Alternative Business Funding Ideas for Startups


When you have a great business idea which you think has the potential to change your life and the lives of others for the better, there can be nothing more disappointing than when you can’t get a business loan and convince a lender to believe enough in your idea to make it a reality. So, if you are in this position, are there any other options open to you to help you raise the cash that you so desperately need?

Here are 4 alternative business funding ideas you could consider. Before we dive in, I should say that borrowing money to set up a business is always a bit of a risk. If you fully understand the risks, though, then one of the following options might well work for you.

Borrowing from a family member

Personally, I’ve never really liked the idea of borrowing from family members. If you feel comfortable with the idea, though, then it might be worth considering this as a possible option when trying to get a business off the ground. You could even offer to repay the money you borrow with interest if that makes things more palatable to you. Often times, it is your family who will know you the best. They know whether you are likely to repay a loan or not, and they will also probably know whether you have what it takes to grow a business from nothing and make it a success. If you have a family member who believes in you and who has the cash to spare, then this could be a viable option. Just be sure to live up to your promises, to avoid any future family feuds.  

Personal Loans

If, like me, you don’t like the idea of borrowing from family, but you are still struggling to obtain a specialist business loan, then perhaps you could consider taking out a personal loan? While some personal loan providers will not allow these types of loans to be taken out for business use, there are some lenders who are quite happy to lend on this basis.

Some Peer-to-Peer lenders, for example, are more than happy to provide a personal loan for business use, as long as you operate as a sole trader.


I suppose this option really shows just how much you believe in your business potential. Freeing up some of the equity in your property via remortgaging could be another possible way to raise the finance you need to get your business off the ground. Again, you will need to ensure that a potential lender is happy to offer a mortgage loan on the basis that the funds are going to be used for business purposes.

If you’re unsure of which lenders will allow this, then it might be wise to have a chat with a professional mortgage advisor.


One other growing sector for small business finance is that of Crowdfunding. Crowdfunding websites offer you the opportunity to put your business ideas forward to individual investors and offer them the chance to buy a stake in your company. One success story in this area is that of the craft beer maker BrewDog. BrewDog recently broke Crowdfunding records, raising millions of pounds to fund their business growth via Crowdfunding. Perhaps you could do the same?

So there we have it, 4 alternative ways to raise the finance needed to start a small business when you have been refused a business loan by mainstream lenders.

Have you ever raised business finance via any of these methods?

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