I remember sitting at my kitchen table with a business plan I was proud of and exactly $1,400 in my checking account, googling “startup funding options” at 1 a.m. like the answer was going to jump off the screen and hand me a check. It didn’t. What I found instead was a mess of jargon , pre-seed, convertible notes, SBA microloans , written like I was already supposed to know what any of it meant. I wasn’t, and if you’re reading this the same way I was reading those articles back then, you’re not either, and that’s completely fine.
This guide is the one I wish someone had handed me before I made three avoidable mistakes while I was still sorting out my own startup funding options. I’m going to walk you through every realistic way to fund a new business in the US right now , borrowing, selling a slice of the company, grants, crowdfunding, and the boring-but-underrated option of just using your own money , and I’ll tell you honestly which startup funding options worked for me, which ones wasted my time, and which ones I’d only recommend under specific conditions. No hype, no “get funded in 24 hours” nonsense. Just what I’ve actually seen work for regular people starting regular businesses.
By the end of this, you should be able to look at your own situation and know which startup funding options are even worth applying to , instead of shotgunning applications at everything with a “startup” tag on it like I did in my first six months.
Startup Funding Options Explained Simply
At the highest level, every dollar you raise for a new business falls into one of three buckets, and together they make up almost every one of the startup funding options you’ll ever come across: borrowing, giving up a piece of ownership, or non-repayable money like grants and your own savings. Once you understand that framework, the whole confusing landscape of startup funding options gets a lot less overwhelming, because you’re really only making three decisions: do I want to owe money, do I want to give up ownership, or do I want to avoid both.
The first of the three major startup funding options is money you borrow and pay back, usually with interest, without touching your ownership stake , think SBA loans, business lines of credit, and business credit cards. I used a combination of a business credit card and a small personal loan in my first year, and the appeal was simple, I kept 100% of my company. The tradeoff is that you’re on the hook for repayment whether your business takes off or not, and lenders almost always want to see some revenue history, which most brand-new startups just don’t have yet.
The second of the major startup funding options flips that entirely. Instead of borrowing, you sell a slice of your company , to angel investors, venture capital firms, or even friends who believe in the idea , in exchange for funding you never have to pay back in the traditional sense. The catch is that you’re giving up a piece of ownership and, often, a seat at the decision-making table. When my friend raised a small round of outside capital for her skincare brand, she got $40,000 to buy inventory, but she also got an investor who wanted a monthly call and opinions on her packaging.
That’s the real tradeoff nobody explains clearly enough: selling equity buys you money and a stakeholder, not just money.
Then there’s the third bucket of startup funding options , grants, personal savings, and crowdfunding , where you’re not borrowing and you’re not selling anything. This is the hardest money to get precisely because it’s the “best” money to get. There’s no interest, no repayment, no dilution. It’s also why competition for something like the FedEx grant is so intense every single cycle.
Step-by-Step: The Startup Funding Options That Actually Work
I’m not going to give you a list of 15 exotic funding sources you’ll never realistically qualify for as a brand-new founder. Here are the seven startup funding options I’ve either used myself, watched close friends use, or researched deeply enough to trust , ranked roughly in the order I’d try them if I were starting over today.
1. Personal Savings and Bootstrapping
This is where almost everyone actually starts, whether they admit it publicly or not. I put in about $6,000 of my own startup capital before I ever applied for anything else, and honestly, it forced me to be disciplined about spending because it was my own money on the line. Bootstrapping means using personal savings, reinvested profits, or a lean budget instead of leaning on outside startup funding options, and it’s still how the vast majority of American small businesses get off the ground.
The upside is total control , no investor calls, no loan officer, no repayment schedule breathing down your neck. The downside is obvious: you’re personally exposed if things go sideways, and you might genuinely not have $6,000 sitting around, which is a completely valid place to be.
2. Friends and Family
This one worked for me once and backfired once, so I’ll be honest about both. My uncle lent me $3,000 for initial inventory with a simple written agreement , interest rate, repayment date, everything spelled out , and it went smoothly because we treated it like a real loan, not a favor. A different attempt, where a friend “invested” $2,000 with no paperwork at all, turned into an awkward six months of neither of us knowing if it was a loan, a gift, or a stake in the company. Learn from that: if you go this route, always put it in writing, no matter how close the relationship is.
3. Debt Financing: SBA Loans, Microloans, and Credit Lines
If you need more than a few thousand dollars and don’t want to give up equity, borrowing through the Small Business Administration is one of the more accessible startup funding options for early-stage founders. SBA microloans go up to $50,000 through nonprofit intermediary lenders and tend to have more founder-friendly underwriting than a traditional bank, though the application and approval process can take weeks.
A business line of credit is the more flexible sibling of a loan , you’re approved for a maximum amount, but you only pay interest on what you actually draw. I opened one after my first year in business specifically because I wanted a cash cushion for slow months without carrying debt I wasn’t using. Just know that most banks want at least a few months of revenue history before they’ll approve a startup, so borrowing usually isn’t a day-one option.
4. Equity Financing: Angel Investors and Venture Capital
Selling equity makes the most sense for startups with real growth ambitions , think software, apps, or anything that could scale fast and needs a large chunk of capital up front to do it. Angel investors are typically wealthy individuals writing checks in exchange for ownership, often at the very earliest stage, while venture capital firms tend to come in with larger amounts once you’ve already got some traction to show them.
I’ll be direct here: among all the startup funding options out there, this one is not the default path for most small businesses, and there’s a myth in startup culture that “real” founders raise venture capital. Most successful small businesses in America never give up a single share of ownership, and that’s not a failure , it’s just a different, often smarter, path depending on what you’re building.
5. Small Business Grants (Including the FedEx Small Business Grant)
Grants are the unicorn of startup funding options , free money with no repayment and no ownership given up , which is exactly why they’re competitive. The FedEx Small Business Grant Contest is one of the more well-known annual opportunities, awarding a grand prize of roughly $50,000 plus FedEx Office print and business service credit, along with additional runner-up prizes. To apply, your business generally needs an active FedEx shipping account open for at least six months, at least six months of operating history, and a compelling story you can pitch in a short video, since public voting has historically played a role in choosing winners.
I applied for this contest in my second year and didn’t win, but the process of writing a tight, honest pitch actually sharpened how I talked about my business everywhere else , investor meetings, my website, even casual conversations. Beyond FedEx, look at Grants.gov, the Amber Grant for women-owned businesses, and industry-specific SBIR grants if you’re in a research-heavy field.
6. Crowdfunding
Platforms like Kickstarter and Indiegogo let you raise money in small amounts from a large number of people, usually in exchange for early access to your product rather than a piece of the company. I ran one modest campaign and raised about $8,000, which wasn’t life-changing, but the real value was the pre-launch customer list and social proof I got out of it. Crowdfunding rewards businesses with something visual or tangible to show off , it’s a much harder sell if what you’re building is a B2B service with nothing exciting to photograph.
7. Business Credit Cards
I’m including this because it’s how a lot of founders , myself included , cover small early expenses without a formal application process. A business credit card gives you fast access to a modest credit line and helps build your business credit score for future borrowing, but it only makes sense if you’re confident you can pay off the balance monthly. I’ve seen more than one founder dig themselves into a hole here, so treat it as a short-term bridge, not a funding strategy.
Debt Financing vs. Equity Financing vs. Grants: A Quick Comparison
Since the question I get asked most is “which one should I actually pick,” here’s how the three major categories of startup funding options stack up against each other.
| Factor | Loans & Credit | Selling Equity | Grants |
|---|---|---|---|
| Repayment required? | Yes, with interest | No repayment, but you give up ownership | No |
| Ownership impact | None , you keep full control | You give up a percentage of the company | None |
| Speed to access funds | Weeks to a couple months (SBA can be slower) | Months (pitching, due diligence, negotiation) | Slow and competitive (often months) |
| Best for | Founders who have some revenue or collateral | High-growth startups needing large capital fast | Founders who can wait and meet strict criteria |
| Example sources | SBA loans, business lines of credit, credit cards | Angel investors, venture capital firms | FedEx Small Business Grant, SBIR, Amber Grant |
| Risk if business struggles | You still owe the money personally in many cases | Lower personal financial risk, but loss of control | None , it’s not repaid either way |
Looking at that table, my honest take is this: if you have no revenue yet, start with personal savings, friends and family, or a small grant application in the background. Once you have a few months of sales, borrowing opens up. Selling equity should really only be on your radar if you’re building something that needs to scale fast and you’re comfortable sharing decision-making power to get there. Of all the startup funding options on that list, none of them is universally “right” , it depends entirely on your stage.
Common Mistakes I Made (So You Don’t Have To)
Applying for funding before I had a real number. My first pitch to a potential lender, I said I “needed some capital to get started” , no specific figure, no breakdown. I laughed out of the room, politely. Know your exact number and what it’s for before you ask anyone for money.
Chasing an equity round because it felt more “legit,” one of the flashier startup funding options. I spent almost two months trying to get in front of angel investors for a business that honestly didn’t need that kind of capital or growth trajectory. A microloan would have solved my actual problem in a fraction of the time. Not every founder needs to raid the same list of startup funding options everyone else is chasing.
Not reading the fine print on a merchant cash advance. I took one out of desperation once, saw the factor rate translate into an effective interest rate way higher than I’d realized, and paid it off as fast as I possibly could. Borrowing isn’t automatically “safe” just because you’re not giving up equity , some debt products are genuinely expensive.
Treating grants like a backup plan instead of a real strategy. I only started applying for things like the FedEx grant sporadically, whenever I remembered, instead of putting it on a calendar with actual deadlines. Grant cycles are seasonal and competitive , you have to treat the application like a real project, not an afterthought.
What to Realistically Expect
Nobody tells you this part clearly enough, so here it is: most first-time founders in the US don’t land a big check in month one. According to Bureau of Labor Statistics data, a meaningful share of small businesses close within their first year, and funding gaps are a big reason why. Realistically, expect a lending decision to take anywhere from a couple weeks (business credit cards, online lenders) to two or three months (SBA loans).
Expect a serious equity conversation, if it’s even relevant to your business, to take three to six months from first pitch to funds in your account. Expect grant applications, including the FedEx contest, to be a numbers game , apply to several, expect most rejections, and treat any win as a bonus rather than the plan.
On the tax side, remember that loan repayments generally aren’t taxable income, while how a sold equity stake and certain grants are treated can get more complicated , this is genuinely a conversation to have with a CPA familiar with small business and IRS rules, not something to guess at from a blog post.
Final Tips and Resources
A few tools and resources I’d actually point a friend toward if they were starting this process today:
- SBA.gov , the single best starting point for microloans, 7(a) loans, and finding SBA-approved lenders near you.
- Grants.gov and the FedEx grant page , bookmark both and set a calendar reminder for application windows, since grant cycles open and close fast.
- A local Small Business Development Center (SBDC) , free, in-person counseling that helped me sanity-check my startup capital numbers before I approached a single lender.
If you’re still mapping out your broader business plan before you even get to weighing your startup funding options, our Entrepreneurship section has more real-experience guides like this one.
Final Thoughts
There is no single “best” choice among the startup funding options out there , there’s only the best option for where your business actually is right now, and that changes as you grow. If I could go back to that kitchen table moment, I’d tell myself to start with what I could control (savings, a tight budget, maybe a small friends-and-family loan), layer in borrowing once I had a little revenue, and only consider selling a piece of the company if my business genuinely needed to scale fast.
Whatever combination of startup funding options you land on, the goal isn’t to raise the most money possible , it’s to raise the right amount, from the right source, without giving away more control or taking on more risk than your business actually needs. You’ve got this, and if you want more honest, US-focused breakdowns of startup funding options like this one, stick around on Natives Money , there’s a lot more where this came from.
Frequently Asked Questions
What are the most common startup funding options for a new business?
The most common startup funding options are personal savings, friends and family loans, debt financing like SBA loans and business lines of credit, equity financing from angel investors or venture capital, crowdfunding, and grants such as the FedEx small business contest.
Is debt financing or equity financing better for a startup?
It depends on your business. Borrowing lets you keep full ownership but requires repayment with interest, while selling equity gives you capital without repayment in exchange for giving up a percentage of your company. Fast-growth startups often lean toward giving up equity; most small, steady-growth businesses do better with loans or bootstrapping. Among all the startup funding options, this is the trade-off that matters most.
How do I apply for the FedEx Small Business Grant?
To apply for the FedEx Small Business Grant, you generally need a for-profit US business, at least six months of operating history, an active FedEx shipping account open for six or more months, and a short video pitch, since the contest has historically included a public voting phase alongside panel judging. Application windows typically open in late winter.
How much startup capital do I actually need to begin?
There’s no universal number , it depends entirely on your industry, whether you need inventory or equipment, and how lean you can run in year one. I started with under $10,000 in personal savings and a small friends-and-family loan; other businesses genuinely need six figures before they open their doors.
Can I combine multiple startup funding options?
Yes, and most founders do. It’s common to bootstrap with personal savings early on, add a business credit card or SBA microloan for borrowing power once you have some revenue, and apply for grants like the FedEx contest in the background the entire time. Mixing and matching startup funding options is normal, not a sign you haven’t figured things out yet.