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New businesses are set up all the time. Whether you’re fed up with your job and want to do something else, you want to have a side-hustle on the side, or you’re setting up a holding company for some properties. You’ll need a bank account, and in some cases you’ll need financing for your business. It is estimated there were 5.4 million businesses set up in the US in 2021 and there are over 35 million businesses all together in the US.

Depending on whether you start your business on a shoestring and cut back as many costs as you can, at one point or another you might need some money to take you to the next step or to get you through a rough patch.

You might fund a business with your own money, borrow money from family or friends or decide to go down another route for money. Before you decide to borrow money today you should explore the different avenues available to you. And you should ask whether you either need money now or can bootstrap.


Small Business Loans

If you define your business as a Small Business – the US census defines a small business as a firm having revenue between $1 million to over $40 million and between 100 and 1,500 employees then you could be eligible for small business funding. You can find a small business loan from a number of institutions – both in-person and online and also from banks on main street.




Depending on what you need the money for these loans could help your business grow, buy inventory or even find new R&D (research and development). You could also use this money to hire salespeople, invest in online or offline marketing, or even pay the running costs of the business.

There are a number of different small business loans available and depending on your needs and personal circumstances you’ll hopefully be able to find a loan that works. The loans that are available, and relevant to you will depend on the amount you need to borrow, the duration of the loan, and the specific terms of the loan.

A popular type of small business loan can be found through a direct online lender. Lenders like these online lenders because it is easy and straightforward to complete the application process and find a loan that works. There are a number of reputable online companies that offer small, fast business cash advances, short-term loans, and working capital loans which can range from $5,000 to $500,000.


Borrow From Family and Friends

Many businesses through the years have started with a loan from family and friends. They know you well, they want you to succeed and so are often willing to loan you small amounts of money to start off your business. When you’re first starting off it can be more difficult to convince banks or investors about the quality of your business and so sometimes friends and family can be the only options.


Look after the pennys and the dollars will take care of themselves.


When you go to family and friends to borrow money it is important to clearly lay out the terms of the loan – the total amount, when you’re expected to repay the money, or whether the loan is for equity in the business (or both).

Whatever terms you finally work out with the lender then you should then get it written down into a legal agreement. This should then be checked by legal representatives on both sides to make sure you are both happy with the terms that have been written out and how they are dictated. You shouldn’t sign off on anything that you are unhappy with or uncomfortable with.

Think carefully before borrowing money from family and friends. A scary number of businesses don’t make it past the first couple of years of trading and so think about what you will do if you cannot pay that money back in the time period that you have specified. Would you be able to cover the money from your own pocket or is there a danger that you won’t be able to repay the money at all? Many a friendship and relationship has been strained by a business going wrong.



Raising money through crowdfunding has recently become more and more popular. Crowdfunding is when you put your business or idea on a website, explain it, and talk about why it will work and how it will make money.

This route gives start-up founders and entrepreneurs the opportunity to raise money through a number of different borrowers who believe in what the business does. It is easy to set up a crowdfunding page but it is more difficult to create a page that sells your idea in a creative and inspiring way.

Once you put your campaign live people can donate money to your campaign. You can send out your campaign to family and friends and it is usually a good idea to create hype ahead of time by doing a pre-campaign that lets people know that something is coming that they can invest in. Some campaigns require you to reach the full funding target before the money is released. If you don’t hit your target then the money is refunded back to those who have donated.

Depending on what kind of money you want to raise then you should be able to find an option that works for you.

Richard Allan

Richard Allan

Richard Allan is the founder of Capital Bean and a passionate writer about personal finance, budgeting and how to save money at home and work.

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