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Funding for Small Businesses: Your 13 Best Options

Obtaining funding for small businesses might be easier than you think. With so many options available, chances are you’ll find exactly the type of funding you need. We’ve compiled a list of the 13 best options to help you narrow down your choices.

  1. SBA Loans: The Small Business Administration doesn’t directly provide funding for small businesses, but it does guarantee loans to business owners made by SBA-approved lenders. If you’ve been turned down by banks, this is a promising option for getting a loan with a low-interest rate. The loans can be used for many different purposes.
  2. Traditional-Term Business Loans: Just like the name implies, traditional-term bank loans are typical agreements between you and the lender. The amount you are loaned is given to you upfront, and you are required to make scheduled payments with interest over a predetermined period of time.
  3. Equipment Financing: If you need specialized equipment for your business but the cost seems prohibitive, you can obtain equipment financing. While you are limited by what you can buy with these funds, repayment terms are defined by the contract you sign with the lender.
  4. Line of Credit: If you opt for a line of credit, your financial institution will set your credit limit, and you can use those funds at any time. You only pay interest on the amount you use.
  5. Invoice Financing: Invoice financing is another way to get access to small business funding. With this method, you sell your invoices to a lender who pays you a significant portion of the amount owed. The lender will keep the remaining portion until the invoice is paid.
  6. Crowdfunding: If you are having trouble getting money through more traditional options, you might want to try crowdfunding. It can help you collect smaller contributions from a large number of people who support your venture–from friends and family to total strangers.
  7. Merchant Cash Advance: Another funding option for small businesses is the merchant cash advance, where a lender lends you a specified amount of cash and you repay the advance and any fees with a percentage of your daily credit card sales.
  8. Startup Loans: Haven’t even opened your doors yet? You can shop for loan products that help you get the startup capital you need. Business lines of credit (available from Blue Vine, DealstruckLenCred) and equipment loans fall into this category and are solid choices for small business owners with good personal credit scores.
  9. Short-Term Business Loans: If you don’t need a lot of money and you have the means to repay a loan quickly, a short-term business loan is another source of funding. Because you repay it quickly, the rates will be higher, but you will move debt off your books faster.
  10. Bank Loans: Don’t forget about standard bank loans. Plenty of institutions will offer you a loan based on your debt-income ratio. You can use the money from these kinds of loans for large capital expenditures and operational costs your business wouldn’t otherwise be able to afford.
  11. Personal Loans:  You can also use personal loans for funding small businesses. These loans are unsecured, so they usually come with higher interest rates. The trade-off is that you don’t need to put up any collateral as a guarantee that you’ll pay back the loan.
  12. Credit Cards: Credit cards work a lot like a business line of credit. The chief difference is that with a business credit card you don’t typically get cash upfront; instead, you borrow funds at the point of sale. The faster you pay off your balance, the less you end up paying in interest.
  13. Angel Investors: Angel investors are affluent people who are in the business of lending capital to startups. If you have a great business idea, you can pitch it to an angel investor and get the financial backing you need.

Not every type of funding is ideal in all circumstances. Weigh the pros and cons, and then choose the funding type that will provide the maximum benefit at the lowest cost.



Emily Suess

Contributor at Fundera
Emily Suess is a contributor for Fundera and a freelance blogger and copywriter specializing in technology and small business.
  • Alexandra Savas

    Don’t forget peer-to-peer lending! Not your traditional bank loan, not a merchant cash advance: Funding Circle offers term loans ranging from 1-5 years with rates starting at 5.99%.

    • meredithfundera

      Hi Alexandra,

      Thanks for stopping by. You’re right. Funding Circle is a great option for small business loans! They are one of the lenders on are platform and provide great products at good prices. It’s exciting to see so many options available to small businesses.

  • Marcus

    This is a very good article. I wish I had written it. Fundera ledger always delivers great content!

    • meredithfundera

      Thanks Marcus! We appreciate the kind words.

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