A rock-solid business plan is just the beginning. The real challenge is securing the capital to turn your vision into reality. Even the most innovative products and brilliant marketing strategies won’t get off the ground without proper funding.
Most business startups start with limited resources, but that shouldn’t stop you. The right financing strategy can bridge the gap between idea and execution. In this guide, we’ll break down your best options to fund your venture and set you up for success.
TL;DR on How to Finance a Business
- Primary ways to finance your business: Personal savings, business loans (SBA/bank), investors (angel/venture capitalists), crowdfunding, etc.
- Choose between debt (loans) and equity (investors) based on your growth plans and willingness to share ownership
- The way a business is financed typically combines multiple sources: startup capital (personal funds), operational funding (loans/revenue), and growth capital (investors)
1. Use a Gold IRA to Secure a Business Loan
One way to secure a business loan is by using your gold individual retirement account (IRA). A gold IRA is just like a regular IRA, only that in a gold IRA, you invest in physical gold instead of the usual retirement fund that uses cash. It can also be in other forms of precious metals, such as silver and platinum.
If you have a gold IRA, you can ask your investment firm how to secure a business loan using your gold account. There are several gold investment firms like Oxford Gold that are extending this kind of service nowadays, and if you do your research right, you can take advantage of their benefits. With a gold IRA acting as your collateral, you no longer have to go from one bank to another just to finance your business.
However, early withdrawals from a Gold IRA before age 59½ may trigger taxes and penalties. Always consult a financial advisor to ensure this strategy aligns with your retirement and business goals.
2. Apply for a Commercial Loan
A commercial loan is a type of loan offered by financial institutions. It can be obtained by businesses that need financing for long-term assets and operational costs. If you want an uncomplicated application process, you can opt to apply for a commercial loan.
The process of securing a commercial loan varies, depending on the lender. But generally, a qualifying process is the first step. It’s sort of like a preapproval stage where the lender will be evaluating your financial background and the revenue of the business. After that, the actual loan process will start, and you’ll be asked to submit requirements such as the company’s financial statements.
Securing a commercial loan can be tedious. You might need to submit several other documents, such as the business plan and your goals and objectives. Another drawback of commercial loans is the inflexibility of funds because you have to clearly specify where and how the money will be spent.
3. Compare Debt vs. Equity Financing
Every new business needs capital, but how you obtain it affects your company’s future. You’ll typically choose between debt financing (borrowing funds) and equity financing (selling ownership stake).
Debt Financing: Secure capital through small business loans (banks/credit unions), SBA loans, or business credit cards. While you’ll maintain full company ownership, these options require regular repayments regardless of business performance.
Equity Financing: Raise funds by partnering with venture capital firms, angel investors, or via crowdfunding. You’ll avoid monthly payments as investors share your risk, but this requires surrendering partial ownership of your company.
Pro Tip: Many successful startups use both types of financing at different stages. A financial advisor can help you determine the right balance for your business needs.
4. Use Personal Savings
Using your personal savings is perhaps the simplest and easiest way to finance your business. In an ideal world, you probably have saved enough money to finance your dream business. That is if you already knew that you wanted to start your own company. If you have personal savings that you can use, that’s the safest and easiest way to finance your business.
However, it’s a bit risky to use all of your savings for the business you’re planning to start. Maybe your savings aren’t enough to finance your business, so you’re likely to still need additional funding to make it work. There’s nothing wrong with trying to make a safe decision, but don’t forget to secure a backup plan for when your business doesn’t take off right away.
5. Bootstrap Your Business with Personal Funds
Before seeking external funding, consider what personal financial resources you can leverage.
Self-Funding Strategies:
- Use personal savings (but keep an emergency fund)
- Tap into retirement accounts (carefully – watch out for penalties)
- Liquidate personal assets
- Take on side gigs to fund your startup costs
Bootstrapping Tactics:
- Reinvest early profits instead of taking salaries
- Negotiate extended payment terms with suppliers
- Use free business development tools
- Keep operating expenses lean
The upside? You keep full control of your business. But there’s a catch: You’re personally liable if things go south. That’s why we recommend that you always keep business and personal finances completely separate.
6. Credit Card For Equipment Financing
Credit cards can also be useful in times of financial need, even when putting up a business. You can use your credit card to pay for equipment that your business needs, as most suppliers usually accept credit cards as a form of payment. It’s also a good way to earn rewards, discounts, and cashbacks.
Aside from using the credit card itself, you can use it to get a cash advance. However, make sure you know what you’re doing because cash advances tend to have higher interest rates. Another downside of credit cards is that they’re linked to your credit score, and failing to make your payments on time will surely affect your credit standing.
7. Apply For Government Assistance Loans
In the United States, small business owners can turn to government assistance loans to finance their businesses. The SBA loan, for example, is offered by a federal government agency called the Small Business Administration (SBA) to provide support to small business owners.
The SBA has various loan programs that you can avail from banks and other lenders that are accredited and guaranteed by the agency. Payment terms are more flexible and interest rates are lower, but you need to prepare yourself because SBA loans are known to be very intensive and tedious when it comes to their loan application process.
8. Explore Long-Term Business Financing Options
When you need capital for major business expenses that will pay off over time, consider these long-term financing solutions:
Term Loans:
- Fixed repayment schedule (1-10 years)
- Typically requires collateral
- Best for: Equipment purchases, commercial real estate
Equity Financing
- Structure: Selling ownership stake (shares) in your company
- Term: Permanent capital (no repayment required)
- Best for: High-growth businesses needing large capital injections
- Key Consideration: Dilutes ownership and control
Equipment Financing
- Repayment: 3–10 years (matches equipment lifespan)
- Collateral: The equipment itself secures the loan
- Best for: Machinery, vehicles, technology purchases
Commercial Real Estate Loans
- Repayment: 5–20 years
- Collateral: The property being financed
- Best for: Buying/renovating office space, retail locations
Pro Tip: Lenders will examine your balance sheet and financial projections closely. Prepare detailed records of your business plan and past performance.
9. Pitch to Venture Capitalists or Angel Investors
For businesses with high growth potential, professional investors can provide substantial capital:
Venture Capital Firms:
- Typically invest $2M+
- Require proven traction and scalability
- Expect a significant ownership share (often 25-50%)
- Focus on tech, biotech, and other high-growth sectors
Angel Investors:
- Wealthy individuals investing $25K-$500K
- More flexible than venture capital
- Often provide mentorship
- May accept smaller ownership stakes
Pro Tip: Venture capitalists fund less than 1% of startups. You need to have alternative financing plans ready if you decide to pursue this competitive funding route.
10. Find A Business Partner
If you’ve tried all the steps above and you still need additional funds for your business, you can consider finding a business partner or an investor. One way that you could try is to ask your family and friends if they’ll be willing to become your business partner. As business partners, though, you’d be sharing responsibilities, as well as all losses or gains that the business acquires.
An investor, on the other hand, could be an individual or any entity that would invest their money in your business to earn a profit out of it. Investors could either give you a loan or buy shares from your company to become one. One of the best ways to meet potential investors is to attend business events and gatherings. Through this strategy, you can be visible, and you’ll have an opportunity to pitch your business ideas to people or companies that are active in investing capital for aspiring business owners like you.
Key Takeaways
Starting a business is an exciting endeavor. But then, you also need to be reminded that it involves several aspects that can be tedious or overwhelming at some point. Don’t let these challenges weigh you down, especially when it comes to financing your business. There are several ways that can help you secure funding for your journey.
You only need to look over them closely, do your research, and compare their pros and cons so you can come up with the best decision. Don’t single out alternative financing options without really knowing if they can benefit you or not. Make no mistake—business requires risk-taking. But with the right knowledge and strategy, you can protect your venture and steer it toward success.
Ready to fuel your business growth? We can guide you to the perfect financing solution, whether it’s startup funding, expansion capital, or cash flow support. Apply now for a personalized consultation and take the first step toward securing your business’s financial future today!
