Small Business Funding Options

Small businesses use a number of sources to fund their business growth. In fact, the National Small Business Association’s (NSBA) mid-year 2016 report, reveals the mix of funding businesses used:

  • Earnings from their business (33%)
  • Bank/credit union loans (31%)
  • Credit cards (31%)
  • No financing (29%)
  • Vendor credit (13%)
  • Leasing (5%)
  • SBA Loans (3%)
  • Venture Capital/Angel Investors (3%)
  • State/Regional Loan Programs (3%)
  • On-line/non-bank lenders (2%)
  • Private Placement Debt (2%)
  • Factoring Accounts Receivable (1%)
  • Public Equity sales (1%)
  • Crowdfunding (1%)
  • Private Placement of Equity (1%)
  • Other sources (6%)

This use of multiple capital sources is to be expected as each company must find the best option for its business needs and status. While traditional forms of capital dominate this list. There are new opportunities for main stream, small businesses in all industries to pursue some of the emerging sources like crowdfunding.

So, it is important to ask the question: “Will new forms of capital like crowdfunding sources grow in importance to traditional and non-traditional business sectors?”

To answer that question, let’s examine all types of capital, the pros and cons, as well as the business stages and categories that are best suited to each. Below is a list of the categories of funding. Categories 1 through 6 are those that most businesses are well-acquainted with, so will not be addressed in detail in this paper. I will also not be going into detail about incubators and accelerator programs, as those tend to be focused on technology and innovation related sectors.


  1. Self-funding
    • Personal capital and assets
    • Personal loans
    • Personal credit
    • Personal Guarantees
    • Friend and family
  2. Vendor terms and credit
  3. Business credit cards and lines of credit
  4. Alternative Lenders (non-bank)
  5. SBA Loans
  6. Operational capital (profits and cash flow)
  7. Traditional private equity and debt sector:
    • Angel Investors
    • Venture Capital
    • Private Equity
  8. Government/Small Business Administration Programs:
    • SBIR
    • STTR
    • SBIC
  9. Other Programs:
    • Program Related Investments (PRIs)
    • Community Development Venture Capital (CDVC)
    • EB-5 Immigrant Investor Program
  10. New Programs and Sources:
    • Royalty/Revenue-based capital
    • Crowdfunding- non-regulated
      • Rewards
      • Product Pre-sale
    • Regulation Crowdfunding
      • Revenue
      • Equity
      • Debt
    • Incubators
    • Accelerator Funds
      • Funding Competitions
      • Private Funds
        • Venture Capital
        • Angel Networks
        • Government



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