Last Updated on September 5, 2022

10 Best ways to raise capital for your small business


If you ask 5 people why they’re not in business, 4 may say “lack of capital.” One of the first milestones for a start-up to cross is to raise business capital. Without a verified source of funding, you can’t think of starting a business. Even if you decide to start small, the first money you spend is still called capital.

So, if you’ve been struggling with the question on how to raise money to startup your amazing idea, let’s help you with that.


All we ask for is that you decide on the best course of action and follow it.

You can even combine one or two strategies from this article and set them in motion immediately.

Before you say “jack” your business is live.

Let’s start!

How to get capital for your business?

1. Personal savings

This is one of the simplest and less-complicated ways to raise capital for your business.

We always advise anyone who wants to venture into any business to start saving money early.

One thing about saving is that the earlier you start, the more you save, and the less difficult it becomes.

What do we mean by this?

If you want to raise $20,000 for your business, you can save $2000 for ten months, or you can save $1000 for 20 months.

You can even decide to save $500 for 40 months or save $250 for 80 months.

Now think about it, if you start early, it will be easier to save $250 every month than $2000 every month.

Your earnings will indeed determine what you can save.

But remember, there’re other bills to pay, and if you’re removing a small fraction for your business, you’ll not feel the impact.

So, the best strategy when planning to raise capital with personal savings is to start early.

But let’s see some of the advantages and disadvantages.

Advantages of using personal saving for small business

  • You’ll not pay interest on your capital.
  • The control of the business remains in your hands.
  • All the business profit is yours.


  • You may not meet your expenses.
  • Fresh ideas will not come from investors.
  • In a case of business failure, you’ll lose your assets.
  • You may not put enough effort into the business.

2. Borrow from your family & friends

This is one of the surefire ways to raise capital for your business.

Your family and friends are a good source of funding for your startup because they have your best interest at heart.

In our experience, it’s best to have some personal savings at hand to convince them to add theirs to you.

Also, it’s important to pitch your business idea convincingly to them if you want to raise capital through them.

The truth is that if your people know you as an unserious person, this option may not work for you.

But if you’ve been hardworking and dependable over the years, they’ll believe and support you.

So, if you don’t have a good record at home, now is the time to change.

One good thing about this method, though is that, you can raise a huge amount since the sources are many.

Yeah! Imagine that you need $2000 capital for your business and have up to 15 friends and relatives who want to sponsor your business.

If each person contributes something as low as $200, you’ve effortlessly raised $3000.

This is why to raise capital for small business this way is usually interesting.

But what are the pros and cons?


  • Little or no interest to pay.
  • You can raise more than you need for the startup
  • Lots of ideas and business growth tips will be given to you.
  • Some of them will contribute to your success.
  • They may be your first clients and customers.


  • You may lose your friends if the business fails
  • The lack of loan interest may make you lazy

3. Consider angel investors

Angel investors are another cool source of business capital for a startup.

These individuals have free money and won’t mind providing the startup funding you need.

All they ask for is to be a part-owner of your business.

Mind you, not like a partnership, but a percentage of ownership rights commiserate with their investment.

Some of the angel investors are people who are professionals in their fields and don’t have the time to start up a business.

Other angel investors may be individuals who have succeeded in their businesses but wants to help upcoming investors.

The only thing required of you here is to write a realistic business plan and a convincing sales pitch.

Of course!

You need to sell your idea to them, you know.

Your question right now is how to find angel investors, right?

Well, some people around you are angel investors, but you don’t know.

There’re three options to explore when looking for ways to raise capital through them.

  • You can meet some well-to-do individuals around you and offer them the opportunity.
  • Some people may recommend angel investors to you if you ask around your social circle.
  • You can check out some sources such as the Angel Capital Association or Funding Post.

So what are the pros and cons, if any?


  • There won’t be any interest to pay since their part owners
  • Angel investors sometimes serve as mentors to guide you
  • You can leverage their connections to hit the ground running
  • They’ll contribute to the success of your business


  • You won’t be the sole owner of the business
  • Decision making will not be based on you alone.

4. Get a partner

There’re lots of advantages of partnering with someone to startup your business.

But our interest in this article is raising business capital.

So, one of the ways to raise capital for your business is to partner with someone who has the capital to support the idea.

Don’t concentrate on his/her technical skills or his business acumen now.

Does he/she have the capital you need to start up the business?

If yes, make him your partner.

No matter how intelligent or smart he is, the business has to start first, doesn’t it?

So, find someone who will provide business funding for your brilliant idea.

Some people have money but don’t know the kind of business to do.

If you’re lucky to find such a person, you can team up and make it work.

All you need is to follow the legal processes of partnership to avoid “stories that touch” later.

You can decide on a profit-sharing percentage for both of you and the potion that goes into business growth and expansion.

Well, it’s never easy to arrive at these things, but it is possible.

Once you’ve spelled everything out and legalized it, you’re set to go.

Are there advantages and disadvantages?



  • Business capital is easier and faster to raise
  • A combination of ideas and strategies from both parties drives success
  • Merging of skill leads to business growth
  • The weight of startup pressures and challenges will be shared by both parties


  • Ownership rights will be split into two
  • There may be a clash of opinion from time to time
  • Most partnerships dissolve when one partner dies
  • There may be delays in decisions making

5. Raise capital through crowdfunding

Here is one interesting way to raise capital for your business.

Crowdfunding wasn’t viable in those years, but now, it’s becoming increasingly popular.

This is a method of raising business capital from many people at once.

You don’t have to depend on your savings, a partner, your family, or your friends.

In fact, in this method, you don’t even need the bank except for the transfers, of course.

Crowdfunding or financing helps you to raise capital from a lot of people.

You may not know this, but the internet has made this method a bomb.

All you need to do is pitch your idea to lots of people on the crowdfunding site.

Make sure you give a detailed presentation of your idea, the value it will provide, the expected profit and the capital you need.

Now, you have to make an offer which investors won’t refuse.

You can offer them a percentage ownership rights once they invest or pay some interest on their investment.

Some of the pros and cons of this method are as follows:


  • You can raise capital faster.
  • Many people will be interested in marketing your products.
  • Venture capitalists may later show interest in funding the business.


  • This method is competitive
  • You must have a solid business plan and pitch to gain the interest of investors.

6. Ask you bank

Banks don’t trust individual entrepreneurs easily, especially ones with little experience.

So, this method is never easy but possible.

We don’t blame the banks for always frowning at the loan applications of small business startups.

The risk in such loans is usually high for them because your business may collapse from a lack of management skills and experience.

If that happens, the poor bank will lose all their money.

So what can you do to convince your bank to give you some loans?

Reduce the risk.

If you can show them something to prove the viability of your business, they’ll consider you.

After all, the banks need your loan interests to survive.

So, it won’t hurt to win your first viable contract before approaching your bank.

Some contractors in the oil and gas usually have the upper hand in this regard.

Once they take the purchase order from a trustworthy company to the bank, the capital appears.

It’s already a done deal, so; the risks are minimal.


  • The bank doesn’t interfere in your business-except when you don’t pay interest
  • Banks charge reasonable rates on loans
  • You’ll not share the profits


  • It’s difficult to qualify
  • You may need to provide security
  • Banks may not give all the capital you requested.

7. Try venture capitalists

This is not going to be easy.

But you can be lucky or smart enough to raise capital for your business this way.

Venture capitalists can provide startup funding for small business ideas.

But the truth is that they concentrate on those emerging firms that have a high propensity to grow.

Not just you know gradually but explosive growth.

That’s why many start-ups don’t even go there except those in certain industries known for fast growth.

A typical venture capitalist will prefer to wait for the business to start operating and making profits first before they invest.

But if your idea is in a widely growing market or you even have a new technology that no one has thought of, you can win them over.


  • The venture capitalists will actively support your business to prevent failure
  • You can achieve your goals faster
  • There will be enough capital for your funding needs


  • It’s not easy to get them onboard
  • They’re part of your business
  • Their terms may be too strict for you.

8. Use some of your assets

Harsh right?

Well, if your savings is not enough, what are you going to do?

This is one of the coolest ways to raise capital for your business.

After all, the assets are your, and the business is yours.

It’s even better to consider this option as it will make you stand up every day and fight for business growth.

Many of us have landed properties, houses, cars, jewelry, and investments.

The truth is that people don’t usually buy into a dream when they’ve not seen any evidence of good results.

If you’re starting a small business, even your family and friend may not believe that you’ll succeed.

They’ll not tell you anyway, but their reluctance in releasing money for you should speak louder than voice.

So, instead of allowing your ideas to waste due to lack of funding, you can start selling some of your stuff and raise the money you need.

But if you’re not emotionally balanced to let go completely, they can be your collateral for loans.

That way, your cherished assets will come back home when you repay the loans.

The idea of not seeing them again will motivate you to succeed.


  • The assets can serve as collateral for loans
  • You won’t need to pay interest if you sell
  • The business profits will all be yours
  • You’re not sharing the control with any investor


  • You may lose all your assets if the business fails.

9. Visit a microfinance bank

If your bank decides to frustrate your loan application with too many requirements, go to the nearest microfinance bank in your area.

You may not know this, but many small businesses started with a loan from these institutions.

A microfinance bank gives loans to small business owners who can’t meet the demands of conventional banks.

All you need to do is

  • Present a genuine business idea or project document
  • Open an account with the microfinance bank
  • Service your account for the specified time
  • Bring your collateral

Are there pros and cons here?

Yes, there are some high points and downsides to this method of raising business capital.


  • The requirements are minimal
  • Your assets can be your collateral
  • The bank has no control of your business
  • The ownership and decision-making in your business lie with you.


  • The bank may confiscate your collateral if you fail to pay back the loan.

10. Government programs/Business plan competition

Here is one of the ways to raise capital.

Every country has these programs, and you can utilize it to raise capital for your small business.

Some of the organizations that get this funding are mostly in research, medicine, agriculture, and technology.

You can qualify for any of these programs and kick start your business idea without delay.

All you need to do is a little research to identify the ones available in your country.

Once you’ve confirmed them, you can start applying for the ones you’re qualified to apply.

Being a government program, the requirement may not be much, but the competition will hit the roof.

But that shouldn’t discourage you at all if you believe that your idea will fly.

Apart from joining the programs, you can enter into a business plan contest to raise capital for your business.


The good thing about these ways to raise capital is that any money you get will be free of interest or little interest.

Moreover, no one will control or share ownership with you.

But the downside is that it’s usually difficult to get the capital due to high competition.

Final Notes

Every successful business started with a capital, no matter how small.

If you have the idea and you know it will fly, we encourage you to do all you can to raise capital for it.

Many people usually ask us how to raise business funding for small businesses.

That’s why we have discussed these 10 methods that never fails.

The ball lies in your court now.

If one strategy is not enough, you can combine one or two to get better results.

We’re sure that by now, you’ve decided on how to acquire capital for your startup.

If you don’t go out there and do something, someone else will start your business before long.

Take action and kick start that idea today.

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