Startup Funding: The 14 Best Sources of 2020

Updated on June 4, 2020
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Where to Get Startup Funding as a New Business

The moment you decide to start a business is an exciting one. But it’s tough to maintain that momentum and enthusiasm as you set in on your search to make your startup dreams come true. One particularly tricky mundanity that can really take the wind out of your sails as you are starting a small business?

Finding startup funding.

Startup funding for small businesses is particularly elusive, but that doesn’t mean it’s impossible to get your hands on. In fact, you’ve got fourteen stellar startup funding options to choose from.

The fourteen best startup funding options will fall into three categories: Loans, business credit cards, and debt-free funding:

  1. SBA Microloans
  2. Business lines of credit
  3. Equipment financing
  4. Invoice financing
  5. Personal loans for business
  6. Friends and family loans
  7. Blue Business Plus
  8. Blue Business Cash
  9. Ink Business Cash
  10. Ink Unlimited
  11. Equity financing
  12. Personal savings
  13. Crowdfunding
  14. Grants

And we’ve compiled a guide to startup business funding sources to help you choose which of these options is the best fit for your new business.

Here is your ultimate resource on the best way to go about accessing startup funding.

Getting Startup Funding Through Loans

Of course, accessing startup funding through a business loan is pretty ideal for a new business. You’ll be able to access money without diluting your ownership if you decide on debt funding as your go-to source of startup money.

Nevertheless, many types of business loans won’t be available to startups because of their minimum time in business requirements. Most traditional business lenders will require applicants to have at least six months of business history under their belt: Offering startup money to brand new businesses is a risk that many banks don’t want to take.

That said, there are a few business funding choises that will be more accessible for startup businesses that need money. Here are the best kinds of debt funding for startup businesses.

1. SBA Microloans

Originally created to make startup business money more easily accessible to women, minorities, and veterans, the US Small Business Administration’s SBA Microloan program partners with community-based, nonprofit, intermediary lenders to provide small business borrowers with $500 to $50,000.

Carrying interest rates between 8% and 13%, and term lengths not to exceed six years, traditional funding with these desirable rates and terms are rarely, if ever, available to brand-new businesses outside of this SBA-subsidized program.

In addition, SBA Microloan lenders are unique because the Small Business Administration intentionally chooses them to work face-to-face with the startup founders as mentors as well as lenders. (It’s one of the many advantages of SBA loans.) Within this role, microloan providers act not only as a source of money for a new business but also as counselors offering advice on business management, marketing, and finance for the ongoing success of borrowers.

You might see this part coming: With all of those desirable perks comes a lot of competition. And that makes the application and approval processes for the SBA Microloan program not only difficult but long. Applying for an SBA loan, in general, can take time, and borrowers might find themselves jumping through what feels like unnecessary hoops to stay compliant with the program’s training requirements.

2. Business Lines of Credit

If you’re looking for a more flexible source of money for your new business, consider a business line of credit. Often described as a hybrid between a credit card and a traditional business loan, a line of credit is a pool of money established by the lender with a maximum credit limit. You can draw from the line of credit for nearly any business purpose and in any amount, up to the credit limit.

The biggest advantage to the business line of credit is that you only pay interest on the amount you’ve used at any given time. So, your credit limit may be $30,000, but if you only withdraw $10,000, then you only pay interest on that $10,000 that you’re actually using.

Beyond this flexibility, here are a few other key advantages of the business line of credit as a source of finance for new businesses:

  • Money can be withdrawn anytime and for any business purpose
  • It’s more accessible to those with less-than-perfect credit
  • Can be an excellent way to begin building business credit history as a startup
  • Provides flexibility for fluctuations in business cash flow

For these reasons, the business line of credit is a source of finance worth exploring for entrepreneurs seeking funding within that critical first year of business operations.

3. Equipment Financing

If you need startup funding to purchase equipment, then consider equipment financing a top option for funding your venture. Equipment financing for startup businesses are particularly apt for your situation because of their self-secured nature. Because the equipment you purchase will act as collateral for the very funding you use to purchase it, equipment loans will be easier to qualify for, even if you don’t have much time in business.

Though many equipment lenders will have minimum requirements for time in business, a fair amount won’t require a minimum time in business to qualify for their equipment financing.  For instance, Currency Capital is one of the best equipment lenders out there, and they don’t have a minimum time in business requirement.

4. Invoice Financing

Another funding option that you’ll be able to access with little-to-no time in business is invoice factoring. Through invoice factoring, you’ll be able to access an advance for a portion of your business’s outstanding invoice value. This form of startup funding will rely on your business already having at least one invoiced customer, but many invoice factoring lenders will require you to have very little time in business to be eligible for funding. BlueVine, for example, is an invoice factoring company that will only require you to have three months of business history to be eligible for funding from them. So, if your startup fits these criteria, then invoice factoring could be a top option for funding your new business.

5. Personal Loans for Business

For entrepreneurs with very strong personal credit and a new business idea that you feel really good putting your own finances on the line for, a personal loan for business might be worth considering. These options have the advantage of being simple: No hidden fees, no fancy formulas, just a basic personal loan.

Consider generally, a personal loan will tend to have lower interest rates as well as easier repayment terms than its business counterpart—and it can also be used for nearly any purpose.

That said, here is the disadvantage—and this is important: When you take one out for business, the lender is entering into a contract with you as an individual—not with your business. This means that if bad fortune strikes and the business fails, you are still fully and personally responsible for repayment of the outstanding balance.

6. Friends and Family

What if you don’t qualify for any of these startup business loans but you don’t want to rely solely on a business credit card for your startup business funding? You might want to consider going to friends and family to fund your startup. If you decide to go for this business startup funding option, though,  then you should be sure to systematize this traditionally less-formal form of debt. The Minority Business Development Agency provides a helpful guide for borrowing startup money from your friends and family, so consult their advice before opting for this potentially risky form of startup funding for small business entrepreneurs.

See Your Loan Options

Getting Startup Funding Through Business Credit Cards

Business credit cards will allow you to leverage your personal credit history to access business credit for funding your startup. This means you’ll be able to use your historical trustworthiness as an individual borrow to get unsecured credit to address your startup business expenses. You won’t need a certain number of months or years in business to get your hands on a business credit card as your startup funding—you’ll simply need a good-to-excellent personal credit score.

Even better, many business credit cards will offer something called a 0% intro APR period, which will allow you to carry an interest-free balance for your first months with the card. With this form of startup funding, all you’ll need to do is make sure you make your monthly minimum payment in full and on time, and you won’t owe any interest on balances you carry during your 0% intro APR period.

Of course, a variable APR will set in after this intro period, and though the exact APR will depend on the market Prime Rate and your creditworthiness, it will set in at more than 0%. So, be sure to pay down all of the startup expenses you put on your 0% business credit card before your intro period is up.

Credit Card

The Blue Business® Plus Credit Card from American Express

Making purchases with a 0% intro APR period

Open Account
on American Express's secure website

Read Full Review

    • Intro APR


    • Regular APR


    • Annual Fee


    • Minimun credit


    7. American Express Blue Business Plus

    The Blue Business Plus offers a 12-month 0% intro APR period, which will allow you to pay down your startup expenses gradually without accumulating any interest over your first 12 months with the card. As long as you pay down your startup spending within these first 12 months, the Blue Business Plus will be an interest-free solution for your startup spending. And by the time you have 12 months of business under your belt, and your intro APR period is up, you’ll barely even be a startup anymore.

    That said, for your entire card membership, you’ll be able to earn rewards points with your Blue Business Plus card—you’ll earn 2x rewards points on the first $50,000 you spend each year and 1x thereafter.

    Credit Card

    American Express Blue Business Cash™ Card

    Earning cash back and a long 0% intro APR period

    Open Account
    on American Express's secure website

    Read Full Review

      • Intro APR


      • Regular APR


      • Annual Fee


      • Minimun credit


      8. American Express Blue Business Cash

      Another top business credit card that offers a 12-month 0% intro APR period ideal for funding a startup is the Blue Business Cash

      Even more, the Blue Business Cash offers cash back for your spending rather than bonus points. You’ll earn 2% back on all eligible purchases on the first $50,000 each calendar year, then 1% back on all purchases after.

      At the end of the day, cash back will be much easier and more valuable to convert to startup funding than rewards points. Plus, the Blue Business Cash won’t charge you an annual fee to access all of the perks it offers that can help get your startup funding efforts off of the ground.

      9. Chase Ink Cash

      Another top business credit card that offers stellar perks for startup funding is the Ink Cash. Though this business credit card offers a 0% intro APR period that’s slightly shorter at 12 months, it will also offer a cash back welcome bonus of $500 once you spend $3,000 in your first three months with the card.

      You’ll also earn cash back throughout your entire cardmembership at the following rates:

      • 5% cash back on the first $25k you spend annually:
        • At office supply stores
        • On internet, cable, and phone services
      • 2% cash back on the first $25k you spend annually:
        • At gas stations
        • At restaurants
      • 1% cash back on everything else and above those annual spending thresholds

      If you want access to quick startup funding through a welcome offer, and you plan to spend a lot at office supplies store and on communication services, then the Chase Ink Business Cash should be a no-brainer source of funding for your startup.

      10. Chase Ink Unlimited

      Finally, one last top business credit card for startup funding is the Ink Unlimited. Just like the Ink Cash, the Ink Unlimited offers a 0% intro APR of twelve months. The Ink Unlimited will also offer you a welcome bonus of $500 once you spend $3,000 within your first three months with the card.

      Unlike the Ink Cash, though, the Ink Unlimited will give you an unlimited, flat-rate 1.5% cash back on every single dollar you spend with it. That means you’ll earn $1.50 for every $1 you spend with this source of startup funding.

      So, if you anticipate spending on non-traditional business expenses as you start your new business, then the Ink Unlimited will likely show you more cash back returns for your spending than the Ink Cash would.

      See Your Startup Business Credit Card Options

      Getting Startup Funding Debt-Free

      Though business credit cards are solid options for startup funding, they do come with their own set of limitations. For one, many vendors that you might want to make a purchase from using your startup funding might not even accept credit card payments. Plus, business credit cards aren’t guaranteed to provide you a certain amount of credit, and any balance you carry could accumulate interest at a pretty steady rate, especially if you don’t opt for a 0% intro APR business credit card. 

      Plus, as a startup business owner looking for sources of finance for a new business, wouldn’t it be nice to begin that journey without taking on debt?

      Fortunately, there are several debt-free options to generate startup funding that every entrepreneur should at least consider:


      11. Equity Financing

      If you’re wondering how to fund a startup without taking on interest-bearing debt, then you should consider equity financing as your go-to startup funding solution. In fact, if you’re in the right industry—think, say, a tech startup—then figuring out how to get funding for a startup without debt will be pretty easy. Especially if you have prior experience and a solid business plan, venture capitalists could be lining up at your door. VC firms will evaluate your new business based on credentials like its pre-money valuation, revenues, and team, so be ready to speak to these points before you pitch to any early stage venture capital firms.

      12. Personal Savings

      Have you considered how much of your own savings you’re willing to invest in your own business? If you are confident enough in your new business venture to seek funding from strangers, step up and show that confidence by investing some of your own savings in the startup. After all, if you’re not willing to take a chance on your startup, why should anyone else—even those who habitually invest in startup—choose your new business?

      Plus, if you’re anticipating applying for an SBA loan at some point, definitely consider this route. The SBA likes to see that a business owner has invested personally in their business—it usually correlates with things going well when the owner has a significant personal stake in its success.

      13. Crowdfunding

      By taking advantage of crowdfunding platforms like Kickstarter and IndieGoGo, you might be able to fund your business by asking a large number of individuals to get involved with funding your startup through small investments. Many experts refer to crowdfunding as the democratization of fundraising. Indeed. it’s available to more people than just the high-net-worth individuals who seem to monopolize equity funding and debt funding. Each investment from a backer incrementally adds to your goal, so even the smallest contribution helps—you don’t need access to an accredited investor to fund your startup.

      Setting up crowdfunding campaigns is also a great way to gain exposure for your young business while you’re seeking money for the venture.

      Fair warning, however—crowdfunding does not normally generate large sums of startup capital, and maintaining a campaign can be time-consuming. Before you pursue this option, consider whether the opportunities for exposure through crowdfunding sites will be worthwhile even if the campaign doesn’t fully fund your business. If you don’t end up meeting your crowdfunding goal, you might have to end up bootstrapping the rest of your startup costs.

      To find a happy medium between two top startup funding sources, you can consider equity crowdfunding. This allows startups to raise money from a large group through selling securities. Each small investment adds up to be a large chunk of capital, but each investment also means you’re saying goodbye to equity, so keep that in mind when contemplating equity crowdfunding.

      14. Grants for Small Businesses

      Often considered the closest thing to “free money” that you could ever obtain for your business, grants for small business are a form of startup funding that require no repayment like debt and no trade of equity like venture capital.

      Although hard to find, small business grants are usually worth seeking out as a source of financing for a new business. They tend to be very industry-specific, so you’ll need to carefully research your business circumstances and identify your niche so that you can tailor your grant application to align with the grant sponsor’s goals. But there’s likely something that applies directly to you—from small business grants for women to small business grants for minority business owners, and more.

      How to Get Startup Funding Despite the Obstacles

      Though being a startup will certainly limit your business funding options, finding funding for startups with little or even no business history is still possible. Be sure to explore the top fourteen startup options we’ve highlighted here.

      And should you decide to pursue one of these forms of startup funding, keep the following tips in mind:

      1. Leverage good personal credit
      2. Tap into your previous experience. 
      3. Build a thorough business plan.
      4. Pick the right industry.
      5. Demonstrate your invested equity.

      Whether you’re asking a family member for startup funding, or you’re applying for a business credit card to fund a startup, be sure to keep these tips in mind. If you do, you’ll be well on your way to finding the best form of startup funding for your young business.

      Contributing Writer at Fundera

      Maddie Shepherd

      Maddie Shepherd is a former Fundera senior staff writer and current freelance writer. Maddie has an extensive knowledge of business credit cards, accounting tools, and merchant services, but specializes in small business financing advice. Maddie has a bachelor's degree in Spanish and Latin American cultures from Barnard College.
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