There are many reasons to seek small business financing. When you’re a startup company, you need money to get off the ground. If you decide to expand your small business, money will make that possible. Or, maybe you need money to improve business processes.

I quickly became flat-broke during the process of starting my first business. I borrowed money and went further and further into debt until I had borrowed nearly two million dollars (which I’ve since paid off). The root of a startup is money.

A lot of times, business owners decide to apply for a loan from the bank. But, securing a business loan is not easy. One study found that 82% of small businesses were denied financing by their bank. And, I’ve been denied several times myself. How do you get small business funding if the bank denies you?

How to finance a small business

Securing a bank loan is a difficult small business financing method for startups. Banks typically look for business experience so they can see how reliable you are as a borrower. They also want to see your credit history, financial statements, and business plan. Plus, you might need to offer some sort of collateral.

If the bank denies your small business funding request, there are other ways to seek financing. In fact, bank loans only make up 8% of startup capital sources for small businesses, meaning owners rely on other small business financing options.

SBA loans

The Small Business Administration (SBA) offers loan programs for startup businesses. Through these programs, you can receive the loan from a bank. The SBA guarantees part of the loan, which will help you get approved by the bank.

There are a few different types of loan programs you can apply for, depending on your business needs. For example, if you are expanding a small business, you could apply for the 7(a) Loan Program. There’s also a Disaster Loan Program that helps you replace items that are damaged or destroyed from a disaster.

Personal savings

If you’ve been penny pinching for your business, you’re off to a good start. Financing your small business startup or expansion projects with your personal savings is a great funding option. The SBA reported that personal savings is the top source of startup capital (57%) for small businesses.

Unlike borrowing, you don’t need to worry about interest rates. If you have the means, use your personal savings to fund your business. Unfortunately, bootstrapping a business is not in the cards for many entrepreneurs.

Credit cards

Business credit cards for startups are a great way to build credit, track expenses, and finance your company. Seventy-nine percent of businesses use credit cards for their business.

Using a credit card can even help you get approved for a loan. When you use a credit card, pay your bills on time to develop a good credit score.

Beware of relying on credit cards. In my second year as a business owner, my partner and I depended on credit cards until they were maxed out. Then, we were applying for new credit cards to pay off our existing credit cards. Credit cards have high interest rates which could take years to pay off if you bite off more than you can chew.

Friends and family

If you need financing for your business, you can ask your family and friends for a loan. You don’t want to ruin relationships over money. Consult a lawyer and make sure you both sign a document agreeing to the loan terms before you borrow.

Don’t underestimate the generosity and help of your friends and family. During my second startup, my business partner and I needed to find a way to print a lot of resumes and job orders. So, we borrowed $10,000 from my partner’s mom and bought a brand new printing press. By borrowing from my partner’s mom, we didn’t have to go through the bank for a loan.


Crowdfunding is another way to finance your small business. With crowdfunding, you ask people on the internet for small amounts of money to fund your startup or expand your business.

Note that when you use crowdfunding as a small business financing option, the investors often expect an incentive, like a product or share in the company, for giving money. Since there are many crowdfunding websites, do your research before choosing one. You want the website to be a good match for your business.