How to Finance Your Startup Without Loans


What are some ideas for financing your new startup -- without bank loans?The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to unemployment and underemployment and provides entrepreneurs with access to tools, mentorship, and resources that support each stage of their business’s development and growth. E-mail your questions about best practices for starting up and/or managing a small business to

No. 1: Blend Your Product With Consultancy From Allie Siarto of Loudpixel

Many successful startups were actually consultancies that went into product building such as 37signals, MetaLab. Use consulting to pay for the development of your products. You'll never have to go into debt, and if you create a product that ties into your consulting, you'll be your own best beta tester.

No. 2: Field Friends and Family From Vanessa Nornberg of Metal Mafia

It may seem old school, but the investors who are the most willing to take a risk on your idea will be those who trust in you more than they do in the idea. Friends and family know you well and can be a great way to get help with your launch. We raised $150,000 this way, which set everything in motion.

No. 3: Pitch Business Plan Competitions From Lawrence Watkins of Great Black Speakers

There are many competitions that are out there where aspiring entrepreneurs can win seed money for their idea. In fact, my team won $10,000 from 100 Urban Entrepreneurs to get our Ujamaa Deals concept off of the ground. We were also in the running for other competitions as well. The hidden benefit to the competitions is that it gives you practice on selling your concept to others.

No. 4: Clear the Clutter for Dollars From Nancy T. Nguyen of Sweet T

Look around. Sell everything you don't need -- you will have more room to work and more money to work with. Prior to moving from Chicago to Raleigh to start my business, I sold everything I could and was able to clear the clutter for startup dollars.

No. 5: The Crowds Will Flock From Nick Friedman of College Hunks Hauling Junk

Crowdfunding is a great tool for raising capital and there are plenty of Websites that make it easy and quick to reach your goals, provided your idea is worthwhile. Instead of going to the bank and hoping that one person will believe in your dream, put your idea out there for the masses to decide. A wider net catches more fish.

No. 6: Monetize Every Step From Thursday Bram of Hyper Modern Consulting

It's not always possible, but depending on the company you're building, you may have some early opportunities for income. The research you do into your market maybe worth writing up and selling as an eBook. The skills you build may be worth teaching in a paid class. Your first runs of products may be worth selling, even if they aren't perfect.

No. 7: Try Customer Financing From Louis Lautman of Young Entrepreneur Society

Start to sell your product without spending any money on that product. Allow your customers to finance the production of your product. You can let them know when delivery will be, and this allows you not to spend any money before the product is sold. It also allows you to find out if it will sell before you even invest any money into testing out if it will sell. Let your customers finance you.

No. 8: Don't Quit Your Day Job From Benjamin Leis of Sweat EquiTees

Day jobs (or night ones) are a great way to fund your new startup. Use a portion of your wages to invest in your new business. The art is in the balance. You need to be able to focus on each individually, so that neither is compromised.

No. 9: Pray to the Angels? From George Mavromaras of Mavro Inc. | Praetor Global LLC.

Before you approach a seasoned entrepreneur wanting access to his or her VC or Angel investors, I highly recommend analyzing your business model and mastering three topics: market validation (purchase orders), technical model (how it works), and business plan. Take all three of those explanations and approach friends/family first. If they can't give you a dollar, neither will an investor.

No. 10: Incubators and Accelerators From Peter Minton of Minton Law Group, P.C.

Not only do they provide you with the capital to get your idea off and running, but the access they provide to industry experts, startup attorneys and venture capitalists greatly improve the chance of your startup becoming a success.

No. 11: Credit Cards Are a Last Resort From Josh Weiss of Bluegala

I wouldn't recommend this unless all other avenues were pursued first, but you can find credit cards that will give you sizable cash advances. If you can scrap together a couple of these offers, you should have some money to get you started.