Starting a Business Without a Loan

If the only thing standing between you and your dream business is a bank loan, perhaps it’s time for a wake-up call. Why? Because there are a variety of ways you can raise funds without racking up bank debt. Here are ten to get you started:

1. Competitions

Several states offer competitions that reward great startup ideas with a cash prize. One competition, the Arizona Innovation Challenge, has already awarded more than $3 million dollars. Search “business competitions” online to get started.

2. Kickstarter Campaign

If your startup leans toward the liberal arts side of the spectrum, consider Kickstarter. It’s an online version of “passing the hat” that links business ideas to potential funders. Click here to learn more about how it works and how you can get started.

3. Incubators

If your business falls along the tech side of the spectrum, an incubator may be the place to help it grow. Incubators reward promising ideas and smart entrepreneurs with funding commonly referred to as "seed financing."

4. Fire Sale

What’s more important, the collection of Star Wars action figures gathering dust in your basement or the T-Shirt shop you’ve envisioned all your life? Chances are your home is filled with things you could sell on eBay or Craigslist for cash.

5. Business Grants

Grants are cash gifts that don’t have to be repaid. Look online for government grant programs for your type of startup business. Odds are good you’ll find something.

6. Charisma

Are you a charmer? A persuader? The type who could sell igloos in the desert? If so, you might make money out of virtually anything. To see how one man traded a throwaway office item for a house to sell for cash, check out one red paperclip.

7. Partner

Consider a partner who might help fund your idea or bring your spouse or significant other into the fold. If you’re blessed with the proverbial “rich uncle,” now’s a great time to connect.

8. Life Insurance

Not that we’re advocates, but a number of startups are funded with life insurance cash-outs. It’s risky for obvious reasons, but it’s been known to pay off. And you can always re-insure once you’re up and running.

9. Angel Investors

Angel Investors are entrepreneurs who invest in startups they believe have potential in exchange for a share of the company or percentage of stock.

10. The SBA

While the Small Business Administration is known primarily for lending, it’s also a tremendous resource for helpful startup insights – even if you’re not borrowing. Particularly of interest is the Starting & Managing section on their site,

By funding your startup without a loan, you’ll be in much better shape if your business ever needs one.


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