Top 7 Lending Options for Financing Your Small Business


In the broadest terms imaginable, there are two steps to launching a startup:

  1. Come up with an idea.
  2. Bring it to life. 

So, if you have a concept for your business—congratulations! You’re halfway there. All that’s left to do is make it a reality.

Simple, right?

In theory, yes, but as bootstrapped business owners will tell you: anyone can come up with an idea; that’s not the hard part. What truly separates the would-be founders from the success stories is tenacity. Financing a startup requires an unyielding supply of commitment, effort, and creativity. Only after exhausting all funding possibilities—twice—does a genuine entrepreneur consider calling it quits. And probably not even then.

Whether you’re looking for a place to start or are in need of a few fresh suggestions, here are seven lending options you may want to consider:

Which Business Financing Options to Start With:

Credit Cards

Despite widespread advice against their overuse, credit cards continue to be a popular financing option among entrepreneurs. According to several nationwide surveys, including one conducted by the National Small Business Association, more than a third of business owners across the U.S. have used credit cards to fund their startups.

While they may be easy to obtain and typically have low monthly minimums, credit cards can quickly become a burden. If you fail to pay them back in full, you’ll end up with significant debt—and interest—as well as a low credit score, which can prevent you from qualifying for loans in the future.

In brief: Use a business credit card as a short-term solution or last resort, and always make sure to pay it off completely.

Private Investors

Angel investors and venture capitalists frequently show up in articles profiling hot new companies, leading non-entrepreneurs to believe that early stage financing is omnipresent and easily attainable. In the real world, however, these sorts of private investors account for about 1% of startup funding.

But while they may represent a tiny portion of the lending market, private investors can catapult a business into (at least momentary) prosperity with their immense financial resources and industry clout. Private investors often like to work directly alongside the companies they fund, which could be a big advantage if you’re willing to give up some equity for the guidance they offer.

In brief: Seek out private investors if you need a serious infusion of capital and are willing to cede some control over your startup, but don’t let your hopes get too high.

Read more about creating reports for your investors that will help them best help you in this blog.

Personal Connections

Depending on your circumstances, asking friends and family for a loan may be a safe bet or your worst nightmare. Your friends’ and family’s financial means are an obvious factor, as are their attitudes toward your company.

Because of its informal nature, be careful before taking a loan from a personal acquaintance, and communicate your expectations and boundaries at the outset. Otherwise, some friends and family members may interpret your request for assistance as an invitation to get further involved in your startup (by joining the board of directors or receiving equity). Others may expect you to pay them back immediately.

In brief: Think about the risk: are you willing to jeopardize your relationships with the people whom you care about most? Set realistic expectations, talk honestly with your potential funders, and consider other options if you need to keep your business and personal relationships completely separate.


With the rise of sites like Kickstarter, Fundable, and even Facebook, crowdfunding has emerged as a viable business funding option over the last few years. But while certain campaigns exceed their goals by a factor of thousands, asking people on the internet to support your company or project is not always as simple or lucrative as it sounds.

Successful crowdfunding efforts take marketing know-how and impeccable timing. Not all campaigns are created equal: a creative or consumer technology-driven endeavor may draw more backers than, say, an bookkeeping software platform would.

In brief: Try out crowdfunding if you believe your idea has broad consumer appeal.

Small Business Grants and Competitions

Startup contests are everywhere, at regional, national, and global levels. From banks to business publications, federal initiatives to executive advisory groups, public and private institutions alike have a stake in helping startups succeed, and do so through the mechanism of competition.

Apart from tens or hundreds of thousands of dollars in capital, startup competition prizes may include mentorship, incubation space, publicity, or other in-kind business services. Of course, to benefit from these opportunities, you’ll have to win…

In brief: Keep your eyes open for grants and competitions especially ones that directly relate to your service or target audience—and do your best—but understand that victory is never a guarantee.

Small Business Loans

For startups that qualify, a traditional lending route offers a great deal of cash and—just as important—freedom. Small business loans, particularly those backed by the SBA, have considerably low interest rates compared to other funding options, and can be tailored to meet your and your lender’s objectives. But, as with grants and competitions, resources are scarce, and challengers are abundant.

In brief: Know what your lending target is looking for and how your business stacks up in its industry before submitting your application for a loan.


One unconventional way to secure financing may be sitting right in front of you as you read this article. I’m referring to your device. Business owners that are hard up sometimes sell their assets or use them as collateral in a loan agreement. Assets can comprise anything from specialized equipment to vehicles to real estate property to—yes—even your computer or phone.

In brief: When the going gets tough, embrace minimalism and sell everything not essential to running your business.

If none of these ideas seem like the right option for your business, don’t be distressed. There are plenty of alternatives we’ve covered in the past, such as lines of credit, invoice advancing, microloans, and many more. If you’ve already tried all of those, then, well, maybe it’s time to dip into your savings account.

You do have savings, right?

For more information about getting your startup off the ground, download our Series A Checklist.

Quick Note: This article is provided for informational purposes only, and is not legal, financial, accounting, or tax advice. You should consult appropriate professionals for advice on your specific situation. indinero assumes no liability for actions taken in reliance upon the information contained herein.