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Need startup money? Here are 6 ways to fund your small business

Entrepreneurs can find funds for their small businesses in unexpected places, from libraries to traditional banks.


By Steve Strauss, USA TODAY

Question: Hey Steve – I am fairly new to business. I started on a shoestring but now I could use some money – for marketing, operations, and so on. But I hear that banks really don’t lend to new businesses like mine, so what does a guy like me do? – Markus 

Answer: In my book, "The Small Business Bible," I have a whole section devoted to unexpected funding options where entrepreneurs can find the money that they need. The good news is that there are actually quite a few possibilities. 

Here are six of my favorites: 


1. Business plan competitions

Example: Entries just closed for the New York Public Library business plan competition where NYC residents can win up to $15,000, free. Business plan competitions like this one happen all over the country because cities and organizations want to encourage startups, and reap the benefits of having an entrepreneurial economy. 

Google “business plan competition” and the name of your city. Regions all over the country are looking to create jobs and attract talent by hosting such competitions.  


2. Factoring

Do you have accounts receivables that pay slow? A company called a “factor” will buy them from you (for a discount of course), but still, it’s money today. 


3. Microfinancing

Maybe you don’t need six or seven figures in funding, maybe you could use $10k, or even much less. Or maybe you don’t qualify for much funding. Fear not, microfinance is here to help. Groups like Kiva offer smaller loans. The Small Business Administration does too; its limit is $50,000. Other microfinance options are typically smaller and include:




4. Crowdfunding

Sites like Kickstarter get a lot of press for good reason – they have opened up a whole new way of funding businesses that heretofore was nonexistent.  

Traditionally, businesses were funded either through ‘debt financing’ or ‘equity financing.’ Debt financing is what it sounds like – the business takes on debt to finance the business. It could be an advance from Uncle Joe or a traditional bank loan or an SBA loan, but whatever the case, the result is the same: You take on debt to finance growth. 

The other option was equity financing. Here, you sell a share of the venture to fund the business. This is what you see on "Shark Tank."

Crowdfunding upended this traditional model. With crowdfunding, people invest in your business in exchange for some benefit. For example, your online jewelry store might create a special edition necklace for someone who invested in your Kickstarter project. No debt taken on, no equity sold. (Note: There is also something called equity crowdfunding, but that’s more complicated and a story for a different day) 


5. SBA loans

The Small Business Administration doesn’t make loans, but it does guarantee certain loans, and guess what? When an arm of the federal government like the SBA is willing to guarantee your loan, your chances of getting approved go way up. You can research SBA lenders here


6. Traditional lending

I list traditional bank loans here as an unexpected source of funding because of this breaking news headline:  

Banks want to lend to you.  

Lending is their business. What they want in return are assurances that a loan to you will be safe; that it will be repaid in full and on time. Your job therefore is to make their job easy. You can do that by meeting with a banker early in the process and creating a loan application that fits their criteria. 

So, as you can see, there really are a lot of options available to you today. What was it Jerry Maguire said? Right.

Show me the money!

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Finance Magazine: Need startup money? Here are 6 ways to fund your small business
Need startup money? Here are 6 ways to fund your small business
Entrepreneurs can find funds for their small businesses in unexpected places, from libraries to traditional banks.
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