How to start your own business. Right loan! 2024
Posted: Sat Feb 22, 2025 5:17 am
Thousands of Americans dream of starting a small business. Between 2019 and 2020 alone, about 1 million small businesses were opened in the United States, according to data from the Small Business Administration (SBA).
There is one thing all of these businesses needed in common to get started: money. Raising enough funds is essential to getting a small business off the ground and paving the way for longevity and future success.
In this article, we will cover the following ways to get money to start a small business:
Savings
Personal loans
Credit cards
Bank loan
Venture capital and angel investors
Government Programs
Corporate Programs
Crowdfunding and Crowdlending
1. Savings
Most startup founders use their personal savings to fund their businesses, according to the Gallup Small Business Index.
That said, you shouldn’t drain your bank account to raise Greece telegram data funds for your business. Entrepreneurs should budget enough expenses (for rent and groceries, for example) to last a year. Why? Because many startups aren’t profitable for months after they open.
Smaller service-based businesses can probably get by with 3-6 months of working capital to cover operating expenses.
There are several ways to start saving to start your small business, including:
Reduce credit card debt (call your bank to request a lower interest rate)
Set up an automatic deduction for your savings account
Get rid of any services you don't use, like a gym membership or car-sharing subscription
Set up a budget using a service like You Need a Budget
Buying used: This includes your car and any other purchases. Look for groups in your area that focus on trading or selling used items.
2. Personal Loans
This tactic involves borrowing money from family and friends. To avoid resentment, put the terms of the personal loan in writing. Be clear about how much you need, what the interest rate is, and when you will be repaid.
3. Credit cards
You can use your personal credit card or open a business credit card.
Even if this option is open to you, don’t choose it lightly. Credit cards often have high interest rates that add to your balance each month. You could end up with a much larger debt balance than you planned, which could hurt your new business.
Still not sure that credit cards are the best option for you? Make sure you’re using a card with the lowest interest rate possible and excellent payment terms. Search Credit.com to find the right card for your business.
4. Bank Loans
Unfortunately, a bank loan for small businesses is not guaranteed. Banks want airtight business plans and excellent credit scores before they will consider approving a small business loan.
They may also want you to invest your own money into the business to prove that you are truly committed to making your business work.
You can go with your personal bank, as they will already be familiar with your banking history. Or, choose a bank that is historically known for lending to small businesses.
To improve your chances of getting a loan, choose an SBA-backed lender. (Read more about SBA loan requirements.)
Business Loan Calculator
Estimate how much your small business loan could cost using this business loan calculator.
5. Venture Capital and Angel Investors
Venture capital and angel investing are best suited for high-growth companies or companies that are already profitable with good cash flow. Still, each investor has their own specialty in terms of region, industry, and age of the company.
You’ll need a unique idea and a solid business plan to attract investment. The SBA can help match you with potential private investors through its SBIC program. Investments are typically made over a 3-year period.
SBIC investments come in 3 forms:
Loans . SBIC loans range from $250,000 to $10 million, which must be repaid (with interest). Interest rates range from 9% to 16%.
Equity . The SBIC will give you money for your business in exchange for a share of ownership (and control). Investments range from $100,000 to $5 million.
Loan and Equity . A combination of the first 2 options. Loans come with interest rates of 10% to 14% and investments range from $250,000 to $10 million.
6. Government Programs
Government grants can take some research to find the right one for you. The SBA has offices, called Small Business Development Centers, throughout the United States that can guide you through available grants, as well as provide business advice and training. Grants.gov also has information on more than 1,000 federal grant programs.
Some small business grants are available to entrepreneurs who face unique barriers. For example:
Women's Business Centers offer advice on local, state and private loans to women, especially those who are economically or socially disadvantaged.
Minority-owned businesses can check out this SBA website that connects them to financing
The 8(a) Business Development program helps businesses in economically disadvantaged areas
Veteran's Outreach Business Centers can match veterans with loans.
7. Corporate Programs
Select companies offer programs that support small businesses, including low-interest financing. For example, Goldman Sachs has a program that provides affordable loans to businesses that may not qualify for traditional credit sources.
8. Crowdfunding and Crowdlending
Crowdfunding typically involves asking large groups of people for funds on dedicated crowdfunding sites. They usually receive a gift or the product you’re developing in exchange for their investment. Crowdlending works in the same way, except your backers expect you to pay them back.
Here are some options:
Kickstarter: The most popular choice. You add project details, your funding goal, and your deadline. You can then email family and friends the link to your page. Payments to you are made via credit card. If you reach your goal, Kickstarter takes 5% and Stripe (Kickstarter's payment processor) takes 3% to 5%.
Indiegogo: An alternative to Kickstarter.
AngelList: Matches you with angel investors.
Kiva: Get small loans with 0% interest.
Accion Microfinance Bank: Loans typically have an interest rate of 3% to 8%, plus additional costs.
There is one thing all of these businesses needed in common to get started: money. Raising enough funds is essential to getting a small business off the ground and paving the way for longevity and future success.
In this article, we will cover the following ways to get money to start a small business:
Savings
Personal loans
Credit cards
Bank loan
Venture capital and angel investors
Government Programs
Corporate Programs
Crowdfunding and Crowdlending
1. Savings
Most startup founders use their personal savings to fund their businesses, according to the Gallup Small Business Index.
That said, you shouldn’t drain your bank account to raise Greece telegram data funds for your business. Entrepreneurs should budget enough expenses (for rent and groceries, for example) to last a year. Why? Because many startups aren’t profitable for months after they open.
Smaller service-based businesses can probably get by with 3-6 months of working capital to cover operating expenses.
There are several ways to start saving to start your small business, including:
Reduce credit card debt (call your bank to request a lower interest rate)
Set up an automatic deduction for your savings account
Get rid of any services you don't use, like a gym membership or car-sharing subscription
Set up a budget using a service like You Need a Budget
Buying used: This includes your car and any other purchases. Look for groups in your area that focus on trading or selling used items.
2. Personal Loans
This tactic involves borrowing money from family and friends. To avoid resentment, put the terms of the personal loan in writing. Be clear about how much you need, what the interest rate is, and when you will be repaid.
3. Credit cards
You can use your personal credit card or open a business credit card.
Even if this option is open to you, don’t choose it lightly. Credit cards often have high interest rates that add to your balance each month. You could end up with a much larger debt balance than you planned, which could hurt your new business.
Still not sure that credit cards are the best option for you? Make sure you’re using a card with the lowest interest rate possible and excellent payment terms. Search Credit.com to find the right card for your business.
4. Bank Loans
Unfortunately, a bank loan for small businesses is not guaranteed. Banks want airtight business plans and excellent credit scores before they will consider approving a small business loan.
They may also want you to invest your own money into the business to prove that you are truly committed to making your business work.
You can go with your personal bank, as they will already be familiar with your banking history. Or, choose a bank that is historically known for lending to small businesses.
To improve your chances of getting a loan, choose an SBA-backed lender. (Read more about SBA loan requirements.)
Business Loan Calculator
Estimate how much your small business loan could cost using this business loan calculator.
5. Venture Capital and Angel Investors
Venture capital and angel investing are best suited for high-growth companies or companies that are already profitable with good cash flow. Still, each investor has their own specialty in terms of region, industry, and age of the company.
You’ll need a unique idea and a solid business plan to attract investment. The SBA can help match you with potential private investors through its SBIC program. Investments are typically made over a 3-year period.
SBIC investments come in 3 forms:
Loans . SBIC loans range from $250,000 to $10 million, which must be repaid (with interest). Interest rates range from 9% to 16%.
Equity . The SBIC will give you money for your business in exchange for a share of ownership (and control). Investments range from $100,000 to $5 million.
Loan and Equity . A combination of the first 2 options. Loans come with interest rates of 10% to 14% and investments range from $250,000 to $10 million.
6. Government Programs
Government grants can take some research to find the right one for you. The SBA has offices, called Small Business Development Centers, throughout the United States that can guide you through available grants, as well as provide business advice and training. Grants.gov also has information on more than 1,000 federal grant programs.
Some small business grants are available to entrepreneurs who face unique barriers. For example:
Women's Business Centers offer advice on local, state and private loans to women, especially those who are economically or socially disadvantaged.
Minority-owned businesses can check out this SBA website that connects them to financing
The 8(a) Business Development program helps businesses in economically disadvantaged areas
Veteran's Outreach Business Centers can match veterans with loans.
7. Corporate Programs
Select companies offer programs that support small businesses, including low-interest financing. For example, Goldman Sachs has a program that provides affordable loans to businesses that may not qualify for traditional credit sources.
8. Crowdfunding and Crowdlending
Crowdfunding typically involves asking large groups of people for funds on dedicated crowdfunding sites. They usually receive a gift or the product you’re developing in exchange for their investment. Crowdlending works in the same way, except your backers expect you to pay them back.
Here are some options:
Kickstarter: The most popular choice. You add project details, your funding goal, and your deadline. You can then email family and friends the link to your page. Payments to you are made via credit card. If you reach your goal, Kickstarter takes 5% and Stripe (Kickstarter's payment processor) takes 3% to 5%.
Indiegogo: An alternative to Kickstarter.
AngelList: Matches you with angel investors.
Kiva: Get small loans with 0% interest.
Accion Microfinance Bank: Loans typically have an interest rate of 3% to 8%, plus additional costs.