3 Options For Getting Together The Capital To Start Your Small Business (Plus Pros & Cons of Each)

Despite the substantial growth and advancements in VC and angel investments in recent years, they still remain restricted to disruptive and scalable startups, leaving most traditional small businesses starved for funds.

When it comes to getting a small business off the ground, most entrepreneurs are still on their own, with the age old trope of pulling oneself up by one’s bootstraps still holding true.

That being said, however, entrepreneurs and small businesses have a slew of options available for them, which can provide the much needed capital to get their ventures going. 

While many of these are quite cumbersome, and lack the flexibility that comes with venture funding, they remain the most dominant source of funding among small and medium sized businesses, and will likely remain strong in the years ahead. 

Tip: How To Easily Prove Your Income & Get A Loan?

Getting a loan approved for your business is far from straightforward, especially when it comes to business loans, as banks and financial institutions assess risks thoroughly, digging deep into the personal finances of the entrepreneur, along with their credit scores, histories, and more.

If you’re struggling with getting approval for a business loan, chances are that it has to do with your inability to prove your personal income.

A great solution in this regard is to make a check stub that attests to your monthly income, and creates a strong earnings background that speaks to your creditworthiness.

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1.) Friends & Family

Beyond bootstrapping your business entirely from your personal savings, the next best option is raising funds from friends and family, either as a loan, or in-lieu of equity in the business. 

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This is how small businesses have gotten off the ground historically, with families, and communities coming together to invest in and lend within their respective communities.


  • Very flexible when it comes to the terms of financing, with reasonable interest rates, and little-to-no loss of equity.
  • A strong motivation factor that comes when you have to prove to your friends and family, while also having to return their funds back to them.
  • A built-in support network, advisory panel, and more, depending on the experience and qualifications of the friends and family.


  • A key drawback of this funding source is that there is always the risk of business and relationships getting entangled.
  • Entrepreneurs will also have to deal with higher pressures and expectations when working with friends and family.
  • If all the funds have been raised from within a family, the risk of failure stands to weigh heavily on the family unit. In case of failure or losses, the entire family stands to lose money.

2.) Credit Cards

The simplest and often the most straightforward way for most entrepreneurs to fund their business is by using their credit cards to fund various purchases and orders. 

Unlike loans or venture funding there is no long, drawn out application process, no pitch to prepare, or having to convince investors to part with their money, it is just a matter of taking out your credit card and swiping it.


  • Simple, straightforward, and hassle-free, with no lengthy application process, or waiting for approvals.
  • No questions asked, allowing purchases and orders to be funded right away.
  • Take advantage of points, cashbacks, and bonuses, helping save on various expenses.


  • Be ready to pay high interest rates, going all the way up to 36% on some cards.
  • Additional fees and charges levied when transactions are considered a cash advance, which can further increase the cost of this funding source.
  • A hit to the credit score depending on the nature and type of transactions, along with the credit usage rates, among other things.
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3.) Bank Loans

Small business loans are dime a dozen these days, with most banks and financial institutions offering a program catered towards up and coming businesses. 

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They offer better rates when compared to credit cards, with higher disbursals and loan tenures, making them perfectly suitable for funding large capital investments.


  • Lower APRs especially when compared to credit cards and other private lending options.
  • Get access to large enough sums to fund your entire capital requirements, all from a single lender, without the hassles of multiple credit cards, or friends and family investors.
  • No loss of equity, as banks and financial institutions only look to be paid back with interest, and maintain no vested interest in the long-term success of your enterprise.


  • A long drawn-out approvals process that involves vetting every aspect of your business plan, personal finances, and more.
  • Some lenders might require collateral, including even your personal assets to secure your loan against, and unsecured loans will come with high rates of interest, and low approval rates.
  • Regular fixed monthly interest payments can be a drain on cash flows, especially for a small business.
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Final Words

Even though we live during a time increasingly accessible, democratized, and inclusive financial services, the sad reality is that funding for most small businesses still remains slim.

There are, however, quite a few options beyond mainstream finance that entrepreneurs and business owners can explore.

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Ella Marcotte

Jonathon Spire

Jonathon Spire

Tech Blogger at Jonathon Spire

My diverse background started with my computer science degree, and later progressed to building laptops and accessories. And now, for the last 7 years, I have been a social media marketing specialist and business growth consultant.

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Jonathon Spire

I blog about a range of tech topics.

For the last 7 years I have been a social media marketing specialist and business growth consultant, so I write about those the most.

Full transparency: I do review a lot of services and I try to do it as objectively as possible; I give honest feedback and only promote services I believe truly work (for which I may or may not receive a commission) – if you are a service owner and you think I have made a mistake then please let me know in the comments section.

– Jon