Secure Business Funding Without Taking Out Bank Loans

You dream of starting a small business, but you can’t wrap your head around the business-funding part of the process.

Of course, bank loans are an option; however, they can become huge financial burdens if your business doesn’t immediately take off.

Additionally, the approval rate of loans with low interest rates and long repayment terms is low and requires a laundry list of conditions, according to statistics from the U.S. Small Business Administration (SBA).

The good news is that you can start a business without relying on help from the bank. Here are 10 loan-free ways to get funded.


These four “bootstrapping” strategies can help you secure the cash you need to make an initial investment in your business, with the lowest possible risks.

1. Monetize your skills

Can you offer services as a consultant, coach, or mentor? By initially selling your expertise, you can raise money to fund the expenses for your dream business. If you’re an interior designer, consider offering home decor consulting services on an affordable website until you save enough money to invest in your own interior-design agency.

2. Downsize

If you have excess stuff that you don’t need, sell it and use your earnings to partially fund your new business. You might sell your car or furniture, or move to a more affordable location. The trade-off of short-term comfort for a thriving business may be worth it.

3. Presell

Let your customers fund you. If you’re creating an online course that involves expenses like graphic design, animations, voiceovers, videos, or interviews with experts, presell the course by collecting payments online and use the money from the “early bird” buyers to fund its creation.

4. Participate in plugin-enabled plan competitions

If your business stands out from the crowd, consider entering it into a business competition. They usually give out significant, equity-free monetary prizes. You can browse lists of plugin-enabled plan competitions online, like the ones from Grasshopper.


These six strategies can get you funded in exchange for equity. This means that eventually you will pay back the individuals who fund you — but not as much as you would owe a bank.

5. Crowdsource

Crowdsourcing is similar to preselling, except that you will give your backers (“investors”) prizes and goodies based on how much money they contribute. The most popular crowdsourcing platforms are Kickstarter, Fundable, Indiegogo, and Rockethub.

6. Find a business partner

Finding a business partner will split up the costs of building your business while removing some of the burden of managing it. If you go down this road, choose someone you trust and who shares your passion for the business to avoid internal disputes.

7. Pitch to angel investors

Angel investors can help your business find its footing. It’s best to take this route if your business idea could be considered innovative and disruptive. You can find angel investors on platforms like Gust, Circle Up, and AngelList.

8. Join incubators

Business incubators are organizations that enable the growth of businesses in their early stages in exchange for a membership or fee. They provide training, coaching, mentorship, networking, and equity funding. Find an incubator that suits your business idea at The International Business Innovation Association.

9. Raise investment capital from SBICs

The SBA can help you find equity investors through a Small Business Investment Company.

10. Ask friends and family for help

If you have loved ones with the means to pitch in, you might reach out to friends and family for funding, and offer a portion of the shares in return.

You don’t have to wait to secure 100 percent of your funding before launching your business. You can collect the business funding you need with the right plan and effective bootstrapping or equity funding strategies.


Satta Sarmah Hightower

Satta Sarmah is a writer, editor and content marketing manager who launched her first personal website a decade ago — on WordPress, of course.

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