- Aug 18
- 5 min read
According to Goldman Sachs 10,000 Small Businesses Voices, 75% of small business owners are optimistic about the future of their business, with 72% planning to grow.
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
Amazon founder Jeff Bezos owes his early success to the $250,000 loan he received from his parents 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 banks are the most common source of external financing for small businesses, which make up 99.9% of all U.S. firms (see our guide on how to get a startup loan). Applicants most often sought financing at large banks, according to the Federal Reserve’s 2025 Small Business Credit Survey.
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.
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. Global venture investment brought in $425 billion in 2025, up 30% from $328 billion in 2024, 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, “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. You can only use them 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. Federally insured credit unions added 2.5 million members over the year, bringing total membership to 145.8 million, according to the National Credit Union Administration. 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.
Small business funding FAQ
What is the most common source of funding for small businesses?
Bank loans remain the most common source of external financing for small businesses, according to the U.S. Census Bureau, though bootstrapping, credit unions and SBA-backed loans are also widely used depending on the business's stage and credit profile.
Can I get small business funding with bad credit or no collateral?
Yes. Options include unsecured online loans, business credit cards, merchant cash advances and microloans, though these often carry higher interest rates. Building a track record with a credit union or nonprofit lender can also improve your odds over time.
How much equity do angel investors typically take?
It varies by deal size and business stage, but angel investors commonly take a minority equity stake in exchange for their investment, with terms negotiated individually rather than set by a fixed formula.
What's the difference between a business loan and a business grant?
A loan must be repaid, usually with interest, while a grant does not need to be repaid. Grants are typically more competitive and narrowly targeted, for example SBA grants for research and development, while loans are more widely available.
Is it better to bootstrap or take outside investment?
Bootstrapping lets you keep full ownership and control but limits how fast you can grow. Outside investment, such as angel or venture capital, can accelerate growth but means giving up equity and often some decision-making power. The right choice depends on your growth timeline and how much control you want to retain.
