5 min read

Food truck business owners leaning against their truck.

For many entrepreneurs, finding the startup financing for their business can be their first hurdle.

It might be fun to come up with an idea for a new product or service. But sooner or later you’ll have to put real money on the table to make it happen.

While personal savings can help, most business owners need startup financing—for equipment, inventory, workspace, and possibly staff.

Once you have a business plan, you’ll want to find out which funding option will work best for you. Maybe that will be borrowing from family, friends, or a bank. Or maybe you will decide to apply for a personal loan.

With preparation and a little legwork, you can make your startup dream a reality.

First things first: write your business plan

To launch and grow your new business, you will need a business plan. A strong plan doesn’t just flesh out your business concepts. It also answers key questions. For example, how much money will you need to get started? What will your expenses be? And when will you become profitable?

Your initial budget will help you estimate your cash flow. This is an important piece of information because it will tell you how much money you can safely borrow. It will also tell you how long your startup funding will last.

According to Cate Luzio, founder and CEO of Luminary, a global professional education and networking platform, 90% of the founders and business owners she talks to have not written a clear business plan.

“It’s about getting back to basics. Understanding how much money you need to start, and how much you’ll have in ongoing expenses—which will inform how much revenue you’ll need to bring in to not only break-even but make a profit,” she said.

Learn about your startup funding options

The best type of funding for your business will depend on factors like your current financial situation, short-term capital needs, how fast you think you’ll burn through capital before you can cover expenses, and cash flow projections. For example, a funding solution that works for a virtual business might not serve a brick-and-mortar one that needs to pay rent.

“One size doesn’t fit all when it comes to entrepreneurship. And that could not be more true when it comes to fundraising,” noted Nicola Corzine, executive director at the Nasdaq Entrepreneurial Center.

Many business owners bootstrap their startup with personal savings. Or they turn to family and friends for a loan or ask them to invest. Another popular tool is crowdfunding, which lets people access money fast, and can be a strong marketing tool.

Other options include applying to a bank for a business or personal loan or applying for grants. And, according to Corzine, “it’s a little-known secret in Silicon Valley that many businesses are actually first started with some use of a credit card.”

Know the pros and cons of different funding sources

Wherever you get your startup money, it’s important to know how and when you will need to pay it back. You’ll also want to know about any fees that will affect the total cost of borrowing.

Here are some pros and cons of popular funding sources:

Business Loans:

  • Pros: higher funding amounts, different loan types for different needs (for capital equipment or operations), business advisory resources may be available, fixed repayment schedule
  • Cons: require a business plan, collateral, and/or personal guarantee; long approval process


  • Pros: few strings attached, good marketing tool, quick access to funds
  • Cons: time and resources needed to launch and manage, may not raise enough

Credit Cards:

  • Pros: fast approval, no collateral requirements, build credit history, no business plan needed
  • Cons: interest rate typically higher than other forms of credit, lower limits on funds

Small Business Administration (SBA) Loans:

  • Pros: longer terms, low interest rates, interest rate caps, wide range of loan types and amounts
  • Cons: strict underwriting requirements, lots of paperwork, long application timelines, collateral or personal guarantee often required

Personal Loans:

  • Pros: fast approval, no collateral requirements, no business plan required, fixed repayment schedule, fixed interest rate
  • Cons: limits on funding amount

While you think about how you will fund your business, Corzine suggests reaching out to other entrepreneurs or “near peers.” Ask them why they chose a specific source of capital. Their experience could help you make your decision.

Consider using a personal loan for business

One of the best things about a personal loan is the simple application process. There are minimal documents, and most people get a decision the same day. You will also have the flexibility to choose a repayment term that works for you. Some lenders, like Discover® Personal Loans, do not charge an origination fee, which is calculated as a percentage of your loan. When you pay an origination fee, that amount is deducted from the money you receive. When you don’t pay it, you get the whole loan amount.  You can read more about origination fees here.

Luzio notes that a personal loan can provide a little breathing room when you’re getting started. A personal loan’s “fixed repayment schedule can be a benefit. You know what you’re paying, and you know when you have to pay it,” Luzio said. “It gives you guideposts. And it can keep you from having to use all of your safety net, which is your savings.”

Discover Personal Loans strives to help small businesses get off the ground as fast as possible. Discover listened and worked with me to get a quick loan needed for my business when no other bank or lending institution would help,” said a customer in Florida. “They truly cared and understood the need for the loan. I will always go to Discover for all my company’s future needs!!! Thank you so much.”

Do your homework and talk with lenders

Your business plan will help you figure out how much you need to borrow. It will also show you how you can pay down a loan without crippling your operations. Just be sure to compare lenders so you can make an informed decision and start strong.

Want to see how a personal loan could help? Once you have your plan and budget in hand, use our personal loan calculator to estimate monthly payments and find a loan that works for you.Estimate Monthly Payments