Get Your Startup Going with One of These Funding Methods

The first big challenge you face with a startup is funding it. It's easy to think of business ideas, but having the best idea in the world does you no good without the money to bring your idea to life.

There are plenty of potential funding options out there for new businesses. Choosing the right funding source is important to get the best deal and to avoid financial issues later. Here are the top three options to consider in the first few years with your startup.


When you bootstrap a business, it essentially means that you're using your own resources to fund it. The term gets its name from the phrase "pull yourself up by your bootstraps," which means to do something on your own.

For a typical business owner, bootstrapping would look something like this – you start by saving as much money as you can to launch your business. While there are many businesses you can start with little money upfront, it's always good to have money on hand to cover expenses. Being able to invest in your business gives it a better chance of success.

After launching, you continue putting your own disposable income into your business and reinvesting any profits into it to help it grow. Business owners can be wary of bootstrapping because it requires them to put up their own money, but the reality is that just about everyone needs to start this way. You're unlikely to ever get approved for financing if you haven't put your own money into your business. If you aren't willing to invest in your business, no one else would want to, either.

Credit Cards

Credit cards are one of the better short-term financing options available, and it's always smart to have at least one credit card for your business, preferably a business credit card. There are two reasons for this.

The first is that when you have a business credit card, you can use it for all your business transactions and keep them separate from your personal transactions, which helps keep things organized when tax time rolls around. The second is that the best credit cards earn rewards or cashback, getting you money back on every transaction.

The downside with credit cards is that they can have higher interest rates than other funding methods. There are, however, 0-percent annual percentage rate (APR) credit cards that don't charge any interest for an introductory period. That into period could be a year or longer. These cards are an excellent financing choice if you're confident you can pay off what you spend within the intro period.

Personal Loans

Although many business owners think that a business loan is the way to go, those are actually very difficult to get unless you've been in business for at least a couple years and have revenues in the six-figure range. A personal loan will be a better option for most people. Even though you can't borrow as much, you can still get a solid amount and put it towards your business.

You can get a personal loan through a bank or credit union, but online lenders and peer-to-peer (P2P) lenders are typically more flexible regarding borrower requirements, while still following the same banking regulations as any other financial institution. If you have a few different lenders in mind, see if they have a prequalification option that lets you see what kind of terms you could get on a loan without a hard credit check.

Of the funding options available, the three above tend to work best for startups. Consider each to see which would best fit the current needs of your business. You can also combine them to get the benefits of different methods, such as using a business credit card for the rewards, and then paying it back with a personal loan.

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