How to Raise Money for a Business Without a Loan

Raise Money

Most startup business startups fail due to a lack of finances. Taking a loan is not an excellent idea. The interests that come with a loan stress a startup businesses leading to business failure. In this article, I will teach you how to raise money for business without a loan.

Do not let lack of funds stop you from launching your idea. Prepare a detailed business plan and stick to it. You can start the business and a side hustle until it is safe to quit your 9-5 job. In most instances, you will not need a huge amount for a startup unless you are venturing into the manufacturing or transport industry.  

There are various ways to raise funds, but here we will look at the best 15 ways to raise money for your business.

Bootstrapping and keeping Overhead Low

As a new entrepreneur, it is wise to venture into a business that will not require a huge investment. Many renowned businesses started with limited funds; you too can start with your savings. All you need is a clear plan on how to expand the business in the future.

You can even get money from your credit card, and refund before it incurs hefty interests. Working with available resources will enable you to run your startup smoothly with minimal risks. Bootstrapping also involves learning a new skill so that you avoid hiring an extra employee for a simple task and outsourcing some simple and short term tasks to contractors.

Strive to keep the overhead low. If you can use part of your garage as your office, you will be able to save on rent. You can inject that rent percentage into your business. When you minimize the money you use to operate the business, you will have enough funds to reinvest back to the business to propel its growth.

Family and friends can be of great help when you are starting up. They can give you affordable and flexible loans as compared to financial institutions. There have even been instances where people looking to increase funds for their startups have looked to make smart investments into other companies, such as looking to buy zoom shares or others to increase their capital for their own businesses.

Crowd Funding

Over the years, crowdfunding has helped many startup businesses to stand on their feet. All you need is a detailed business plan, pitching, and negotiating skills.

For a successful crowdsourcing campaign, keep the people updated in all the stages of business. No one wants to contribute to a ghost project. If you include a video detailing the business, you will win more trust- it will guarantee 100% funding.

When you launch a campaign, you will attract like-minded people. You will learn a few tips on how to improve your product to meet and satisfy the market demand. People are willing to fund a marketable product compared to unsalable products.

Angel Investors

Within your locality, you probably know a few individuals who have a net worth of over $1 million. Such individuals can invest in your idea if you convince them the idea will bring good returns. Here, your persuasion and pitching skills will come to play. Show them your plan and business potential. 

Many of these angel investors operate alone, but when the idea is big and worthy, they may team up to bring your business to the limelight. In most instances, the angel investors will not take credit for business success. 

There are various sites where you can get angel investors. Most of them will mentor you through acquired knowledge and personal experience. Through them, you will meet new contacts who can take your business to the next level.

Venture Capitalists

Recently, venture capitalists have risen to help out small businesses and startups. They are a group of millionaires who are seeking ideas to invest in.

When you involve venture capitalists in your business, they will be part of your management team. They will influence business decisions.

If your business has a positive track record and a detailed and enticing business plan, venture capitalists will dive in and offer the financial support that you need.

Business Incubators and Accelerators

It is possible when you have an excellent idea, and you lack the money and the necessary skills to run the business. Business incubators exist for people like you. They will offer guidance and finances until you can run your business independently. During the incubation period, you will learn how to get ahead of your competitors and remaining in the lead.

Accelerators come in handy when your business is lagging or stuck. Accelerators work with pre-existing companies, offer guidance, and fund to ensure the business does not fail.

Small Business Grants

Governments, Non-profit organizations, and wealthy individuals often offer grants to small startup businesses. It is upon you to draft a winning proposal to win the grant. If you master the art of proposal writing and presentation, you will have a smooth way in winning these grants,

However, you need to understand that these grants should be used for the intended purpose, or you will never get another grand from any other organization.

Equity Financing

When you are stuck, and your business is at risk of failing due to finances, why not sell part of it to investors and save the business?

Equity financiers invest in your business, and you surrender a percentage of ownership. They become co-owners of your venture. You can buy the part you sold to them when you are back on your feet. 

Most small businesses do not qualify for venture capital funding. The only option remaining for such entrepreneurs is to sell part of their business to investors. 

The advantage of equity funding is that you will nor repay the investment. Also, the new business owner will come in with new ideas that will improve product quality and service delivery.

Participate and Win Contests

Many corporates are organizing competitions were small investors with great ideas win awards that help them start their businesses; such competitions require creativity and planning. 

If you do not win the award, you may be lucky to get an investor interested in your idea. The whole idea of the competition will not be in vain.

Product Pre-Sale

Are you a trusted brand? Do you have a product underway, but you are short of funds? How about preselling the products to get the funds before you launch the product?

With this plan, you need to have a clear timeframe to launch the product so that the customers do not claim their money.

Product pre-sale will keep you committed to production. You are also sure that your product has customers.


Dropshipping is a sure way of raising money without investing a cent. All you need is a tablet or a laptop, internet connection, and marketing skills.

In drop shipping, you open a virtual store where you sell existing products from manufacturers or large scale vendors. You get rewarded with some commission for marketing the products. You can use the money as capital for your business.

Reinvesting Profits

Reinvesting profits is the surest way to grow your business. If you have another source of income, you can reinvest the profits back to the business for the first few months. The reinvestment will expand your capital base, and soon, you will be able to quit that 9-5 job and become self-employed. 

Withdrawing from Retirement Accounts

Withdrawing from retirement accounts before maturity attracts heavy penalties. However, some financial advisors will take you through steps to avoid those penalties. You need to have an excellent business idea so that you do not end up losing your retirement savings.

The most popular trick is using rollover business startup funds. The funds are made available by corporations that invest your money in the stock market.

Alternatively, you can take a loan against your retirement investment balance.

Side Business

When you want to venture into business without taking a loan, you look for all available avenues to raise money. Starting a side business is another excellent plan to raise the capital. The business does not need to be permanent.

For example, your car spends a lot of time in the parking, you can think about renting it out when it is not in use. Alternatively, you can sign up with a company and make deliveries during your free hours.

With such and other ideas, you can raise enough funds for your business.

Factoring Invoices

Most startup businesses struggle with funds at the beginning. One of the reasons is the waiting period for an invoice to mature. Some companies buy your pending invoices at a discount.

Instead of freezing operations because of late invoice payments, you may consider selling some of them to keep your business afloat.

Sell Personal Assets

There are those personal assets that you do not need; you only keep them for prestige. You can consider selling some of them to raise funds for your business venture. You can always buy new assets once your business is up and running. Do not hold on so much to assets that are not generating income when you need money for your business.

How to Raise Money for a Business Without a Loan

All the above methods of funding your business have their pros and cons. Do proper research and evaluate your business before settling on one approach. Be careful with selling part of your business at an early stage. As much as you need the cash, do not make hasty decisions that you may regret later.