9 expert tips to finance a startup

Tried and true advice for starting a new business.

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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 February 26th, 2020
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
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.
Become Business Loan Marketplace
12+ months in business and $10,000+ monthly revenue
Compare loan offers from top lenders using this marketplace. It’s free & won’t affect your credit.
National Business Capital Business Loans
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.
OnDeck Small Business Loans
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
BlueVine Business Loan
6+ months in business, $10,000 in monthly revenue, 600+ personal credit score.
Get approved for a business loan in as little as 5 minutes. Applications won't affect your credit score.
First Down Funding business loans
Varies by type of loan
Alternative financing up to $300K with highly competitive rates.
Kabbage Small Business Line of Credit
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.
First Union Lending Unsecured Long-Term Business Loan
450+ credit score, 3+ months in business, $15,000+ monthly revenue, no open bankruptcies
Unsecured funding and more for all credit types.
Sheer Funding Business Loans
6+ months in business, 550+ credit score, $150,000+ annual revenue, eligible industry
Multiple financing options available for business owners with less-than-perfect credit scores.
Efundex long-term business loans
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.
Lendio Business Loan Marketplace
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

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