9 expert tips to finance a startup

Tried and true advice for starting a new business.

Last updated:

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.

Finding funding is one of the biggest hurdles to starting a new business. You don’t have a track record to show your company will be successful, and it’s on you to convince your funder — be it a lender or investor — that your startup is worth the risk. Here’s what experts have to say about financing a startup.

1. First, know your market inside and out.

“Regardless of your industry or sector, you must show that you have clients willing to buy your product or service. It doesn’t necessarily have to be the final version of the product, but you need a bit more than just a general description.

This will show any investor that your product has some product-market fit. When you meet, this sets the basis for a larger discussion on not just where you can go with the product, but where you can end up as a company.”

— Paul Brown, chief operating officer of Positive Venture Group

2. Attract investors with a strong business plan.

“To attract angel investors, you must create a convincing business plan, backed with a great idea for a product or service. You also need to be able to present your idea in a way that’s attractive to your investors. Pitching to angel investors can be done in person, but nowadays you can use websites like AngelList to post your ideas to future investors.”

— Igor Mitic, cofounder of Fortunly.com

3. Showcase all successes — even if you haven’t launched.

“The best indicator of future success is past success, so show everything you’ve done so far. Even if you have no revenue, ask yourself: Have you built a prototype? Created a menu? Spoken to potential landlords? Interviewed potential customers? Anything you’ve already done can give investors or lenders more confidence in you and make them more likely to write you a check.”

— Dave Lavinsky, president of Growthink

4. Consider bootstrapping to get your foot in the door.

“Bootstrapping is fairly self explanatory — you use your own savings and money to fund the company. It can be difficult to do since you’re not bringing on investors or taking out loans. However, if you budget carefully and are able to sacrifice certain expenses in order to fund the business, you can self-fund the company through bootstrapping. Best of all, because you didn’t take out any loans, you don’t need to pay anyone back.”

— Deborah Sweeney, CEO of MyCorporation.com

5. Crowdfund your early projects.

“If you can convince enough people to crowdfund your product initially, it can create a domino effect, making it progressively easier to finance your startup. Public opinion is critical, and people are influenced by the actions of others. So if a friend invests in the crowdfund, friends of friends might be more inclined to participate.”

— Igor Mitic, cofounder of Fortunly.com

6. Look into grants.

“You could be eligible for certain types of startup grants — either from the government or large public organizations. Applying for this type of funding is ideal since grants normally don’t need to be paid back, therefore the funding comes with the least amount of risk. Grants are highly competitive and typically require a lot of work. But if you qualify, the recognition of being awarded a grant by a prestigious organization can come with additional benefits.”

— Jibran Qureshi, director of Clear House Accountants

7. Pick your investors carefully.

“Design your perfect investor before you try to raise money. Pitching to the wrong investors wastes your time and your focus. It can also hurt your chances with your ideal investors, since they might not understand your company or your market and could dismiss you to other investors.”

— Nicole Toomey Davis, president and CEO of Enclavix, LLC – Creators of the VentureWrench Startup Coaching Community

8. If you borrow, find a guarantor.

“While you might be able to get a normal bank loan for your startup, these can be very expensive with high interest rates due to the risks involved. It might make more sense to apply for a loan with a guarantor, in which someone you nominate is responsible for paying back the loan if you can’t. Think carefully about who you’d choose, though. While family or friends may be more than happy to help out, if you’re not serious about your venture and can’t pay back the loan, they’ll have to.”

— Chris Avery, general manager at Solution Loans

9. Watch out for scams — especially with grants.

“Be careful when searching for small business grants, as some may not be legitimate. For example, grant applications won’t require you to pay a processing fee or provide your bank account information. If you see a grant asking for this information, don’t apply.”

— Deborah Sweeney, CEO of MyCorporation.com

You can learn more with our guide to business loans for startups.

Compare business loans for startups

Updated December 14th, 2019
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
$5,000
$500,000
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
OnDeck Small Business Loans
$5,000
$500,000
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Efundex long-term business loans
$50,000
$1,000,000
2+ years in business, 620+ credit score, not a sole proprietorship or nonprofit, strong financial history
Financing for high-risk industries with transparent rates and terms.
National Business Capital Business Loans
$10,000
$5,000,000
Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.
Kabbage Small Business Line of Credit
$500
$250,000
1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
A simple, convenient online application could securely get the funds you need to grow your business.
LendingTree Business Loans
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but many require good personal credit, minimum annual revenue and minimum time in business
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Lendio Business Loan Marketplace
$500
$5,000,000
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.

Compare up to 4 providers

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site