According to a recent Goldman Sachs survey, while 2021 was more difficult for business than 2020, 73% of owners expressed optimism about their small business’s financial trajectory in 2022. An overwhelming majority supported emergency federal assistance to small businesses during the COVID-19 pandemic.

Starting a business or running one has never been cheap. Figuring out secured funding is essential to succeeding especially during a global slowdown. Whether you want to bootstrap a business or find investors, this guide will compare the available small business funding options.

Tip: Make a business website and gain all the tools you need to grow your business.

Best business funding sources

01. Bootstrapping

Bootstrapping uses existing resources such as personal capital, equipment and real estate to fund a business. If you choose to bootstrap your business, you may start with dipping into savings accounts and adjusting the line on your personal credit card to come up with cash. But once your venture takes off, you can reinvest your profits to continue funding your business growth.

Bootstrapping allows you to maintain full equity in your business and decide on impactful issues without investor interference. It also helps you learn better spending habits as you manage big business goals on a tight budget.

Mailchimp’s $12 billion exit to Intuit makes it one of the most successful bootstrapping startups in tech history. As a side project to a web design business, co-founders Ben Chestnut and Dan Kurzius launched Mailchimp in 2001 and slowly and steadily nurtured their clients towards their email marketing business. Mailchimp’s success was ultimately tied to “a proximity to its customers,” Chestnut told the New York Times back in 2016. His advice was: “If you want to run a successful tech company, you don’t have to follow the path of ‘Silicon Valley.’ You can simply start a business, run it to serve your customers, and forget about outside investors and growth at any cost.”

02. Crowdfunding

Aspiring entrepreneurs have long used crowdfunding to raise money for business online. As the cost of starting a business keeps rising, some small business owners use crowdfunding websites, such as Kickstarter, GoFundMe and Indiegogo, to help close the gap.

When funding your business via crowdfunding, know your target audience. Create a transparent budget and set a reasonable goal. Communicate with your backers frequently and once you hit your fundraising goal, don’t forget to thank all your donors.

03. Loans from family and friends

Currently the richest person alive, Jeff Bezos owes his early success to the $250,000 loan he received from his parents for Amazon in 1995. Borrowing from family and friends comes with its own set of pros and cons: Not only will people within your personal network give you a more gentler and flexible lending experience, they won’t charge you to apply and may even eliminate interest rates altogether. On the other hand, taking a loan from family and friends often comes with a lot of emotional ties that can worsen relationships .

When the time comes to create your elevator pitch to family and friends, keep it professional but friendly. Show them why they should invest in your business. Write a speech like you would for a bank or private lender using these guidelines:

• Present your case and outline reasons why they would want to fund your business.

• Share a completed business plan template to show you are worthy of credit and prepared.

• Help them understand how the money will help

• Give them a repayment timeline with applicable interest.

• Turn this agreement into a document with signatures from both sides.

04. Bank business loans

The U.S. Census Bureau reports that bank loans comprise 99.9% of external financing for small businesses (see our guide on how to get a startup loan). However, we need to learn more about lending practices in relation to how they contribute to an ever changing economy. (Note: The FDIC and the Census are conducting a survey of 2,000 banks of all sizes across the U.S and expect to publish their findings in 2024.)

In the meantime, if you run an established business with strong credit and collateral, you might want to figure out how to get a business loan from a bank. See what financing options you qualify for, whether for equipment, commercial rental loans, business lines of credit or business credit cards.

05. Angel investors

From dentists to influencers and retirees, angel investors represent a more diverse investing crowd than ever before. And the New York Times reports that the research firm Pitchbook stated that some 3,000 new angel investors made their first deal in 2022, up from 2,725 investors in 2011.

The Securities and Exchange Commission amended the investor accreditation process last year, removing certain “roadblocks” that deterred aspiring small time investors, reported the Times. Companies like AngelList Venture now help all types of businesses raise capital by connecting them to new investors.

06. Venture capital

Many start-ups prefer funding their business with venture capital, as firms can invest large sums quickly. With venture capital, you don’t put your personal assets at risk. Also, unlike bank loans, you won’t need to worry about structured repayment plans with harsh penalties. 2021 also saw venture funding break records. Global venture investment brought in $643 billion last year, up from $355 billion in 2020, according to Crunchbase.

That said, some venture capital firms are “sounding alarm bells” due to the familiar small business challenges of rising interest rates. For example, VC firm Sequoia Capital published a 52-page presentation for companies to navigate investments during economic uncertainty.

07. SBA loans and grants

The U.S. Small Business Administration backs loans to help fund business owners. These U.S.-bank administered loans, generally include low interest rates and fees, counseling and resources, and require little or no collateral.

Four million small businesses received nearly $390 billion in COVID relief funds under the SBA’s COVID Economic Injury Disaster Loan. SBA head Isabella Casillas Guzman said in June 2022, “Nearly 90 percent of loans went to small businesses with 10 employees or less, which tend to include the hardest-hit and most underserved population.”

Aside from special programs, the SBA website has a Lender Match tool that helps you match your needs with traditional loan options (including 7(a) loans, 504 loans and microloans.) When talking to SBA approved lenders, keep your business plan, credit history, financial projections and amount of funds by your side.

The SBA also provides limited small business grants to promote entrepreneurship in scientific research and development. However, you cannot use these grants for starting or expanding your business—only to maintain or run an existing business.

08. Credit union financing

Many Americans have turned to non-for-profit credit unions for community and personal relationships with their lenders. In fact, 3.37 million more people joined credit unions between 2019 and 2020, bringing total membership to 125.11 million, according to CNBC. According to the Credit Union National Association, these institutions' lending grew more than bank lending did during the pandemic. Credit unions also offer low-interest programs and special member services, including financial education and outreach. Find your local credit union on mycreditunion.gov.