Can You Fund Your Business Without a Bank?

You already rely on bank loans for your mortgage and credit cards, so when you are ready to start your business, you are likely less than eager to look to your bank for help. Business loans through banks and similar major financial institutions are popular, but they can be difficult to acquire — especially if you have a history of poor personal credit or a flock of failed startups. Even if you can obtain a loan without much trouble, you might not want to bother with exorbitant interest rates or restrictive rules regarding use of funds. Fortunately, there are other ways to find funding.

To run your business, you don’t need a bank. Here are a few less common but more attractive methods for acquiring small business funds.


Bootstrapping, or paying for your business from your own pocket, is exceedingly rewarding, gratifying, and terrifying. As you should already know, businesses are expensive, so unless you have an untouched trust fund, successful bootstrapping requires immense powers of frugality, commitment, and passion.

Though bootstrapping is difficult, it is not impossible. First, you must sacrifice some of your vision for the sake of your budget; by relying on your existing savings and income, you will not be able to afford the spacious office, experienced and professional team, and expansive and diverse product line you initially envisioned. You should ask employees and vendors if they will defer payments or accept alternatives, such as equity in your business. Finally, you must optimize your growth so your business can start paying for itself as soon as possible.

Bootstrapping is a common business practice, but it rarely suffices as a sole funding method. If you want to avoid the bank and retain as much control of your business as possible, you should certainly strive to bootstrap, but it’s likely you’ll need a little financial help from the following funding methods.


For a few years now, crowdfunding has been a popular solution to help startups and small businesses gain the funding they need for new projects while estimating audience interest. Using one or several crowdfunding platforms, you can advertise your business idea to an audience of consumers, who will contribute to your cause in return for minor benefits, such as early access to your product or marketing materials like shirts and stickers.

However, many entrepreneurs quickly learn that crowdfunding is not the free, obligation-less money they expect. The popularity of crowdfunding has created immense competition within the crowdfunding community, so you must create a magnificent marketing campaign for any hope of attracting the attention of investing consumers. Such campaigns can be expensive, but when successful, they more than pay for themselves.

Peer-to-peer Lending

Like crowdfunding, peer-to-peer (P2P) lending allows you to rely on smaller contributions from individuals rather than professional lending organizations, like banks or venture capitalists. However, unlike crowdfunding supporters, P2P lenders expect to get their money back.

First and foremost, P2P lending is an unsecured personal loan system, but most of the largest loans are for business use. P2P loans typically boast better interest rates than loans you can acquire from the bank, which means you can save money and interact directly with a community of potential consumers. To sign up for a P2P loan, you must apply to an online lending program and hope to attract the attention of willing lenders.

Customer Financing

If crowdfunding and crowdlending seem less-than-appealing, you might consider taking your funding activities straight to certain customers. Customer financing involves selling your product to customers before you have a product to sell. Customers who engage in these programs typically get discounts on items or service subscriptions in exchange for a slight delay in delivery. Using the money from these early sales, you can begin to build your business. Similar to crowdfunding and P2P lending, this method helps you understand market interest before you invest any significant money and time.

Family Lending

If you are lucky, you can still make withdrawals from the bank of Mom and Dad. Investors tend to offer more money when they believe in the entrepreneur more than the business idea, so loved ones who know and trust you are often willing to contribute substantial amounts to your startup. Many entrepreneurs are hesitant to even consider relying on friends and family for business funds, but if you have the right legal agreements, family lending can be profitable for everyone. A handshake and a wink is not enough to make anyone feel safe in an investment; you should negotiate an interest rate, build a repayment plan, and get notarized signatures from every family investor.

Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

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