BTSMAGAZINE

How to Get Money to Start a Small Business: 10 Funding Options

By · November 10, 2026
Person stacking coins on a table

A practical guide to the main ways to fund a new small business, with the costs and risks of each.

Quick answer: Most small businesses start with personal savings, then add funding such as SBA microloans of up to $50,000, business credit cards, vendor credit, crowdfunding or support from friends and family. Larger, fast-growing ideas may suit angel investors. Start by working out exactly how much you need, then choose the cheapest option that fits your plan and risk level.

Money is often the biggest worry for new business owners. The good news is that there are more ways to fund a small business than a traditional bank loan, and many small businesses need less money than owners first think.

This guide covers ten funding options, drawing on guidance from the US Small Business Administration (SBA). It explains who each option suits and the risks to weigh before you sign anything. It is general information, not financial advice.

In this article

How much money do you need?

Before you look for funding, work out your numbers. The SBA recommends calculating your startup costs, including equipment, licenses, insurance, stock, marketing and enough cash to cover expenses until sales pick up.

  1. List one-time costs such as equipment, registration and a website.
  2. List monthly costs such as rent, software, insurance and supplies.
  3. Estimate how many months it will take to cover those costs from sales.
  4. Add a buffer for surprises.

Many service businesses, such as consulting or bookkeeping, need very little. Our guide to low capital, high profit business ideas lists options you can start for under $1,000.

What are the main funding options?

Option Typical size Main advantage Main risk
Personal savings Any No interest or approval You can lose your own money
Friends and family Small to medium Flexible terms Strained relationships
SBA microloans Up to $50,000 Easier to get than many bank loans Interest, usually 8% to 13%
SBA 7(a) loans Larger amounts Long repayment terms Paperwork and approval time
Business credit cards Small Fast and flexible High interest if not repaid
Vendor credit Small Buy now, pay later, often net 30 Must pay on time to keep it
Crowdfunding Small to medium Tests demand while raising money Needs planning and marketing
Grants Usually small No repayment Competitive and limited
Angel investors Medium to large Expertise and contacts You give up ownership
Personal loans Small to medium Quick, based on your credit Your personal credit is at risk

How do the most popular options work?

1. Personal savings

Most small businesses start with the owner’s own money. It keeps you in control and avoids debt, but only invest what you can afford to lose.

2. SBA microloans

The SBA microloan program provides loans of up to $50,000 through nonprofit intermediary lenders. The SBA says the average loan is about $13,000, terms run up to seven years, and interest rates generally fall between 8% and 13%. Many lenders also offer business training.

Example
Leila needed $15,000 to open a small alterations shop. Her bank turned her down because the business was new. A local SBA microloan lender approved her after she completed its business planning course and showed a clear budget.

3. Business credit cards

The SBA notes they can help keep business and personal spending separate and build a business credit history. Pay the balance in full where possible, because interest rates are high.

4. Vendor credit

Many suppliers let you buy now and pay later, often on net 30 terms. The SBA describes vendor credit as a major source of small business financing. It is especially useful for stock and supplies.

5. Crowdfunding

Platforms let many people back your idea, often in return for early products. A successful campaign also proves demand. The SBA warns it needs careful preparation.

6. Grants

Grants do not need to be repaid, but they are competitive and often limited to specific industries, locations or groups. Beware of websites that charge fees for grant lists.

7. Angel investors and venture capital

These suit businesses aiming for fast growth. In return for money, you give up part of your company, and investors usually expect a say in decisions.

BTS Magazine Tip
Contact your local Small Business Development Center or SCORE mentor before you apply for any loan. Advisors can review your plan for free and point you to lenders that work with new businesses in your area.

How do you prepare to ask for money?

  1. Write a simple business plan: Lenders want to see your idea, market, costs and how you will repay. See our food truck business plan guide for an example.
  2. Check your credit: Many small business loans look at your personal credit, especially for new businesses.
  3. Register your business: Lenders often ask for your EIN and registration documents. See how to get an EIN.
  4. Separate your finances: A business bank account shows lenders a clear record.
  5. Know your numbers: Be ready to explain exactly how you will use the money.

What are the risks of borrowing to start a business?

  • Personal guarantees: Many loans for new businesses require you to guarantee them personally, so your assets may be at risk.
  • Cash flow pressure: Loan repayments start before your business may be profitable.
  • High-cost lenders: Some online lenders and cash advances charge very high effective rates. Read the terms carefully.
  • Family tension: Put loans from friends and family in writing, with clear repayment terms.
Example
Daniel accepted a merchant cash advance for his cafe without comparing options. The daily repayments took a large share of his card sales. He later refinanced with an SBA microloan at a much lower cost, but he wished he had checked first.
Try this today
Write down your total startup cost and how many months of expenses you need to cover. Then list which two funding options from the table fit that amount. This gives you a clear starting point before you speak to any lender.

Frequently asked questions

How can I get money to start a business with no money?

Start with a low-cost service business, use savings carefully, and consider an SBA microloan, vendor credit or crowdfunding.

What is an SBA microloan?

It is a loan of up to $50,000 made through SBA-approved nonprofit lenders, with an average of about $13,000.

Can I get a business loan with bad credit?

It is harder, but some microloan lenders and community lenders work with owners rebuilding their credit.

Are there free grants to start a business?

Some exist, but they are competitive and limited. Be careful of sites that charge for grant information.

Should I use a credit card to start my business?

It can work for small, short-term costs if you can pay the balance quickly, but high interest makes it costly to carry debt.

Do I need a business plan to get funding?

Most lenders and investors want one, and it helps you work out how much you need.

Final Thoughts

  • Work out exactly how much you need before you look for funding.
  • Savings, SBA microloans and vendor credit are common starting points.
  • Compare the full cost of every loan and avoid high-cost cash advances.
  • Use free advisors at SBDCs and SCORE to prepare your plan.

Explore More on BTS Magazine

Sources