5 Ways to Raise Money for Business You May Not Think About

Even with the world going crazy due to the COVID-19 pandemic and the resulting economic downslide, it is possible to raise money for business.  The key is to think outside the box and get creative.

Raise Money for Business: Beyond Traditional Loans and Investors

Most often people turn to traditional loans, including SBA loans, and standard investors when they need to raise money for business.  In times like these however, those options may not work so well. That means it will be necessary to seek out ways to fund your business you may not have thought of already.

Raise Money for Business: Angel Investors

Angel investors  are usually only in for a one-time deal. Many choose to spread their risk out over a lot of people and businesses to be certain they get a safe return on their investment.

Angels tend to be a lot more informal than most types of funding. They can be people you know, or people you connect with through networking or other means.

Angels are not covered by the Securities Exchange Commission’s (SEC) standards for accredited investors. Still, a lot of them are accredited investors anyway.

To become an accredited investor, a person has to have a minimal net worth of $1 million and an annual income of $200,000.

There are a number of angels who aren’t millionaires. They could be friends or colleagues with home equity, or local professionals who are looking to invest.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

How Do You Find Angel Investors?

The best way to find these kinds of investors is to ask. You can also try an angel investors website or network. Try Gust, which used to be called Angel Soft. They keep a database of investors, companies, and programs. Startups can also search for business plan competitions and more.

Another option is to look at the biggest angel investor groups. Be aware, however, that these meetings are really only going to happen if you can get an introduction.

According to Entrepreneur, in order from smallest to largest the top 10 Angel Investor groups are:

  1. New York Angels Inc.
  2. Alliance of Angels (Seattle)
  3. Pasadena Angels
  4. Hyde Park Angel Network (Chicago)
  5. Band of Angels (Menlo Park, CA)
  6. North Coast Angel Fund (Cleveland)
  7. Golden Seeds LLC (NYC)
  8. Investors’ Circle (San Francisco)
  9. Tech Coast Angels (Los Angeles) and
  10. Ohio Tech Angel Funds (Columbus, OH)

Focus and requirements may vary from group to group.  For example, some concentrate on local startups only. Do your research so you don’t waste yours and the angels’ time if it isn’t a good fit.

Raise Money for Business: Crowdfunding

Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants a piece of the action can buy in.

Investors pledge amounts ranging from as low as $5 to as high as they want. They may give $5, $80, $150, or even over $500. As a general rule, they can give as much or as little as they want.

Though not always necessary, most business owners offer rewards for investment. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards.

Raise Money for Business: Credit Cards

You have to be careful with this one.  Many would consider it the easy way out.  This is because even with credit that isn’t stellar, credit cards aren’t all that hard to get.  They also are not hard to get in trouble with. If you have established business credit, it’s best to use that to get credit cards to raise money for business.

If you do not have business credit, it’s time to fix that.  Regardless of the state of the economy, you need business credit to access funding for capital, growth, and expansion. Building business credit can happen even in a recession.

Raise Money for Business: Credit Line Hybrid

A credit line hybrid is revolving, unsecured financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.

What Does it Take to Qualify?

It is not as hard to qualify as you may think.  You do need good personal credit.  That is, your personal credit score should be at least 685.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Also, in the past 6 months, you should have less than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards.  It’s also preferred that you have established business credit as well as personal credit.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

If you do not meet all of the requirements, all is not lost. You can take on a credit partner that meets each of these requirements.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

Why Is It Such a Great Option?

There are many benefits to using a credit line hybrid.  First, it is unsecured, meaning you do not have to have any collateral to put up.  Next, the funding is “no-doc.”  This means you do not have to provide any bank statements or financials.

Not only that, but typically approval is up to 5x that of the highest credit limit on the personal credit report. Additionally, often you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business.

The process is pretty fast, especially with a qualified expert to walk you through it.  One other benefit is this.  With the approval for multiple credit cards, competition is created.  This makes it easier, and likely even if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months.

Build Business Credit with a Credit Line Hybrid

The key is the approval of multiple business credit cards at once.  If your business is set up properly, they will report your on-time payments to the business credit reporting agencies.  These include Dun & Bradstreet, Experian, and Equifax mostly, though there are others. Not all of them report to all of the CRAs, but some of them report to at least one.  Each account reporting consistent on-time payments helps you build strong business credit.

The Connection Between Business Credit and Fundability

Here is how it works.  The fundability of your business is like a huge puzzle.  All the pieces fit together, and you have to have all the pieces to see the complete picture.  Unlike a puzzle, some pieces are bigger than others, meaning if you are missing those pieces, the impact on your complete fundability picture is bigger. Business credit is the biggest piece of the fundability puzzle.

To begin building business credit, and thus fundability, you first have to set your business up to be a fundability entity apart from yourself.

How to Set Up Your Business to Build Business Credit and Be Fundable

There are a few things you have to do to be sure that your business debts are reported to the business credit reporting agencies and thus your business credit report, not your personal credit report.

Make Sure You Have Separate Contact Information

Your business has to have its own phone number, fax number, and address.  You can still run your business from your home or on your computer if that is what you want.  There is no need to even have a fax machine.

You can get a business phone number and fax number that will work over the internet instead of phone lines.  Also, the phone number will forward to any phone you want.  As a result, you can simply use your personal cell phone or landline.  Whenever someone calls your business number it will ring straight through.

Faxes can be sent to an online fax service, if anyone ever happens to actually fax you.  This part may seem outdated, but it does help your business appear legitimate to lenders.

You can use a virtual office for a business address. How do you get a virtual office?  What is that?  It’s not what you may think.  This is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services.  In addition, there are some that offer meeting spaces for those times you may need to have an in person meeting.

You Need an EIN

Next, get an EIN for your business.  This is an identifying number that works for your business the same way your SSN works for you personally. By using an EIN for business transactions, you help ensure your SSN is not associated with your business.  That makes it more likely your account will report to your personal credit rather than your business credit. You can get an EIN for free from the IRS.

You Have to Incorporate

Incorporating your business as an LLC, S-corp, or corporation is non-negotiable.  First, it lends credence to your business as one that is legitimate. Also, it offers some protection from liability.

Which option you choose does not matter as much for fundability as it does for other things.  Your budget and need for liability protection play more into that decision.   The best thing to do is talk to your attorney or a tax professional.  You will lose the time in business that you already have.  When you incorporate, you become a new entity. That means, you basically have to start over.  You’ll also lose any positive payment history you may have accumulated.

This is why you have to incorporate as soon as possible.  Time in business is also important to building business credit and fundability.  The longer you have been in business the more fundable you appear to be. That starts on the date of incorporation, not the date you started doing business.

You Must Open a Separate Business Bank Account

You have to open a separate, dedicated business bank account.  There are a few reasons for this.  First, it will help you keep track of business finances.  It will also help you keep them separate from personal finances for tax purposes.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

There’s more to it however.  There are several types of funding you cannot get without a business bank account.  Many lenders and credit cards want to see one with a minimum average balance.  In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.


For a business to be legitimate it has to have all of the necessary licenses it needs to run.  If it doesn’t, red flags are going to fly up all over the place.  Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.

No Matter What the Economy Looks Like, You Will Always Need to Raise Money for Business

As you can see, there are a few ways to raise money for business.  The need to do this is not something that comes along just with a recession.  With or without the COVID-19 pandemic and resulting economic crash, you would still need funding for your business at some point.  If your business is suffering due to the pandemic and needs for social distancing, be sure you take advantage of all that is available.  This includes the Paycheck Protection Plan, as well as relief options from the Federal and State governments.  Even some businesses and professional organizations are offering help.

The first options mentioned however, including the credit line hybrid, are always available.  Be sure you work now to get your fundability and business credit in order. It will serve you well not only in hard economic times, but when the dust settles as well.

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