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7 Unique Startup Funding Ideas for Cash-Strapped Entrepreneurs


Launching a startup requires passion, perseverance, and a great business idea. It also requires money, and without a long and successful business history, getting startup funding through traditional channels may be challenging. The solution? Consider non-traditional avenues to fund your business. Here are seven ways you could gather startup financing for your next venture.

Personal credit

One of the fastest and easiest places to find startup funding may be in your own pocket. In a pinch, your own personal credit cards can be a solution to finance woes. Other personal credit options for financing a new business could be an unsecured personal line of credit, a signature loan, or even a home equity loan if you're a homeowner.

Borrow against life insurance

Does your whole life insurance policy have a cash value? If you're looking for creative ways to fund your startup, it may be a good idea to pull out your insurance policy and read the fine print. As long as you've owned the policy for at least three years, you may be able to borrow against its cash value, reports Fox News. Contact your insurance professional for details on how borrowing against life insurance works.


An often overlooked source of capital for startup businesses is family. If your parents are still reeling from contributing to your college education, consider approaching a grandparent, uncle or aunt, or even cousins who may be interested in investing in your venture. Family members may be more likely to support your dreams when they've started and succeeded as entrepreneurs or business owners themselves.

Pawn shops

Today's pawn shops have come a long way from the seedy establishments of your grandparents day, and are increasingly used by small businesses as a financing alternative, according to Reuters News. If you have something that you're willing to pawn for quick cash, a trip to the pawn shop could launch your startup funding. And if you don't want to deal with a local pawn shop, check out one of the online pawn shops — but do your homework and check with the Better Business Bureau to ensure you're dealing with a legitimate operation.

Equity crowdfunding

If you're willing to part with equity in your business, crowdfunding could be the answer to your startup funding dilemma. Crowdfunding refers to funding a business (or any endeavor) with small contributions from many investors. In return, each gets a small equity stake in your business. Popular online crowdfunding sites include CrowdFunder and CircleUp.

Peer-to-peer funding

Similar to equity crowdfunding, peer-to-peer funding simply lets other businesses invest in your business, and finding willing investors may be as simple as applying online. Small businesses can find one to five year loans, available from well-known businesses such as PayPal and Lending Club. Take note though — the convenience can be costly, as interest rates may range from 5.9 percent to 29.9 percent, reports Bloomberg Business News.

Find an angel investor

If your startup has real "wow" power, you may have a shot at attracting the attention of an angel investor. These individuals are high-net-worth investors who provide over 90 percent of seed capital to startups, according to Stanford University's Graduate Business School. To find an angel investor, start by letting your family, friends, and business contacts know that you're looking for investors. Your accountant and lawyer may also be good sources of potential angel investors.

Funding your startup may be the first challenge you'll face as an entrepreneur, but it won't be your last. Get creative and stay determined to see your great idea blossom into a successful business, and soon you'll find financing new projects and expansions less difficult as your business thrives.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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