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It’s a topic that keeps budding entrepreneurs and experienced business owners alike awake at night.

  • Financing is complicated. Lack of knowledge about its concepts and regulations adds to the confusion.
  • There is the risk and uncertainty of not knowing what the future may bring.
  • There is the discouraging prospect of being rejected for financing or failing to find money elsewhere.
  • And not to be overlooked: New business owners’ emotional investment in the success of their enterprise may cloud their judgment when it comes to raising and managing capital.

Yes, small business financing is a knotty problem, but not an impossible one if you take a few fundamental steps to get the ball rolling.

Get Help

Above all other things, if you are a financing naïf, find someone who has expertise in perhaps the single-most critical issue facing entrepreneurs.

Even superheroes have only one superpower, and if business money-management is not yours, stay in your lane. If pride is an issue, get past it. If money is an issue (and that’s what this whole thing is about), you can get past that too.

Ask a trusted friend with finance experience to act as your de facto Chief Financial Officer. As a new business owner, you likely will be running a lean budget without wiggle room. A mistake in your first round of money planning—which is a crucial part of your business plan, the quality of which will have a massive impact on funding—can strangle your dream in its crib.

If you can afford an accountant or CPA to assess the financial health of your prospective or recently launched business, let one go over your numbers. These are money professionals, and anyone who is trying to start a business is in their world.

Another reason to look for help with the books: Time you spend poring over them is time you’re not working on something you are great at doing. Put that together with the increased probability of making a mistake is the final argument for finding help.

Now, if want to learn a new skill that enhances your business and saves you money, more power to you. Please remember, though, until you master business financing, learning it is a side hack to the things you do well.

A good place to start working on your budget—with that second set of eyes or not—is evaluating how much it will cost to launch your business and keep it running.

Get Your Costs on Paper

“He who fails to plan is planning to fail,” said someone famous sometime (quote-trackers attribute it to various sources.) Nevertheless, you can’t know how to get to where you want to be unless you know where you are. You don’t need a fancy computer program using complex algorithms, although a spreadsheet would be helpful.

But a pen and notepad will do the trick. Start jotting down expenses and respective costs, all the obvious things. And the one many people wishfully overlook: Taxes, and business taxes are different from personal taxes.

Research your potential expenses online. A good rule of thumb is to calculate all business expenses—then add 20% on top of that for things you missed, changing market conditions, a sales-tax bump, and so on. Worst case scenario, you’ll have extra capital on hand for emergencies.

(Aside: You still have your personal expenses to manage. If you haven’t already, keep tabs on your monthly expenses. Also factor in mandatory annual expenses. Calculate them by dividing each annual outlay by 12 and entering the value in your monthly budget as a set-aside.)

When you’ve calculated your costs, you’ll have a handle on your financing needs.

Financing Options

There are a number of ways to fund your enterprise. You can:

  • Invest your own savings
  • Borrow from friends and family
  • Take out a business loan from a bank

Food for thought: Asking relatives and associates for start-up money likely will mean carving out shares of the business for them. A bank will want collateral in the form or your home or other assets. If you apply for a business loan at the institution where you do your personal banking, you may receive more favorable terms.

Another great resource is the Small Business Administration (SBA). It’s website provides a wealth of information, including types of loans and prospective lenders. Of course, you should search online for articles and other reference materials in regard to starting a business and costs you should consider.

Don’t overlook government grants as a potential source of startup capital. Grants are given out based on a variety of qualifying factors. Unlike loans, grants do not have to be repaid. To access thousands of available grants and find out how to qualify, visit


Crowdfunding is another source to consider when looking for start-up money. It is popular in the non-profit and charity sectors, and also widespread in fund-raising campaigns to benefit families in need, community drives, and the like. There are pros and cons of the strategy for business financing but think about sorting them out to see if it makes sense for you. Investopedia provides a comprehensive crowdfunding breakdown that’s worth reviewing.

Establish Good Credit 

If you’ve decided to take out a loan to start your business you will need excellent credit. Period. Put yourself in the shoes of a lender. Who would you rather loan money to? Sally, who pays her bills on time and uses her credit cards but pays off the balance every month? Or Stan, who pays his bills late and has sizable credit debt. Be a Sally, not a Stan.

Bad credit can be fixed, but the best thing to do is maintain a healthy score. You do that simply by paying your bills on time, not exceeding your credit limit by 20%-30% of your total credit available to you, limiting the number of credit cards you have, and also using your credit card regularly yet responsibly.