Image of an African American Baker and a lady in glasses discussing financing options for their startup

What Business Financing Options Do Startups Have?

Last Modified : Jan 23, 2024

Fact-checked by: Bruce Sayer

These are exciting and challenging times for all businesses, old and new. Disruption to global economies caused by the recent pandemic has altered the landscape considerably, elevating some industries to new heights while devastating others. The initiation of vaccine rollouts across North America kick-started the economy – businesses are adapting and restructuring to meet the needs of a pent-up consumer base. Consumer spending is returning to pre-pandemic levels, but new buying patterns are emerging as the economic recovery takes hold. This reshaping of the economy is fertile ground for new businesses to find their footing and grow.

Efficiency remains a key component of surviving and growing, but the disruptions of the pandemic has shown that resilience and agility are equally important. For startup businesses, these essential components of success are superseded in importance by two indispensable requirements – a viable business plan, and sufficient access to working capital.  This article explores the best business financing options to consider when choosing the right startup funding solution for your new business.

Now Is a Good Time to Launch a Startup Business

You have studied the marketplace, identified a business opportunity and have developed a viable business plan to fulfill a need. This marks the beginning of a thriving business, all it needs now is startup funding to support the venture.  Investor sentiment has jumped to a three-year high according to a recent AAII Sentiment Survey. This opens the door for lenders to be more amicable toward new business ventures. Now is an opportune time to present your business plan to a selection of commercial lenders willing to capitalize your endeavor.

Business Financing Options for Startups

Following is a list of business financing options to consider when choosing a financial partner for your startup business:

  • Bootstrapping: Also known as self-funding, this business financing option lets you leverage your own financial resources to support your business. The main advantage is your ability to retain complete control over your business. There are no third party interests in the direction, management or performance of your company. The drawbacks are that funds are limited and all the risk is taken on by yourself.

Self-funding can be supported by family and friends, your savings account, or tapping into your retirement savings plan. Check with your plan’s administrator and a personal financial advisor to properly assess if you’re spending more than you can afford.

  • Community Development Financial Institution (CDFI): CDFIs are private sector financial institutions dedicated primarily to personal lending and business development in economically challenged communities. Just like most lenders, CDFIs rely on credit scores to evaluate a borrower’s qualification for business financing, but they are much more flexible and forgiving compared to commercial bank business loans.
  • Commercial Banks: During the crisis, central banks pumped trillions of dollars into financial markets. This increased liquidity has prompted banks to be more willing to extend cash to small business owners. That being said, banks are entrenched in low risk, high profit lending strategies which favor larger corporate style businesses with a history of good credit and strong business performance. Small business, especially startups are generally not considered good candidates for business loans as they have no history and little collateral as security – a solid business plan is not enough. Without these key performance indicators on your side, banks are sure to deny business loans to startup companies.
  • Government Grants and Subsidies: During the pandemic crisis, government agencies played a critical role in supporting businesses across all industries and at all levels of development. Now that the crisis is coming to an end, governments are once again tightening purse strings – getting grants can be tough. The criteria for awards are often stringent, competition may be strong and the application process is long. If awarded, businesses are normally required to match the funds being given.
  • Angels: Angel investors are generally wealthy individuals or possibly retired company executives who invest in small business. They often contribute their experience and network of business contacts to support the business, but generally seek involvement in supervising the company’s management.
  • Venture Capital: Venture capitalists generally look for companies with high growth potential to invest in – that is a great qualification criteria for startup companies with a solid business plan to meet. However, their preferred businesses to finance are technology-driven companies in sectors such as communications, information technology and biotechnology. Venture capitalists seek an equity position and expect a healthy return, often when the business starts selling shares to the public.
  • Equity Crowdfunding: This financial option refers to raising funds from the public (the crowd). In exchange for small individual investments, public investors get a proportionate share of equity in the business. As the investment is low, many investors are needed to raise the required capital. This option provides no additional support as with angel investment or invoice factoring.
  • Invoice factoring: This alternative financing option is one of the most ancient forms of commercial financing. Invoice factoring goes back 4,000 years to Mesopotamia, was used extensively throughout the Roman Empire and helped spread commerce as Europe colonized the globe. Today, alternative lenders have evolved this time proven cash flow solution with integrated advanced technology to provide a simple, easy to manage financing option for small business to medium size companies in all stages of development.

Invoice factoring is the selling of account receivables at a discount in exchange for immediate cash. This eliminates the need to wait 30 to 60 days for your customers to remit payment and provides immediate access to working capital. By accelerating invoice payment to less than 24 hours, your company creates instant positive cash flow to support ongoing operations.  As the only funding option tied to sales, invoice factoring has the unique ability  to increase access to working capital to keep pace with business development – the more invoice your company generates, the more funds become available.

The greatest feature of this financing option is the ease of qualification – if you invoice credit worthy customers, your startup business easily qualifies for invoice factoring. Learn more about how to get startup financing without a business loan using invoice factoring.

Benefits of Invoice Factoring:

  • No history, no problem – easy qualification for startup funding
  • Fast funding – invoices paid within 24 hours
  • Stop chasing customers for payment – cost free account receivable management included
  • Funding grows with the business – credit limits grow as the business develops
  • Easy to manage – user friendly online management portal to access your account 24/7
  • Full transparency – track all transactions in real time
  • Dedicated customer service – ensures high customer satisfaction

Be Careful When Selecting Your Financial Partner

It costs money to start, maintain and grow a business. Choosing the right financing option to fund your startup business is one of the first and most important financial choices most business owners make. Be careful to select a financial provider who understands your business and provides the support to be resilient and agile. The right financial partner for your startup company will have the financial resources to grow with your company’s current and future needs and support your company with additional benefits to improve your business success.

For more information about the benefits of invoice factoring for your business financing, visit

ABOUT eCapital

Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.

We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.

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eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit

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