to study over. I have given it thought a time or two and you have some good information.

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Imonline - so glad you enjoyed the article! Thanks for reading and commenting!

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Allie - Thanks so much for your kind comments, and for passing the hub along to others! I'm glad you like the information here.

lmonline from Brazil on June 13, 2012:

Great article. Congrats!

alliemacb from Scotland on June 13, 2012:

Great information for anyone thinking about starting a new business. Voted up and shared.

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, Billy - I appreciate your voice of experience here; I know you are right about the importance of a business plan! Thanks so much for sharing!

Marcy Goodfleisch (author) from Planet Earth on June 13, 2012:

Hi, cnhughes - thanks so much for reading and commenting, and for sharing this with your friend! I hope she finds the information helpful!

Bill Holland from Olympia, WA on June 13, 2012:

Great recommendations Marcy! I've been there several times and I can say with all certainty that you have to have that business plan in hand or you can forget about any funding. Nice job my friend!

Courtney from Wilkes-Barre, PA on June 13, 2012:

Very interesting. I have a friend that is looking to start her own business and I think she will highly enjoy this read. Thank u!