How to Fund Your Startup

To fund a startup, start with a number, not a funding source: add up what you must spend before the business pays for itself, then compare what each option costs and pick one that covers it. Spending your own savings and early customer payments keeps the decisions with you. For loans, investors and crowdfunding, compare what each would cost you in repayments, ownership and promises, using the SBA's descriptions quoted below. Check grants last: in the US, the SBA's grants page (checked October 31, 2026) says: "SBA does not provide grants for starting and expanding a business."

This page compares the main ways to pay for a new business. For running on your own money in detail, read what is bootstrapping a business, and for campaign types, crowdfunding in business. To build the numbers lenders and investors ask for, start with a business budget and then the business plan. Every SBA statement below is quoted from SBA.gov, In the US, checked October 31, 2026.

Work out how much you need

In the US, the SBA's planning guide (checked October 31, 2026) says: "Once you know how much startup funding you’ll need, it’s time to figure out how you’ll get it." Split your figure into two parts:

• One-time costs: equipment, deposits, first stock, a website, licenses and set-up fees.
• Monthly costs until you break even: rent, software, insurance, your own minimum pay, loan repayments.

The SBA's guide (In the US, checked October 31, 2026) gives the break-even formula as "Fixed Costs ÷ (Price – Variable Costs) = Break-Even Point in Units". That tells you how many sales a month cover your fixed costs, and so roughly how many months of costs you need to fund while you build up to it. The break-even point guide goes through the formula step by step.

Your own money

In the US, the SBA's guide (checked October 31, 2026) says: "With self-funding, you retain complete control over the business, but you also take on all the risk yourself." It also warns: "Be careful not to spend more than you can afford, and be especially careful if you choose to tap into retirement accounts early."

Early customer payments work in the same direction: a deposit or an upfront fee is money you don't have to borrow. If your work allows it, ask for part of the price when the job is booked.

A loan

In the US, the SBA's guide (checked October 31, 2026) says: "If you want to retain complete control of your business, but don’t have enough funds to start, consider a small business loan." On SBA-guaranteed loans it says: "When a bank thinks your business is too risky to lend money to, the U.S. Small Business Administration (SBA) can agree to guarantee your loan." It also advises: "You’ll want to compare offers to get the best possible terms for your loan."

Consider a loan if the business has a clear way to repay it from sales, such as equipment that lets you take on more paid work. Before you apply, work out the monthly repayment and check it against your worst realistic month, not a good one.

Investors

In the US, the SBA's guide (checked October 31, 2026) says: "Venture capital is normally offered in exchange for an ownership share and active role in the company." It adds: "Almost all venture capitalists will, at a minimum, want a seat on the board of directors."

Consider investor money if the business needs a lot of capital to grow quickly and could become much larger. For a local service business that doesn't need to grow fast, weigh the share of the company you'd give up against the start-up costs it would cover. An investment agreement has legal terms; work with a lawyer before you agree to anything.

Crowdfunding

In the US, the SBA's guide (checked October 31, 2026) says: "Crowdfunders don’t generally receive a share of ownership in the business and don’t expect a financial return on their money." It cautions: "Every crowdfunding platform is different, so make sure to read the fine print and understand your full financial and legal obligations."

Consider crowdfunding if you have a product people can picture and an audience ready to back it. Count the cost of the rewards you promise, and the time to deliver them, before you set a target.

Grants

In the US, the SBA's grants page (checked October 31, 2026) says: "SBA does not provide grants for starting and expanding a business." For research businesses, the same page (In the US, checked October 31, 2026) asks: "Does your small business engage in scientific research and development? If so, you may qualify for federal grants under the following programs:" and names the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Be wary of anyone who offers you a guaranteed start-up grant for a fee.

Worked example: how much to raise

Sample figures, for illustration only. A mobile dog groomer plans the first six months:

• One-time costs: van fit-out $3,200.00 + equipment $900.00 + website and insurance deposit $400.00 = $4,500.00.
• Monthly fixed costs: $1,800.00. With an average price of $150.00 and $30.00 of variable cost per groom, break-even is $1,800.00 ÷ ($150.00 − $30.00) = 15 grooms a month.
• Planning cover: six months of fixed costs while bookings build: 6 × $1,800.00 = $10,800.00.
• Total needed: $4,500.00 + $10,800.00 = $15,300.00.
• Own savings available: $6,000.00, so the gap is $15,300.00 − $6,000.00 = $9,300.00, which the owner compares across a loan and deposits from early customers.

Use your own figures; these are only an illustration.

Where Billed fits

Have what the business earns and spends ready for lenders and investors. Billed's financial reporting page says: "See where your business is spending most money and export expense reports for better accounting during tax season." It also says: "Each report can be filtered by date range and exported." Billed's expenses page adds: "The expense report shows what you spent over a date range, and the income vs expense report compares income with expenses so you can see how profitable the business is."

Mistakes to avoid

• Choosing a funding source before working out how much you need.
• Funding only the one-time costs and forgetting the months before break-even.
• Using retirement savings without checking the fees and penalties first.
• Taking investor money for a business that will never need to grow fast.
• Paying someone who promises a guaranteed grant.

When this guide isn't for you

If you are raising money from investors, issuing shares or taking on a partner, the legal and tax terms matter more than this overview; work with a lawyer and an accountant. If your business is already trading and needs working capital rather than start-up money, look at your cash flow and payment terms first.

Related Articles

• What Is Bootstrapping a Business?
• Crowdfunding in Business
• How to Create a Business Budget
• How to Write a Business Plan

Frequently Asked Questions

Does the SBA give grants to start a business?

In the US, the SBA's grants page (checked October 31, 2026) says: "SBA does not provide grants for starting and expanding a business."

What is an SBA-guaranteed loan?

In the US, the SBA's guide (checked October 31, 2026) says: "When a bank thinks your business is too risky to lend money to, the U.S. Small Business Administration (SBA) can agree to guarantee your loan."

Do crowdfunders get a share of my business?

In the US, the SBA's guide (checked October 31, 2026) says: "Crowdfunders don’t generally receive a share of ownership in the business and don’t expect a financial return on their money."

How much money do I need to start a business?

Add your one-time costs to your monthly fixed costs for the months before you break even. Work out break-even with your own prices and costs rather than relying on a typical figure.