5 Smart Ways to Fund Your Business
Launching a new business is an exciting endeavor, but securing the necessary funds, not just to get off the ground but also to grow, can seriously drag things down. Many founders worry that raising capital means relinquishing control (i.e., giving up a percentage of ownership and the decision-making process), but there are paths to funding a business without diluting equity. In this post, we’ll explore five smart options, plus pros, cons, and tips for making them work for you.
Bootstrapping
“Bootstrapping is a method where entrepreneurs start companies with minimal capital, using personal finances or operating revenues instead of external investments,” as defined by Investopedia. Tapping into savings and early reinvestments allows you to retain full ownership and avoids any outside investor involvement or demands; however, there is a risk of slower growth and personal financial strain when going this route. If you’re limited in resources, small loans and donations from friends and family could also help cover startup costs without too much interference. When bootstrapping, GoHire recommends operating on a trim budget, avoiding “unnecessary costs” and “prioritizing revenue generation.”
Crowdfunding
Crowdfunding can be a powerful way to get a business up and running, generating online buzz while raising small contributions from a large number of people who support your unique products and/or services. LendingTree recently compared the most popular crowdfunding platforms, including their focus (customizable options, perks-based fundraising, creative projects, growth, etc.), funding types, and fees, which can be found here. Crowdfunding loans are another option, where you borrow from a crowd and repay with interest (think debt instead of equity). If you want to try crowdfunding, be ready to tell a compelling story on social media, with visuals, social proof, and stretch goals.
Grants & Competitions
Grants are free funds, typically from government programs and private organizations (corporations, foundations, and nonprofits), to achieve a specific goal. In addition to a boost in visibility and credibility, grants do not need to be repaid, which allows small businesses to develop without incurring debt. Because of this, they are highly competitive and often come with distinct eligibility requirements and time-consuming applications. But it will be well worth the effort if you are awarded one! Start small at the state and local level, before chasing big, national grants, and target your profile to match the mission of the grant you are trying to secure. Check out this 2025 list of small business grants compiled by LegalZoom to get started. And if you don’t mind a little more competition, keep an eye out for pitch contests, innovation challenges, and the like, with awards of cash or resources.
Revenue-Based Financing
Another method of non-equity funding is revenue-based financing (RBF), which involves borrowing money upfront in exchange for a percentage of future revenue, either until the debt is fully repaid or a predetermined multiple is reached. Unlike a fixed loan payment schedule, RBF payments scale with performance. This option aligns investor returns with your growth, allowing for flexible payments during leaner months. Of course, this also means the repayment timeline could stretch and lead to higher total costs when business stalls. As such, RBF works better with a predictable revenue stream or solid sales forecast.
Debt Financing
While not ideal for core funding, microloans, SBA loans, and venture debt are considered viable options for bridging growth. The U.S. Small Business Administration (SBA) offers microloans up to $50,000, with intermediaries handling disbursement, as well as broader loan programs ranging from $500 to $5.5 million to support business expansions. Venture debt is also available for growth-stage startups as an alternative to traditional bank loans that require collateral. This type of financing “may involve options for unique terms to accommodate the high-risk nature of startups,” as well as higher interest rates, according to J.P. Morgan.
Debt financing requires set payments regardless of performance; however, the interest is typically tax-deductible (depending on jurisdiction). Also, keep in mind that over-leveraging can harm credit and future fundraising, so be sure to negotiate for favorable terms that match your cash flow and understand covenants that may restrict operations.
As you can see, financing without giving up equity is possible, especially if you pick the approach that fits where your business is now and not just where you want it to be. Stay tuned for information on how to choose the right financing option for your business in November, on our News page, and follow us on LinkedIn, Instagram, Facebook, and Threads to stay connected!
The mission of the EMSDC is to stimulate and support economic development throughout Pennsylvania, Southern New Jersey, and Delaware. As a 501(c) (3) non-profit organization and regional affiliate of the NMSDC, we certify and connect our certified member businesses with member corporations to create a more dynamic supply chain. We invite you to explore our website at emsdc.org to learn more.