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9 expert tips to finance a startup

Tried and true advice for starting a new business.

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

Name Product Filter Values Loan amount APR Requirements

OnDeck small business loans
Finder Rating: 4.7 / 5: ★★★★★

OnDeck small business loans
$5,000 – $250,000
As low as 35%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.

Fora Financial business loans
Finder Rating: 3.4 / 5: ★★★★★

Fora Financial business loans
$5,000 – $500,000
Varies
6+ months in business, $12,000+ monthly revenue, no open bankruptcies
Get qualified for funding in minutes for up to $500,000 without affecting your credit score. Great for SBA loan applicants.

Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★

Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.

ROK Financial business loans
Finder Rating: 4.7 / 5: ★★★★★

ROK Financial business loans
$10,000 – $5,000,000
Starting at 6%
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.

LendingClub personal loans for business

LendingClub personal loans for business
$1,000 – $40,000
8.05% to 35.89%
US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.
Get prequalified for a personal loan up to $40,000 to help you grow your business. Great for new business owners with at least fair credit.

Rapid Finance small business loans
Finder Rating: 3.74 / 5: ★★★★★

Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK

Fundbox business loans
Finder Rating: 4.76 / 5: ★★★★★

Fundbox business loans
$1,000 – $150,000
4.99%
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
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Compare up to 4 providers

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