What Are The Best Types of Funding for a Business?

Author · Modified on 20 January, 2023

Businesses are being set-up constantly – it is estimated that 5.39 million new business applications were submitted in 2021, and this number is forecast to grow even higher by the end of 2022.

However, no matter how great your business is or how great your product may be, it is essential that you have sufficient funding to help lift your business off the ground. Without funding of some sort, it is nearly impossible for your business to make any money.

While many people finance their new companies with their own capital or by borrowing money from family or friends, there are other options available. It is important to explore all the potential avenues before deciding the best way for you to fund your new business.


Small Business Loans


Small business loans are available from a large number of online or in-person lenders and banking institutions. These types of loans can help your business grow, fund new R&D (research and development), help you expand, enhance sales and marketing efforts, allow you to hire new people, help to pay running costs and much more.

Depending on the criteria, you may need a profit level of 30%, or you can only borrow 25% of your annual revenue – however this may vary from lender-to-lender. In fact, some businesses may be in debt but need a small business loan to become profitable – and therefore other factors may be looked at such as their future orders and invoices, value of their collateral and credit score.

There are multiple types of small business loans available, and options vary depending on your business needs, the length of the loan, amount you need to borrow and the specific terms of the loan.

One type of popular small business loan can be achieved through direct online lenders. There are a number of online lenders that make small business loans through a relatively easy online process. Reputable companies often provide fast, small business cash advances, working capital loans, and short-term loans in amounts which can range anywhere from $5,000 up to $500,000.


Friends and Family may be more willing to loan you money for your business if they believe in you and your project!


Friends and Family


Borrowing money from friends and family is a classic way to start a business. While it may be harder to convince investors or banks of the quality of your idea, your family and friends often believe in your dream.

They may be more willing to help fund your company. If you do go to friends and family for loans, it’s a good idea to make sure that each of you gets sound legal advice, especially if you are taking the money as a loan.

However, it is important to be wary that borrowing money could be a quick way to lose friends and sour family relationships. Be careful if you decide to proceed this way, as it is often said that mixing business and personal doesn’t often end well.




Crowdfunding is a relatively new, popular way of raising funding through multiple funders, often via popular crowdfunding websites.

Crowdfunding gives startup entrepreneurs the opportunity to raise startup funding for their business, and can help a company promote its products or services.

Setting up a crowdfunding campaign is not very difficult. You set up a profile on a crowdfunding site, describing your company and its business, and the amount of money you are trying to raise.

People who are interested in what you are trying to do can donate to your campaign, typically in exchange for some kind of reward for their donation (one of your products or services, a discount based on how much donated, or some other perk), or for some form of equity or profit share in your business.

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