How to Finance Your Business Startup

SCORE’s expert mentors help new business owners weigh funding options—from personal investments to bank loans and beyond.

WASHINGTON, July 22, 2025 /PRNewswire/ — Finding funding for your startup may be more complicated than you think. Before you launch your business, it’s critical to evaluate how much funding you’ll need—and how you can realistically access it. SCORE, the nation’s largest network of volunteer business mentors, helps entrepreneurs navigate startup financing through free mentoring and educational resources.

Understand What Your Business Needs

Before exploring funding sources, new business owners should take time to assess their financial outlook. This includes estimating how much capital the business will require and determining whether that capital will come from debt financing (loans) or equity financing (investments). “Startup funding isn’t one-size-fits-all,” says Bridget Weston, CEO of SCORE. “Every entrepreneur’s journey is unique, and the right financial strategy depends on the goals, resources, and timing of the individual business.”

Debt Financing Options: Bank Loans and SBA Microloans

Startups with little or no track record may face challenges securing traditional bank loans, which typically start at $100,000. However, SBA-guaranteed microloans—some as low as $5,000—can be a more accessible alternative. These often require a personal guarantee, meaning the founder may be personally responsible for repayment.

Other Small Loan Possibilities

If traditional bank funding isn’t a match, entrepreneurs might consider personal loans or nonprofit microloans. Based on income and creditworthiness, a personal loan could be used to cover business expenses. Meanwhile, nonprofit lenders may offer microloans to community-focused businesses or those with strong missions, often in the $5,000–$10,000 range.

Credit Cards: A Cautionary Tool

Business and personal credit cards can offer quick access to capital—but they come with risk. High interest rates and the potential to damage personal credit scores make this a high-stakes funding option. Business owners should use credit cards only if they can repay the balance promptly.

Equity Financing: Using Assets or Attracting Investors

Equity financing allows founders to tap into personal assets or attract outside investment. Options include:

• Home equity loans or lines of credit

• ROBS (Rollover for Business Startups) using retirement savings

• Friends and family contributions, structured as loans or equity stakes

Each option comes with unique risks and tax implications, so professional guidance is strongly recommended.