• Hear from several top YouTubers who offer unique entrepreneurship advice on how to increase your business credit score, qualify for startup loans, increase revenue, and more. 
• Learn about experiences and strategies from small business financing influencers who have been there and done that before you apply for funding in 2024.
• In this article, we’ll explore the unique perspectives of several popular YouTube personalities as they share their thoughts on the evolving landscape of small business financing 2024.

Why Is Starting a Small Business So Difficult?

Starting your own business comes with its joys as well as struggles. “I’ve started 32 companies from scratch so I know a little bit about startup capital and how hard and ridiculous it is,” says popular business YouTuber Andrew Cartwright. The most challenging part? “Getting your hands on the right amount of moolah is pretty much the thing that can make or break your small business dream.” 

However, no matter how important it is for entrepreneurs to be able to access business funding, it can be difficult to qualify for small business loans.

Cartwright says, “It’s like the chicken and the egg.” You need a certain amount of revenue or a certain number of years in business, sometimes even for startup funding, but those years are hard to obtain with no money or cash flow to start.

What Is the Best Way to Find Funding for Small Businesses?

The best business financing completely depends on your situation and your business plan. It’s most important to fund your business in a way that you can afford. 

If you’re looking for external funding, first make sure you understand the total cost of debt before you apply. Unless you’re applying for small business grants — which are certainly worth looking into — you’ll likely have to pay fees or interest (or both). Check out this Nav guide on typical fees you’ll run into when you seek small business financing.  

On the other hand, bootstrapping your business only works if you have the savings to do it and you’ll still be able to make rent. 

However, there are many businesses you can start with a small amount of cash. Prominent YouTuber Ellie Talks Money says, “If I can go from $1,200 to $1.2 million, you can absolutely do the same.” In one of her videos, she points out five businesses you can start with only $1,000. These include a vending machine business, a dropshipping business, an affiliate marketing business, and more. 

How Do Small Businesses Get Funding for the First Time?

Although financing a new business might seem impossible, the U.S. Small Business Administration (SBA) says everything you need to know on its website: “No treasure map necessary.” Securing funding for beginners isn’t like hunting for a long lost treasure. There are lots of options out there — you just have to know where to look.

In the same video, Andrew Cartwright recommends considering the following options: 

• Business grants: Grants are funds from the government, companies, or charitable organizations that you don’t have to pay back. “It’s the golden ticket for free money,” says Cartwright.
• Local angel investors: Cartwright recommends looking for angel investors near you that are willing to give money to businesses like yours to help them succeed (usually in exchange for a percentage of ownership in the company).
• Alternative lenders: Traditional banks are notoriously difficult to get funding for a new business, especially as most of them require at least two years in business. Alternative lenders might be willing to work with you even if you have been in business for a few months. Cartwright does warn about one thing: “The interest rates can be steep.”
• SBA loans: Although SBA loans can be difficult to qualify for, they do offer some of the best rates and terms out there. They’re worth seeing if you’re a candidate for these loans.
• Bootstrap your business: “This is the smartest hustle, in my opinion,” says Cartwright. If you have the cash on hand to pay for your business’s startup costs, it can be worth considering using your savings. You can avoid long applications and fees associated with a lot of funding options.
• Crowdfunding: Using reward-based crowdfunding is an option that works for small businesses who can attract future customers. People agree to pay you money in exchange for a reward — anything from a signed postcard to a mention in your documentary.
• Ask your family and friends: Andrew says, “This is the toughest one. I don’t recommend it if you’re in a rough patch.” However, if you have family or friends that have money to spare, this can be a good route.
• Business credit cards: Small business owners often overlook the power of business credit cards, but you can get a healthy line of credit and build up your business credit by using the right card. Plus, they’re easier to qualify for than a lot of the other options.

Other options that might be available to you — depending on factors like your time in business, annual revenue, and credit — are small business loans, like business lines of credit, equipment financing, or microloans.

What Are the Benefits of a Small Business Loan?

Small business loans can provide your business with the cash you need to grow in ways that you couldn’t manage without an influx of cash. Learn more about how debt can be used to grow a company here.

Also, getting financing specifically for your business can help protect your personal credit. YouTuber Noelle Randall says, “Once you have a business and you create a business credit profile, literally that business credit profile can borrow money and those liabilities are in the business’s name.” This protects you from being personally impacted if your business defaults or goes bankrupt. 

Do Most Small Businesses Start With a Loan?

Older businesses are more likely than startups to turn to business funding, according to the 2022 Small Business Credit Survey. Here’s a quick breakdown of the survey results, ranked from most to least likely to use external funding:

• Most likely: established businesses with employees. More than half turned to lenders (53%) or the government (63%) for funding.
• In the middle: startups with employees. These businesses aren’t too far behind — 42% reported receiving funding from financial institutions, although a whopping 80% said they funded with their personal savings. 
• Least likely: startups with no employees. This group is the least likely to turn to financial institutions, with only 20% using financial institutions and 11% using government sources to fund their operation.

One reason new businesses might not turn to funding is because there are hardships to financing a business. “Banks are not giving out money like they used to,” says YouTuber Destiny Adams. “So it’s going to be very hard to get those large loan amounts for your business.” 

Destiny recommends bootstrapping a business. “Before I start looking at getting loans and stuff for my business, I want to make sure that I can actually sell the idea and that it’s profitable.”

What Is the Most Common Source of Small Business Financing?

The most common way to fund a business depends on the business. Established businesses are more likely to apply for government funding than use their personal savings, according to the 2022 Small Business Credit Survey. Plus, their use of loans is almost even with their use of personal savings.

Startups, on the other hand, are more likely to use personal savings of the owner. In fact, new businesses with employees are almost twice as likely to use personal savings rather than funds from a lender. But this fact remains true whether or not the business has employees.

Can I Get a Small Business Loan if I Just Started My Business?

You might be able to qualify for a business loan even if you have a brand new business. However, there are a few things you’ll need to do before applying. In her tutorial for beginners, Ellie Talks Money walks you through step-by-step how to establish business credit to create the foundation for funding success:

1. Create your business entity: Forming your LLC requires you to file your business with your secretary of state. You can use a business formation service to help make sure you stay compliant. 
2. Get your EIN: An employer identification number (EIN) is usually required when you apply for business checking accounts or for business financing. 
3. Get a business bank account: A business checking account helps you to separate personal and business finances and can work well with payment processors for online payments. 

Ellie also mentions getting a DUNS number. Business credit bureau Dun & Bradstreet provides a free DUNS number to all businesses, which allows you to start building business credit with that bureau. (Plus: Using Nav Prime allows you to build your credit history with your regular payments). Bad credit can make it more difficult to get business funding.

When you’re looking for good business funding options, don’t forget to use Nav to see tailored funding choices that your business can apply for today.