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How to Get Money to Start a Business: Guidelines and Resources

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections of This Topic Include


First, Get Ready for Getting the Money
Then Do a Business-Startup Business Plan

Estimate How Much You Need

Then Estimate How Much Money You Need to Start Your Business
Then Identify Your Best Sources of Funding For Your Startup

Traditional Sources of Funding

Traditional Sources of Funds to Businesses
- Angel Investors
- Bootstrapping
- Confounding and Friends
- Loans - Commercial Bank Business Loans
- Loans - Credit Cards
- Loans - Lines of Credit
- Loans - SBA-Backed (Government Loans)
- Venture Capitalists
- Trade Services

Non-Traditional Sources of Funding

Non-Traditional Sources of Funding for Businesses
- Business Incubators
- Grants
- Loan Collateralized by Accounts Receivable
- Microloans
- Peer-to-Peer Lending

Resources for Free Assistance

Sources of Assistance With Your Startup

Also consider
Related Library Topics


First, Get Ready for Getting Money

Be Patient With Yourself Now

There are numerous steps involved in starting a business, as well as in the planning and getting of sufficient funding for your new business. Investors will notice how carefully you were in doing those steps. You'll end up doing those steps in a proactive and planful way if you do them now -- or you'll do them in a highly reactive and chaotic way later on. Take it one step at a time. Remember the guidelines in:
How to Stay Sane During Planning

Get Your Personal Finances in Order Now

Do a personal budget now and in a format that makes sense to others. In the budget, make sure that you have sufficient funds to pay your personal bills at least until your new business makes sufficient profits to pay your personal bills as well as the business's. The reasons for getting your personal finances in order now include:

  • Investors and funders will want to see that you believe in your business idea so much that you are willing to invest your own funds.
  • Banks and other lending institutions will want to see a strong credit rating from you, as well.

The following Library topic provides a variety of resources for you.
Introduction to Personal Financial Management

Be Willing To Seek and Accept Help

There are numerous sources of assistance in starting and funding a new small business. Be sure to scan the sources at
Sources of Assistance With Your Startup

Also consider
Getting and Using Banker
Getting and Using a Consultant
Getting and Using a Lawyer
Getting and Using an Accountant

Then Do a Business-Startup Business Plan

Consider Steps in Starting a Business

If you are looking for money to start a new business, then you first should think about what's involved in starting a new business even before you get the money to start it.

If investors know that you had the wisdom to very carefully think about those first steps, then they are much more likely to give you the money to start the business.
Reference Manual for How to Start a Business.

Then Do Business Startup Business Plan

Most types of investors will ask for a well developed business plan. A business plan will guide you to carefully think about how your business can regularly make a profit over time.

The above-mentioned Reference Manual for How to Start a Business will specify when to start that business plan. It also will link to another Library topic that will guide you to do the right kind of business plan for your needs.

If you want to read about business planning now, this topic will guide you through every step of developing one. In that topic, be sure to focus on the "startup" design of a business plan.
All About Business Planning

Also consider
How Do You Know You're Financially Ready To Start A Business Full-time?
Are You Ready to Seek Funding? This 10-Point Checklist Will Decide
How to Prepare for Your First Round of Startup Funding
Five Things Small Business Owners Should Prepare to Ensure Funding Success

Then Estimate How Much Money You Need to Start Your Business

Depends Especially on the Type of Business You Are Starting

The amount of money that you'll need depends on whether you're starting a:

  1. Manufacturing business -- that includes getting different types of resources, storing them, assembling them and shipping them to the customers.
  2. Online store -- that includes designing online catalogs of products, utilizing credit card processing services, arranging order fulfillment and shipping products to the customers.
  3. Service industry -- that includes developing and retaining sufficient expertise, understanding customer needs and working with customers to meet their needs.

For Now, Identify Typical Business Startup Costs

There are standard startup costs that you will probably incur regardless of the type of business you are starting, for example: legal filings, professional services, facilities, labor costs, marketing, website design and maintenance, computers and software, and telephones.

Here is a very useful spreadsheet that lists and and organizes many of the typical startup costs. It includes directions to download it to your computer and then open it in a spreadsheet.
Small Business Start Up Costs

Then Compute Your Business StartUp Costs

One Simple Overall Approach

You can arrive at the same amount by taking a variety of different approaches. For example, the article How to Estimate Start-Up Costs suggests:

  1. List your likely spending on the assets in your business, for example, facilities, mortgage, shelves, tables, a cash register, etc.
  2. Then list your likely spending on typical expenses, such as those in the above-mentioned spreadsheet.
  3. Then determine how much you'll need to get started by adding up the spending from numbers 1 and 2. It's not likely that you'll get money from profits during the first six months of operations. So spread the total of your expenses over the first six months to give you a better idea of how to spend the money.

A More Specific Approach

The article Startup Costs: How Much Cash Will You Need? suggests a more specific approach including:

First, estimate your costs, including:

  1. One-time costs - professional fees (lawyer, accountant, etc.), loan fees, equipment purchases, bookkeeping software, etc. (these are "variable costs")
  2. Ongoing costs - rent, utilities, supplies, etc. (these are fixed costs)


  1. Essential costs - rent, labor, computers, etc.
  2. Optional costs - enhancements to furniture, services you could do yourself, etc.


  1. Fixed costs - that you cannot avoid
  2. Variable costs - that vary with your rate of sales

Draft a Business Startup Cash Flow Statement

Then, estimate your cash flow -- how much you'll spend and need -- for the first six months. This is the most important financial statement to do when starting a business. It tells you whether you can pay your bills or not. Here is a downloadable spreadsheet to start your basic cash flow spreadsheet.
Cash Flow Forecast template

Also consider
Calculate Your Startup Costs
How Do You Know You're Financially Ready To Start A Business Full-time?
Startup Basics: How Much Money Do You Need to Start a Business?
How to Evaluate Start-Up Costs
Startup Costs: How Much Cash Will You Need?

Now Identify Your Best Sources of Funding for Your Startup

There is a wide variety of sources of funding for startup businesses. For example, this article Startup Funding Comparison Table compares the features of each of 31 different types. Most new startups use a variety of sources for funds. The following is an overview of the most often mentioned sources for startups. The following list is by alphabetical order only.

Traditional Sources of Funds to Businesses

At the time of this writing (2019), the following sources are frequently mentioned in literature about funding for businesses.

Angel Investors

These are wealthy individuals or groups who invest in startups to make a profit and/or to assist a business that is closely affiliated with the interests or causes of the investors. These investors are usually very familiar with the challenges of starting and developing a small business and, thus, can be very useful to business owners. These investors want comprehensive and due diligence (fact-gathering to analyze the startup) before they invest. They might want partial ownership and decision-making in the business.
Angel Investor Groups
How Angel Investors And Angel Groups Work
The Top 10 Angel Investor Groups


This source includes your own money either from your own savings or money generated from your private assets. Investors often want to see that the entrepreneur will invest some of their own funds. This source is often used as "seed" money, that is, to fund the new business until other sources of funds are obtained.
How to Bootstrap Your Small Business From the Ground Up
6 Sources of Bootstrap Financing
25 Amazing Ways to Bootstrap Your Business


This source includes a marketing campaign via social media that aims to raise small amounts of donated money from numerous individuals and organizations. As written at Launch Your Idea With These Top Crowdfunding Services, "If your business is a startup or doesn’t quite meet the bank’s requirements for a conventional loan, or you just want to stay out of debt and keep 100% ownership, then crowdfunding your idea may be a viable solution for your funding needs."
8 Crowdfunding Sites: Which Is Best for You?

Family and Friends

This is another popular source of funds for startups. Although they are family and friends, the terms of this grant or loan of funds from this source should still be carefully specified in a loan agreement, especially to avoid confusion, frustration and troubled relationships in the future.
Family and Friends Financing
How to Borrow from Family and Friends
The Right Way To Get Funding From Family And Friends

Loans - Commercial Bank Business Loans

There is a trend away from commercial banks giving loans for small startups. Estimates are that about 35% of small businesses get funding via this means. Banks want evidence of collateral that will subsidize the loan, a good credit history and/or that the borrower having strong experience in the industry of the business. A personal loan can take as few as a couple of days if the bank already knows the borrower. A business loan from the bank usually takes up to a few weeks.
10 Things the Bank Will Ask When You Need a Business Loan
How to Get a Loan to Start a Business: Follow These 4 Steps
How to Get a Loan to Start a Business: What to Know About Startup Loans

Loans - Credit Cards

The advantage of using a personal or business credit card is that funds can be immediately available and the funds usually do not need to be secured by collateral. Funds are usually in small amounts, for example, $2,000 to $3,000 to help get the business started or through various shortages of cash. The borrower pays an interest rate on the borrowed funds and usually, the stronger the borrower's credit ratings, the lower the amount. A downside of this approach is that it is a very expensive way of addressing cash shortages and can end up hurting the borrower's credit history.
Can I Fund a Startup With My Credit Card?
8 Steps To Wisely Financing A Business with A Credit Card
When Is Using Credit Cards to Fund Your Business Right?

Loans - Lines of Credit

A startup business line of credit is a loan that is usually backed by the borrower's collateral, for example, a home or significant property. The borrower can continue to borrow up to a pre-set limit. Thus, it is similar to a credit card. Interest rates are often lower than the typical credit card rates.
Business Line of Credit: How It Works and Best Options
Small Business Line of Credit: How to Choose the Right Option
The Pros and Cons of a Startup Business Line of Credit

Loans - SBA-Backed (Government Loans)

The Small Business Administration (SBA) in the United States of American backs, or guarantees, the payments of loans for small businesses. (If the borrower defaults, the SBA pays off the loan.) Advantages are that the loans are usually less expensive to start, have flexible eligibility requirements and come with advice about starting and running the business. Loans are provided based on the business's expected income, nature of its ownership and where it operates.
SBA Loans
SBA Loans: What You Need to Know
Find the Lowest Rates on SBA Loans

Venture Capitalists

This is usually an organization, rather than a singular individual, comprised of experts in starting and developing businesses. They seek significant returns or increases in profits from their investments. They usually invest primarily in businesses that show clear evidence of strong current and/or potential growth. A major benefit of this source is availability of ongoing advice and resources to help the business. Similar to angel investors, they expect careful due diligence and partial ownership regarding their investments.
10 Tips for Finding Outside Investors for Your Business
How To Get Venture Capital Funding For Your Startup
The Entrepreneur's Guide to Venture Capitalists

Non-Traditional Sources of Funding for Businesses

At the time of this writing (2019), the following sources are occasionally -- but not yet frequently mentioned -- sources of funding to businesses. The following list is by alphabetical order only.

Business Incubators

A business incubator is an organization that assists startups by providing specialized facilities and services. The incubator's overall goal is regional or national economic development. Facilities might be, for example, shared office space or computer equipment. Services might be trainings on activities to start and management startups.
Business Incubator
25 Diverse Startup Incubators
The Top 40 Startup Accelerators and Incubators in North America in 2019


These are funds given to small businesses in certain industries, especially those that benefit society, in scientific or research. They are not always limited to nonprofit organizations. However, it take a long time to apply and receive these kinds of grants. Also, they often are highly competitive to get because many organizations apply to get them.
Small-Business Grants: Where to Find Free Money
Small Business Grants: 107 Ways to Get Free Money for Your Business
Small Business Grants: 21 Best Places for Free Money in 2019

Loans Collateralized by Accounts Receivable

Accounts receivable includes the money that customers owe to the business when they bought items on credit. So, in effect, these receivables are a form of money in that they have strong likelihood of become actual money when they are paid by the customers. Thus, they can be used as collateral by the business when borrowing money for its own expenses.
Overview of Accounts Receivable Financing
How to Show Accounts Receivable Used as Collateral
What is a Line of Credit Secured by Accounts Receivable?


As defined at What Are Microloans?, "Microloans are typically defined as very small, short-term loans with a low-interest rate, extended to self-employed individuals, new startups with very low capital requirements, or small businesses with only a few employees."
Everything You Need to Know About Microloans for Startups
SBA's Microloan Program
The 5 Best Microloans: How and Where to Get Them

Peer-to-Peer Lending

This is a type of funding in which a person can get a small loan from a collection of other individuals (investors). The loans are facilitated by a variety of online organizations to which a person submits an application for a loan. The organization lists the loan applications in a directory that investors can review. Each application has a deadline to be funded. The facilitating organizations ensure the applications are complete, including to get the borrower's credit information. These loans usually have affordable interest rates and are not secured, or collateralized.
Peer-to-Peer Lending for Small Businesses
Peer-to-Peer (P2P) Business Loans: Where to Find Them
How to Use Peer-to-Peer Loans to Fund Your Small Business

Trade Services

This source includes trading one or more assets (cash, expertise, services, facilities, stock, etc.) of the startup business for one or more assets owned by another. As to whether it is a trade or not depends on the specifics of the exchange. It can be an advantage to a startup that already has strong expertise in various areas, but that needs other assets to develop to the next stage.
The Top 5 Considerations When Trading Equity For Services
7 Things to Consider Before Trading Your Services for Equity
As a Startup, Is It Better to Find a Way to Pay for Services or Trade Equity for It?

Also consider
The Most Common Funding Types for Young Startups, Explained
How to Fund Your Business Startup: 5 Fast and Popular Options
Small Business Financing Options Without a Traditional Bank
9 Realistic Ways To Fund Your Startup
The 10 Most Reliable Ways to Fund a Startup

Sources of Assistance With Your Startup

Business Startup Templates and Calculators

Small Business StartUp Costs (template)|
SCORE Start-Up Expenses (template)
This Is the Best Budget Template for New Business Owners (template)
Business Startup Cost Calculator
This Free Small-Business Budget Template Will Take Your Bookkeeping to the Next Level
Essential financial tools: a free budget template and guide
5 Free Small Business Budget Templates
How Much Money Do You Need to Start a Business?

Sources of Free Assistance

The sources of free assistance to getting funding are very similar to those who assist in starting businesses. The following link is to a large number of free and helpful sources of assistance.
Free Help to Start a Business

Learn More in the Library's Blogs Related to This Topic

In addition to the articles on this current page, also see the following blogs that have posts related to this topic. Scan down the blog's page to see various posts. Also see the section "Recent Blog Posts" in the sidebar of the blog or click on "next" near the bottom of a post in the blog. The blog also links to numerous free related resources.

Library's Business Planning Blog
Library's Building a Business Blog
Library's Strategic Planning Blog

For the Category of Financial Management (For-Profit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books