Sources of funding

You may be able to tap one or more of these five common sources of funds to finance your small business.

Personal savings

A hand taking money that appears to be growing on a tree.If you haven’t saved all of the money you’ll need, you’ll need to combine your own investment with funds from other sources. A lender will have greater confidence in your commitment to succeed when they know you have your own personal investment in the business. Many lenders, including the SBA, often require this.

Loans from family and friends

Your family and friends may believe in you and your business plan and may be willing to loan you funds. Be prepared to show them how and when you’ll be able to repay.

Financial institutions

Loans and lines of credit from financial institutions can be a source of start-up funding. To borrow from a financial institution, you need to have good credit. Secured credit is ideal if you’re just starting out and want to build good credit history.

Develop a good working relationship with your banker or lender. The more they know about you and your business, the better they can advise and assist you.


The U.S. Small Business Administration (SBA) is an independent agency of the Federal Government. Its purpose is to help people get in business, stay in business, and grow. The SBA offers a tremendous number of resources to help you start, finance and manage your business, and find new business opportunities. It can help you write a business plan, obtain start-up capital, purchase real estate, and much more.

The SBA has offices throughout the United States to assist you. Learn more by visiting the SBA Web site at

Examples of SBA services:
Starting your business: Small Business Start-up Kit; training and counseling; business planning tutorial; special assistance programs for minorities, women, the disabled, veterans, and other groups; workshops; shareware.

Financing your business: Loan programs, including those that focus on: microloans (up to $35,000) for start-up, newly established, or growing small businesses; low and moderate income areas. Working capital lines of credit.

Client commitments to contracts

Your customers (or future customers) may be willing to sign contracts, or even pre-pay, for products or services that you commit to deliver to them.


Most potential investors will request certain financial statements and a business plan from you before they are willing to invest in your business. In order to be prepared for their questions, analyze the creditworthiness and investor appeal of your business before you develop a business plan. While the plan should reflect your personal business goals, keep in mind who your audience is, and draft the plan so that it sells your ideas to people who are in the business of making money.

Learn more about business financing in the topic Growing a Business.

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