Small Business Funding and Financing Options

Pots containing a wide variety of plants growing at different speeds. Represents the different funding options you can use to grow your business.
Author: Kody Wirth

Kody Wirth

Kody Wirth

4 min. read

Updated May 20, 2024

When looking at your small business funding options, you’ll typically do one of two things—take on business debt or offer up a portion of your business in the form of equity.

While that may sound simple, there is, unfortunately, no one-size-fits-all funding method. Each option will have unique requirements, benefits, and drawbacks that you’ll need to consider.

Finding the right business financing really comes down to understanding your business needs.

Why you need funding, how much you need, and how quickly are just the basics. The specific terms, type of debt, and potential requirements from lenders or investors should also guide your decision. 

As you consider all of that, the best thing to do now is start exploring your options. And this guide will help you do just that.

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What are your business funding options?

While there are seemingly endless options for funding your business, they can all be categorized within these eight categories.

1. Friends and family

Some of the most successful businesses in the world started off with money from friends and family. But you shouldn’t just ask and leave it at a handshake.

You need a plan and documents that hold you both accountable.

Dig Deeper: Friends and family financing guide

2. Bootstrapping and self-funding

Every business owner will have to bootstrap at some point in time. This doesn’t mean starting with nothing. Instead, you’re using any and all personal resources to get your business up and running.

Dig Deeper: How to self-fund your business

3. Business loans

Applying for a small business loan from a bank or credit union is one of the most common and accessible funding options.

Here, we’ll cover how to apply, what to expect when pursuing a loan, and answer some common questions that come up when applying.

Dig Deeper: How to get a small business loan

4. SBA loans

Despite the name, these are not direct loans from the SBA. Instead, they are more accessible loans from traditional banking institutions backed by the SBA.

We’ll walk you through this program and how to rework your business plan to work for this type of loan.

Dig Deeper: How to get an SBA loan

5. Venture capital and angel investors

This type of funding is often reserved for high-growth companies that display a promising potential return for the investor.

In this guide, we’ll provide an overview of outside investment as well as specific tips for approaching investors and VC firms.

Dig Deeper: How to get venture capital and angel investor funding

6. Crowdfunding

Crowdfunding platforms are a great way to test out your business idea and see if there is real interest in what you have to offer.

We’ll go over the basics of crowdfunding, along with insights on how to use a few popular platforms.

Dig Deeper: Crowdfunding basics for small businesses

7. Grants

A small business grant is money awarded to a business with no repayment or portion of equity required. While often rare, unless you’re in the agriculture or medical industries, they are more common for nonprofits.

Dig Deeper: What are small business grants and how to get them

8. Small business credit

Business credit is an often misunderstood aspect of starting and running a business. While yes, your business can build credit, the more important part is your own personal credit score and history.

Dig Deeper: Small business credit guide

Explore your funding options

Looking for a quick way to explore multiple funding and financing options within the eight categories listed above?

Check out these guides, where we list some of the top traditional and alternative funding options.

Small business funding templates and resources

Free resources to help you prepare to pursue multiple funding options.

Content Author: Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.