Startups need capital to launch and grow, and while multiple funding paths exist, grants are rarely reliable.

Many first-time founders share a common misconception: that a solid idea or business plan alone will secure grant funding. And while startup grants do exist, most are reserved for businesses that are already generating revenue.

“With so many grants out there, it’s easy for first-time founders to see them as an accessible way to fund a business. But the reality is, grants are competitive, unpredictable, and rarely enough to build a sustainable business—even when you’re fortunate enough to receive one early on,” says Alice Cherng, CPA, Business Consultant.

Setting aside time to research and apply for grants that align with the business can be part of a business’s plan, but a broader funding strategy will allow startups to grow and scale.

“Founders should create a solid financial plan that accounts not only for what it will cost to launch their business, but also how they will continue funding it as it grows,” says Sebastian De Vivo, financial consultant and strategist. “During COVID, we saw an unusual increase in grants and other forms of accessible capital, which has led some founders to believe grants can support their business long-term. In reality, grants are limited and challenging to secure. Another common misconception is that venture capital is easy to access. Despite the perception, only a small percentage of businesses receive VC funding. Small businesses need to build a solid, realistic plan to fund their venture.”

The amount of capital you need will help determine your financing strategy. If you’re in the beginning stages, list all foreseeable expenses and add a cushion for unexpected costs. Consider the cost of legally setting up and structuring your business, registering your trademark(s), obtaining business insurance, purchasing inventory, rent, and hiring freelancers or professionals such as graphic designers, photographers, web developers, and other specialists you may need to launch.

If your business is generating revenue, create a 12- to 18-month forecast to determine how much additional funding you’ll need to operate and grow.

Here are some of the most common ways to fund your business as you launch and grow:

Most small businesses get off the ground through self-funding. Founders may use personal savings, dedicate a percentage of their current income to the business, sell investments or other assets, or, in some cases, tap retirement funds to provide the initial capital needed to launch. Credit cards are also commonly used. According to the Federal Reserve’s 2026 Small Business Credit Survey , 42% of small businesses that regularly use credit cards rely on personal credit cards for at least some of their business financing.

While investing your own money in a new business comes with risk, having some of your own capital invested can be important when seeking other forms of financing. Lenders generally want to see that founders have a financial stake in the business and are willing to share the risk rather than relying entirely on outside capital.

Work with an accountant or business lawyer to document and structure the contribution properly from the start.

Tapping into your network for funding is a common way to raise capital to launch or grow a business. The key is understanding how the money you receive is being treated and documenting it properly to avoid issues down the road.

If you’re crowdfunding, be clear about the type of campaign you’re running. Crowdfunding can include donation-based platforms such as GoFundMe, where funds generally do not need to be repaid, or rewards-based campaigns, where supporters contribute in exchange for a product or other benefit. Regulated forms of crowdfunding also allow businesses to raise money from investors in exchange for debt or equity.

If you’re raising money directly from friends, family, or others in your network, determine the terms before accepting the funds. Is it a loan that needs to be repaid? If so, what is the repayment timeframe, interest rate, and payment schedule? Is it a convertible note that may later convert into equity? Or is the person investing in exchange for ownership in the company?

When debt, convertible notes, or equity are involved, work with a qualified business or securities attorney to document the arrangement properly, ensure both parties understand the terms, and comply with applicable federal and state laws.

Lines of Credit & Bank Loans

Credit unions can be a good place for small business owners to explore loans and lines of credit, especially because many focus on supporting local communities. No matter which bank or lender you approach, remember their primary concern is whether you can repay. If your business is pre-revenue, a lender will look at factors such as your personal income, taxes, credit, assets, collateral, or a co-signer. If your business is generating revenue, lenders will also evaluate the company’s financials and cash flow to determine whether the business and individual can support additional debt.

The Small Business Development Center (SBDC) is a nationwide program that provides no-cost consulting and resources to small business owners. Consider meeting with a financial consultant at your local SBDC to review your financial situation, identify financing options that fit your business, and connect with local lenders. Many of these lenders participate in U.S. Small Business Administration (SBA) loan programs, which reduce some of the lender’s risk through a government guarantee and can make financing more accessible to qualifying small businesses.

Nonprofit & Community Lending

In addition to traditional lending, SBDCs have relationships with Community Development Financial Institutions (CDFI’s) and other nonprofit and community-based lenders.

Whether you become a client of an SBDC or search on your own, here is a list of common organizations that help support small businesses.

  • Accion Opportunity Fund is a nonprofit lender that provides small business loans nationwide, ranging from $5,000 to $250,000, as well as SBA 7(a) loans of up to $350,000.
  • FOUND/LA , founded by Jane Wurwand, founder of Dermalogica, connects local entrepreneurs with funding, coaching, and a community of like-minded business owners. The organization currently serves Los Angeles–based businesses and is expanding its reach.
  • Certified Development Companies (CDCs) are nonprofit organizations certified and regulated by the U.S. Small Business Administration (SBA) that help small businesses access financing, particularly through the SBA 504 loan program. These loans are designed primarily for inventory purchases, commercial real estate, and equipment.
  • TMC Community Capital is a nonprofit microlender that provides fast, affordable online financing to support entrepreneurship among women-owned, low-income, and under-resourced small businesses in California.
  • Kiva U.S. is a nonprofit, crowdfunded lending platform that provides U.S. entrepreneurs with small business loans ranging from $1,000 to $15,000 at 0% interest, with no fees, collateral, or minimum credit score required.
  • LiftFund is a nonprofit CDFI that provides affordable small business loans and support services, focusing on entrepreneurs who may struggle to qualify for traditional financing, with a strong presence in Southern states.
  • Ascendus is a nonprofit CDFI that provides small business loans and financial education to underserved entrepreneurs, with a strong presence on the East Coast.

As you develop the financial strategy for your business, remember that grants can help, but they shouldn’t be the foundation of your funding plan. Long-term success comes from a thoughtful strategy for how you’ll finance the business and, most importantly, building healthy cash flow that lets it sustain itself and grow.