Startup Business Funding: 10 Ways to Finance a New Business in 2027

By American Business Center | Updated January 2027 | Startup Financing

Funding a startup is harder than funding an established business because lenders and investors have less data to evaluate: no revenue history, no payment history, often no collateral. The result is that the best financing options for startups are fundamentally different from those available to businesses with 1 to 2 years of operating history.

This guide covers every major funding source for new businesses in 2027, what each actually requires to access, the realistic dollar amounts available, and the situations where each one makes the most sense. Whether you are pre-revenue or just past your first year, this list covers your real options.

Startup vs established: Most traditional business lenders define "startup" as under 2 years in business. Businesses under 1 year have the fewest options. Businesses 1 to 2 years old have more access but still face restrictions compared to established companies. This guide focuses on options specifically accessible to businesses in the 0 to 2 year range.

1. Bootstrapping (self-funding)

The simplest form of startup funding is using your own money. Personal savings, 401(k) rollovers (via ROBS), and income from other work or employment. Bootstrapping has significant advantages: no debt, no equity dilution, no approval process, and complete control over the business. The tradeoff is that growth is limited to what you can personally fund.

ROBS (Rollover for Business Startups) is a legal arrangement that allows you to invest retirement funds into a new business without early withdrawal penalties. It is complex and requires a third-party administrator, but it can unlock six figures in startup capital from an existing retirement account. Cost: $3,000 to $5,000 to set up with a provider like Guidant Financial or Benetrends.

Bootstrapping Method	Typical Amount	Cost	Risk Level
Personal savings	Variable	$0	Personal financial risk
ROBS (retirement rollover)	$50K–$500K+	$3K–$5K setup	Retirement fund risk if business fails
Credit cards (personal)	$5K–$30K	15%–28% APR	Personal credit impact
Home equity (HELOC)	$25K–$500K+	7%–12% APR	Home at risk if business fails
Cash-out refinance	$50K–$500K+	Closing costs + rate change	Home at risk

2. SBA microloans

SBA microloans are the most accessible government-backed loan for true startups. Administered through nonprofit intermediaries, they accept new businesses with limited credit history and can fund as quickly as 2 to 4 weeks. Maximum $50,000, with the average around $13,000.

The key difference from bank SBA loans: microloan programs are specifically designed for underserved entrepreneurs and often provide business training alongside the loan. Many accept credit scores below 640 and businesses under 1 year old. Rates are typically 8%–13%.

How to find microloan programs: Search the SBA's microloan intermediary list at sba.gov, or contact your local Small Business Development Center (SBDC) for referrals to programs in your area.

3. Small business grants

Grants are funding you do not repay. For startups, grants are highly competitive but genuinely worth pursuing if you fit the target demographic or industry. The key categories:

• SBIR/STTR grants: Federal grants for technology and research businesses. Phase I grants up to $275,000; Phase II up to $1.83 million. Very competitive; requires a federal agency interested in your research area.
• SBA small business grants: The SBA does not directly give grants, but it maintains a database of federal and state grant programs. Check grants.gov for the full federal listing.
• State and local grants: Most states have economic development agencies that offer grants to businesses in target industries. Search "[your state] small business grant" plus your industry.
• Demographic-specific grants: Multiple organizations provide grants for women-owned, minority-owned, and veteran-owned businesses.
• Accelerator and competition grants: Many business competitions and accelerators provide non-dilutive cash ($10K–$250K) plus mentorship and resources.

4. Friends and family funding

Friends and family (F&F) funding accounts for a significant share of startup capital, particularly for businesses that are too early for formal investors. If you have a trusted personal network willing to invest, F&F can bridge the gap before you have the revenue history that formal lenders require.

The critical issue: formalize every arrangement in writing, whether it is a loan with interest terms or an equity investment with ownership documentation. Informal arrangements lead to misunderstandings, damaged relationships, and legal complications. Use a simple loan agreement or equity agreement, even between family members.

5. Angel investors

Angel investors are high-net-worth individuals who invest in early-stage businesses in exchange for equity. The average angel investment is $25,000 to $100,000, though groups can syndicate larger checks. Angels typically invest at the pre-seed or seed stage, before venture capital is involved.

What angels look for: scalable business model, founder quality and experience, large addressable market, and a clear path to growth. Angels are generally not the right fit for traditional small businesses (retail, restaurants, service businesses) because these businesses do not offer the venture-scale returns angels seek.

6. Crowdfunding

• Rewards crowdfunding (Kickstarter, Indiegogo): You presell a product or offer rewards in exchange for backing. The business retains full ownership. Best for product businesses with a compelling story and built-in community. Average successful campaign: $7,000–$10,000.
• Equity crowdfunding (Republic, StartEngine, Wefunder): You sell equity to the public under SEC Regulation Crowdfunding rules. Raise up to $5 million per year from non-accredited investors. More complex than rewards crowdfunding (legal costs of $5K–$20K to set up) but can raise larger amounts.

7. Equipment financing for startups

Equipment loans are secured by the equipment itself, which makes them significantly more accessible to new businesses than unsecured term loans. Some equipment lenders approve businesses with as little as 6 months of history if the credit score is solid (650+). For startups that need a capital asset (vehicle, machinery, technology), equipment financing is often the most accessible formal financing product.

OEM financing (manufacturer financing through Caterpillar, John Deere, medical equipment vendors) can offer 0%–4% rates on promotions, with more flexible credit requirements than independent lenders.

8. Revenue-based financing

Revenue-based financing (RBF) is available to startups with some revenue history (typically 6+ months) and consistent monthly revenue. The advance amount is sized as a multiple of monthly revenue; repayment comes as a percentage of future revenue. Clearco, Capchase, and similar platforms focus on SaaS and subscription businesses with recurring revenue.

For non-SaaS businesses, some alternative lenders provide RBF for businesses with stable monthly revenue in any industry. The key qualification is consistent, predictable revenue, not credit score or time in business. Rates translate to effective APRs of 20%–50% typically.

9. Business credit cards

Business credit cards are accessible even to new businesses with limited history, especially if the owner has personal credit above 680. For startups with under 1 year of business history, business credit cards may be the only formal business credit product available.

Strategic use: Many business credit cards offer 0% introductory APR periods of 12 to 18 months (the Ink Business Cash and Ink Business Unlimited from Chase, for example). Using these for startup purchases and paying off before the promotional period ends is essentially free financing for initial inventory, equipment, and operating expenses.

Warning: Business credit cards for startups typically require a personal guarantee and report to personal credit bureaus. High utilization affects your personal credit score and can complicate future business lending.

10. SBA 7(a) for startups

SBA 7(a) loans are possible for startups, but difficult. Most SBA lenders want 2 years of business history. The exception is the SBA Community Advantage program (administered through nonprofit lenders) which is specifically designed for businesses in underserved markets that may have less than 2 years of history.

For true startups seeking an SBA 7(a) loan, the path is: strong personal credit (700+), substantial collateral (often real estate or significant personal assets), owner equity injection of 20%+ of the total project, and a detailed business plan with financial projections.

Startup funding by stage

Stage	Best Funding Options	Typical Amount	What You Need
Pre-revenue (idea/MVP)	Bootstrapping, grants, F&F, angels	$10K–$250K	Personal credit, proof of concept
Early revenue (0–6 months)	Equipment loans, credit cards, crowdfunding	$5K–$100K	EIN, 3+ months deposits, decent personal credit
Growing (6–12 months)	Microloans, revenue-based, Fundbox	$10K–$150K	6+ months history, $5K+ monthly revenue
Established startup (1–2 years)	SBA Express, online term loans, LOC	$25K–$500K	1+ year history, 625+ credit, $10K+ monthly revenue
Post-startup (2+ years)	Full SBA 7(a), bank loans, all options	$50K–$5M+	2+ years, 680+ credit, full financials

What lenders and investors look for in a startup

• Founder background and experience: Prior business ownership, industry experience, or domain expertise dramatically increases approval odds.
• Personal credit score: Even for investors, a strong personal credit score signals financial responsibility.
• Collateral: Real estate, equipment, or significant personal assets reduce lender risk and open doors for startups.
• Business plan and projections: For microloan programs, SBA loans, and investors, a credible business plan with realistic financial projections is essential.
• Personal investment: Lenders and investors want to see that you have skin in the game — at least 20% of the total project cost.

Frequently asked questions

What is the easiest startup business loan to get?

SBA microloans have the most flexible requirements for true startups. Equipment loans are the most accessible for startups that need a capital asset. For pure working capital with under 6 months in business, options are limited: business credit cards and personal loans are often the only available formal products.

Can I get a startup business loan with no revenue?

Pre-revenue financing is very limited. SBA microloans through some nonprofits, grants, angels, and crowdfunding can fund pre-revenue businesses. Traditional business lenders require at least 3 months of bank deposits. Equipment loans may work with zero revenue if the business has a signed contract or customer commitment.

How much startup funding do I actually need?

Many startups significantly overestimate how much they need and underestimate how much it costs to service debt or give away equity. Before raising, build a 12-month cash flow projection with specific line items for every expense. The right amount to raise is what gets you to the next fundable milestone with a 20% to 30% buffer for unexpected costs.

Bottom line

Startup funding in 2027 rewards preparation: strong personal credit, some owner equity to invest, relevant experience, and a clear business plan. The most accessible options for most startups are SBA microloans, equipment financing for asset needs, business credit cards for initial working capital, and self-funding through savings or ROBS.

The best-funded startups combine multiple sources: some personal capital, a microloan or small equipment loan, strategic credit card use for 0% periods, and grant applications for applicable demographics. Build a funding stack from day one.

Next step: Before applying anywhere, check your personal credit score and report at AnnualCreditReport.com (free). Then build a 12-month cash flow projection. These two steps improve every funding conversation you will have, with every type of funder.