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Financial Funding for Small Business: The Best Options

What is the best financing option for a business?

Dream Big


Starting or running a small business requires a financial plan that supports your goals and enables you to continuously grow. In addition to the revenue your company brings in, there may be times when you find yourself in need of additional financial funding for your small business. Savvy owners know the financing options available, how to qualify for them, and how they can help.

Are you a complete novice when it comes to small business financing? Have you heard about a few different ways to fund a business but are curious about the details? 

This post covers all significant funding options and a few lesser-known ones like business startup rollovers and direct public offerings.

Small business funding can help start a new venture, hire new employees, or expand an existing business. What you need the money for will determine the type of financing best for your small business. Other factors such as how much money you need, your willingness to take on debt, and so on will also be a deciding factor.

You can get funding for your business from various places, including banks, online lenders, investors, and other unconventional sources (such as small business grants).

Funding for a small business can be challenging to come by.


You didn't come this far to come this far

Owners of small businesses and franchises always deal with the unknown, but their entrepreneurial spirit helps them overcome each challenge as it arises. 

A small business owner will have to deal with writing a business plan, hiring employees, dealing with taxes, licenses, and accounting, among other things.

However, the most challenging task comes before any of these: determining the best financing option. Financing can be a mountain of “what ifs” that keeps you from realizing your dream of owning a business. 

Sunwise Capital, on the other hand, is on a mission to increase the number of people who succeed. As part of that mission, we believe it’s our job to help you and your business find the financing options that will enable you to achieve your goals.

We’ll go over the basics of each funding option, when it makes sense to use it and how to get started so you can choose wisely between investors, friends and family, bank loans, retirement rollovers, and other options.

Give us a phone call if you’d like to discuss these options with someone. 

Small business loans can help you launch a new venture or expand an existing one. Small-business loans may be able to keep your company afloat during the coronavirus outbreak. 

Direct lenders and Small Business Administration loan programs can provide working capital loans and other financial assistance, such as the SBA Paycheck Protection Program (commonly referred to as PPP).

“Do I have what it takes saved to fund my business?” is frequently a person’s first thought. Nationwide, a survey of small business owners revealed that more than half of small business owners take cash from their personal checking and savings accounts to fund their operations. 

Is that an option for you? Is the answer is “yes?” If so, you’re in the same situation as the majority of business owners and entrepreneurs.

The next logical step is to obtain a bank loan. Isn’t it supposed to be straightforward? Unfortunately, the answer is no: SBA loans are a great way to get money, but the rejection rate is about 70% to 80% of applications.

An entrepreneur may now look for a partner or investor who can provide the necessary funds. Once again, this is a viable option. Once again, success is the exception rather than the rule. After failing to find an investor, most entrepreneurs give up their dream of owning a business. 

Unfortunately, they believe they exhaust all of their financial options and prematurely decide to return to the life they had hoped to avoid.

The truth is that there are several funding options available to you and other entrepreneurs in the United States, and we’ll lay them out for you.

Small Business Financing: Two Common Misconceptions

Entrepreneurs who aren’t familiar with the business financing process have two misconceptions, both of which are false. Let’s clear this up before we get into the various funding options.

Many entrepreneurs believe that they should wait until they have found their business to think about financing. In reality, many funding options consider the entrepreneur’s credit and business history and those that don’t frequently require a specific amount of cash to qualify. 

Finally, selecting the “right” business does not guarantee funding, which is why it’s critical to start researching funding options as soon as possible.

A franchise and a sole proprietorship are different. Many entrepreneurs also believe that financing for startups and franchises differs significantly, which is true in some cases. 

On the other hand, most debt-financing options consider startups and franchise locations to be the same thing. Some options distinguish between startups and established businesses. 

The options present to the business owner are a predicate of the likelihood of success—an existing business has already proven its profitability, which can make a difference when considering debt-based financing options.

Continue reading to learn about SBA loan programs, working capital loans, and real estate loans, as well as other small-business financing options. Learn about small business loans and how to get the best one for your startup, expansion, or maintenance.

A company’s funding determines whether it will live or die. If you have enough available cash or other liquid assets, you can expand your business, hire new employees, increase your inventory, and increase sales. When there is a lack of funds, the opposite occurs.

What exactly is the good news? A business owner can find a plethora of financing options if they know where to look.

Make a note of these when looking for funding.


Before finding the right fit, more than a dozen publishers rejected J.K. Rowling, the best-selling Harry Potter author. Look at her now—living her dream. 

Allowing a possible rejection to deter you from achieving your goal during your financing search is a mistake. Entrepreneurs have various financing options, and we’ll help you find one that fits your needs.

Do reclaim control of your credit. Your credit score and history are taken into account by the majority of funding options. Pay off your credit cards and improve your credit score by doing so. Keep in mind that lenders use your credit score to determine if lending you money is risky or safe.

Do keep an open eye on your finances. The value of your more significant assets, your home, your 401(k) and stock portfolio, your annual income, and other financial factors all play a role in determining what you are eligible for and what options are available to you. Staying on top of this data will help you figure out which funding options are available to you.

Do make a presentation deck and a business plan. Business plans are not a requirement for all funding options. However, you should write one if you are serious about starting or buying a business. 

Having a written plan will save you time in the future when discussing funding options that require one, and it will give you a clear picture of your goals for those that do not. Are you perplexed as to where to begin?


Sometimes it’s enticing to take the easy way out, don’t do so without first determining if it is the best option for you. High-interest rates can wreak havoc on your cash flow if you choose simple options. Why would you choose that over other, superior options just a few steps away?


Make no significant purchases (such as a new car, house, or boat) or apply for new credit cards until you’ve figured out how you’ll fund your company. 

If your only option for financing requires good credit, you don’t want to have several recent credit inquiries on your record from trying to secure credit cards or buying a new car.

Accepting financing without first consulting with a business attorney and a CPA is a bad idea. The type of financing you obtain may influence the type of business entity you form. 

There will be tax implications as well, so speak with your trusted team of professionals to ensure you’re ready to go when you launch your company. 

It’s always best to plan ahead of time to avoid any legal or tax surprises. Always consult your business attorney and CPA if you have questions.

Know your capabilities.

Some financing options rely on credit, while others rely on savings. Determine what you can support with your resources and ratings as the first step.

Why Would I Need Financial Funding for My Business?

There are various reasons a small business, even a thriving one, may need to apply for financial funding on occasion. Some examples include launching a new product or marketing campaign, acquiring permanent real estate rather than renting a workspace, opening a new location, or building seasonal inventory. Whatever the reason, it is wise to be aware of how to obtain financial funding for small business endeavors.

Types of Financial Funding for Small Businesses

To determine which type of financial funding is right for your small business, compare the terms of various options with a trusted lender. Also, take into consideration the timeframe for repayment and how it measures up to your projections for business growth. Choose the option that best fits the needs of your company and your ability to pay off the debt in full.

What is the best funding for small businesses?

Traditional Loans/Business Loans

A traditional loan/business loan is one with which you are probably already familiar. Typically, with this type of loan, you borrow a designated amount of money for a specified purpose and make predetermined payments on a regular basis for several years. The benefits are that your payment will not change and you may get a lower interest rate. However, with many lenders, you need to have a pretty good credit score and have been in business for a while.

Merchant Cash Advance

A merchant cash advance is based on the future revenue your company brings in via credit card sales. The lender will provide you with an advance amount to use right away, and you will pay it back by giving them a percentage of your daily credit card sales. The amount of time it takes to pay off this type of financial funding varies depending on the number of sales you generate. If you prefer to have a payment that is lower when sales are lower, then this option may work for you.

Business Line of Credit

A business line of credit works in a similar style to a credit card. You will be approved for a total possible amount, but charged only on the amount you actually spend. This line of credit remains open for future use as long as you have not reached the total amount available, and the funds replenish as they are paid. These do not affect your personal credit, but a high credit score and good credit history are beneficial. You can often get approved quickly and qualify for a low-interest rate, and this type of financial funding is often used for small business growth.

Unsecured Business Loans

With an unsecured business loan, you do not need personal guarantees, assets, or collateral. You also don’t need to have an amazing credit score or a long business history. You can use this type of loan for a short term solution and a starting point for building up your business credit history.

Business Startup Rollovers

A rollover for business startups allows you to invest funds from an existing 401(k) or individual retirement account (IRA) into your new business (ROBS). Because a ROBS is neither a business loan nor a 401(k) loan, there are no interest payments or debt to repay. It’s a way for you to put your retirement money to work in your company.

A business startup rollover allows aspiring entrepreneurs to access their retirement funds. The rollover provides the owner to be, the capital to pay for the business startup. The rollover also provides for the initial operating costs of a new business without taking out a loan.

You can use a ROBS to purchase or invest in an existing business or franchise. You create a C corporation (C-corp), allowing for shareholders, as well as a new 401(k) plan.

The prospective business owner’s retirement funds purchase stock in the new company, and the proceeds from the stock sale fund the new or purchased company.

This option is better than borrowing against an existing 401(k) or IRA. The reason is the interest and penalties and the short-term nature of many 401(k) and IRA loans against the long-term benefits.

Direct Public Offerings

The term “direct public offering” (DPO) refers to a company’s public offering of securities to almost everyone in their community or network.

DPOs can take one of several regulatory paths, depending on the type of entity and the scope of the network.

In its initial public offerings (IPOs), a company that uses a DPO avoids using intermediaries such as investment banks, broker-dealers, and underwriters, instead self-underwriting its securities.

By removing the middlemen from a public offering, the cost of capital for a DPO is significantly less. As a result, DPOs appeal to small businesses and those with a long-standing and loyal customer base. A direct placement officer is also known as a DPO.


SBA Loans

An SBA loan is a government-guaranteed business loan with a long-term and low interest rate. The SBA, a federal agency, backs the loans issued by lenders.

The Small Business Administration’s (established in 1953) goal is to assist small business owners all over the country.

The most common misunderstanding about the SBA loans is that the agency makes them directly to small businesses. Direct loans, on the other hand, are uncommon at the agency.

The SBA provides a guarantee for the loan, promising to reimburse the bank for a certain percentage of the loan if you default. This guarantee lowers the risk for banks and other lenders, allowing them to lend to more small businesses in the US.

You can get SBA loans from various banks and other financial institutions (like Sunwise Capital), but the application process, requirements, and fees differ.

SBA 7(a) loans ranging from $30,000 to $350,000 can are for debt refinancing and working capital. Working capital includes things like operating costs, marketing, and hiring.

SBA loans can buy new equipment as well.

Existing non-real estate-secured business debt can also be refinanced with SBA 7(a) loans (such as cash advances, business loans, and equipment leases).

SBA Commercial Real Estate loans range from $500,000 to $5 million and can be used to buy or refinance 51 percent owner-occupied commercial real estate.

How Sunwise Capital Can Help

At Sunwise Capital, we put all our focus into financial funding for small businesses. We work quickly to approve loan requests so that business owners can continue business as usual. Loan qualifications are less complex than the demands of a bank as we are dedicated to helping small business owners succeed. Contact us today to speak to one of our experts and get started!

Mark Kane

Mark J. Kane is a successful entrepreneur and small business owner. He spent 17 years in the investment banking industry. As CEO of Sunwise Capital, he understands the challenges of building a business through equity, debt, and off-balance sheet financing.

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