Angel investors: Angel investors are individuals or groups who invest in a business in exchange for a piece of ownership or equity.
Bootstrapping: Entrepreneurs invest their own money to launch and grow their businesses without external financing. Most bootstrap businesses tend to start small and grow from revenues.
Crowdsourcing: Collection of small amounts of capital from a large number of individuals to finance a new business venture. Social media is often used to motivate crowds of friends and family to support a business.
Friends and family: As a source of support, friends and family members may be the best bet to finance a startup. Friends and family tend to be lenient with loan terms or investment agreements. It is best to have formal agreements to ensure clarity and avoid problems.
Incubators: These programs are often sponsored by non-profits, private companies or municipalities, or
universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services.
Local and state economic development organizations: There are many local, municipal, county, and state
economic development organizations that offer a variety of financing options for small business owners. The best way to learn more about these options is through your local Small Business Association (SBA) or state Small Business Development Center (SBDC).
Peer-to-peer lending: These online services pair lenders with borrowers such as non-profit and for-profit
companies that facilitate loans without going through traditional lending institutions. These companies charge fees to broker and service loans. Most peer-to-peer loans are unsecured personal loans.
Small business loans: A loan is money (capital) that is borrowed by business owners to apply toward expenses. Small business loans provide short-, mid-, or long-term financing options for small business owners. These loans can be used to purchase assets, working capital, and real estate. Most lenders require business owners to personally guarantee the loan by providing secured interest on personal assets (collateral). Commercial banks, credit unions, and micro-lending programs provide small business loans.
Venture capital: This is money provided to small businesses owners in exchange for ownership or equity.
Venture capitalists invest substantial amounts in high-risk ventures that have a potential for above-average returns and long-term growth potential.