Top Sources of Alternative Funding for a Startup

As an entrepreneur with a brilliant idea, there’s probably one big thing on your mind: how to make it work.

Making it work often requires capital and plenty of it, but as Firmex reports in their Mid-Market M&A Report, the deal-making environment is one that’s sluggish right now, and one of the reasons is because of the tight regulatory environment of the banking industry.

So whether you’ve already exhausted your bank-based funding options, or you simply prefer to look at funding opportunities outside the banking system, the following are some alternative financing options that can work for all kinds of entrepreneurs and startups.

Online Lending

The Internet is one of the best marketplaces we have, and it’s right at our fingertips, yet this is something a lot of entrepreneurs overlook. There are online lending platforms that perform exactly as they sound they would.

Potential borrowers create an application, and then when a decision is made, funding might come as soon as a few days.

Online lending is becoming one of the most viable options for small businesses, particularly since banks have been limiting their funding of entrepreneurs. In fact, a 2015 Federal Reserve Bank survey showed online business lenders had the second highest loan approval rate at 71%, only behind very small banks.

Small Business Administration Loans

The Federal Government created the Small Business Administration to help budding entrepreneurs grow their small businesses, and one of the many services they offer are small business loans. Small business loans from the SBA are relatively flexible, so they can be used for most of the things a startup might need including buying equipment or even providing capital for the purchase of another business.

SBA Loans can also be ideal for female or minority entrepreneurs because they’re given special consideration in the funding decision.


If you have a great idea and you know it’s something people are going to love, you can actually use sales as a way to provide capital for your startup to get it off the ground and pay for the production of the product.

If you don’t want to worry about traditional forms of lending, you can offer presale opportunities, which are most readily available through crowdfunding platforms such as Kickstarter.

There’s no equity provided to investors, but instead, the people who give money to your company ultimately get the product itself in exchange for their funding.


Finally, there is a multitude of opportunities to get grants as a startup entrepreneur, particularly if your business is focused on technology, science or research.

When you find these grant opportunities, such as what’s offered by the Small Business Technology Transfer, it’s good because you don’t have to worry about paying back a loan or pleasing investors.

There are typically development goals outlined by the organization funding the grant, so it’s important that before considering this option you know you would be able to keep up with the demands.

If you’re an entrepreneur who’s been turned down for traditional financing from a bank, or that’s just not the route you want to take, there are more alternative funding options than ever to get capital and transform your idea or brand new startup into a thriving business.


Carmelo is a marketing writer and blogger helping small and medium size businesses craft winning content strategies. She's always scouting the web for new social media strategies and is slightly addicted to apps. When not tapping the keyboard, you are likely to find her in the park playing with her uncontrollably friendly Irish setter or trying out new vegan recipes.

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