Hands counting dollar bills and coins on table. Concept: capital resources
Jordan Schneir
By: jordan_shneir
Read in 13 minutes

Capital Resources: Alternatives to a Business Loan

As a new business owner, you might not be aware of all of your options you actually have when it comes to capital resources. You’ve likely looked into traditional business loans from banks. However, the high-interest rates, rigorous application process, and strict requirements may have deterred you from applying for a loan. Or you may have gone through the process only to be rejected by a traditional lender.

Fortunately, there are plenty of options and alternative capital resources to help you get your business off the ground. Here we bring you 10 of them.


10 Alternative Sources of Capital

Alternative sources of capital include funding from pretty much anyone or any company that believes in your business and are willing to invest in it. If you’ve decided that traditional business loans aren’t the best option for your situation, you should consider some of these alternative capital resources.

Personal Savings

Your own personal savings can be a great option if you are able to safely invest some of your own money. This option can show potential investors that you are confident in your new business and help you avoid many of the hassles that come with traditional small business loans.

Owner’s Assets

If you are unable to invest cash into your business, you might consider offering some of your own assets as collateral for those who are willing to finance your company. Of course, you have to remember that you will lose your assets if you’re unable to pay off your debt as agreed.

Learn here how collateral works

Home Equity Loan

Home equity loans can be a great way to increase working capital as they let you use your home’s equity as collateral. These types of loans can give you access to large sums of cash without the strict requirements that accompany business loans.

These loans are particularly risky, however, as your risk losing your home if you’re unable to pay back your loan.


You might also consider approaching your family and friends for capital. If you only need to raise a small amount of capital, this can be a great option. However, you should always be careful when forming a business relationship with friends or family members.

Venture Capitalists

Venture capitalists are one of the more popular alternative capital resources as they can provide large sums of money to startups. This form of financing is provided by firms or funds to small, emerging firms that are deemed to have high growth potential. Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in. Venture capitalists also have a wealth of business expertise and resources that may be beneficial to you as a small business manager. But keep in mind that, as we just mentioned, a VC may ask for a sizeable stake in your company.

Angel Investors

Angels investors are wealthy individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. This can be a great option if you need to raise a significant amount of capital as angels may be able to contribute upwards of $100,000. Again, have in mind that in exchange for their investment, angel investors will generally ask to have some control over your business’ management practices.

As you can see, both venture capitalists and angel investors are people who invest money into businesses. Both take a calculated risk in your company in the hopes of earning a healthy return on investment. So, what is the difference between them? A venture capitalist is a person or firm that uses money pooled from investment companies, large corporations, and pension funds. Typically, they don’t use their own money to invest. However, an angel investor uses their own money. Therefore the amount they are willing to invest is usually smaller. As a result, venture capitalists usually expect a higher percentage of your company in return of their investment, in comparison to angel investors. Lastly, venture capitalists tend to invest in businesses that are already established to reduce their risk of losing investments. Angel investors are more likely to invest in businesses that are just starting out.


Business Incubators

A business incubator is a company that helps new and startup companies to develop by providing services such as management training or office space. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development. The NBIA is definitely a good place to start your research is you consider this a good option for your company. Have in mind, however, that business incubators generally operate in the tech industry and are certainly not for everyone. Rather than lending you a large sum of money, business incubators will let your startup operate on their premises and give you access to their resources. Once your business is off the ground, you would then leave the incubator and operate independently.


One of the best alternative capital resources is grants, as they provide you with large sums of cash that you don’t have to pay back. However, the requirements can be incredibly strict, so you might choose to avoid these if that’s one of the reasons you’re considering business loan alternatives in the first place. Grants are generally only available to businesses that the grant provider considers significant, so you must be able to demonstrate the value that your startup provides. Some business grants are specifically focused on helping minorities. You can find here some of the most popular grants for entrepreneur women.


Crowdfunding has become an increasingly popular source of capital thanks to websites like Kickstarter and Indiegogo. Crowdfunding allows you to cast an incredibly large net and collect donations from anyone interested in your venture. This can help you raise large amounts of capital without giving up any ownership in your business. This article with everything you should know about crowdfunding can help you decide if this is a viable option for you.


Bartering consists of the exchange of goods or services for other goods or services without using any money. While this is not necessarily a resource to generate capital, you can consider bartering to access those services your small business is unable to afford. For example, you might hire independent contractors and give them access to your services free of charge rather than paying them upfront.

The benefit of this technique is that it can significantly reduce the amount of capital that you need. Also, note that bartering transactions are still taxable even though cash is not exchanged.

Alternative Business Lending

Essentially, alternative business lenders include anyone who is able to provide capital and is not a traditional lender, such as a bank. These share many of the same qualities as traditional loans. However, you might find that these capital resources provide many advantages over standard bank loans.

Short Term Loans

Short term loans can be a great alternative to long-term loans allow you to take out a lump sum of capital to be repaid over a short, predetermined amount of time. Typically, these loans have low, fixed interest rates and can be borrowed in amounts up to $500,000. If you expect to be able to pay off your loan quickly, short-term loans an ideal capital resource.

Equipment Loans

Equipment loans are a great way to get your new business up and running as they let you cover up to 100% of the cost of any necessary equipment. This could include vehicles, machinery, copiers, computers, printers, and more. The equipment itself serves as collateral, making these loans fairly easy to obtain.

Invoice Financing

Sometimes called accounts receivable financing, invoice financing lets you get an advance on money that your business is owed. Meaning, if you’re awaiting payment from clients for services already provided, your cash flow doesn’t need to be obstructed. You’ll have to pay a fee to the lender, but this can be great for businesses that provide services that are typically paid for after completion.

Merchant Advances

A merchant cash advance lets you take out a lump sum of cash that you pay back through a lender fee plus a portion of your daily credit card transactions. Merchant cash advances are very, very expensive. However, if your company does a lot of business through credit cards, this can be a good option for quick funding.

Read this post for more detailed info on Equipment loans, Invoice financing, and Merchant advances

Business Credit Cards

Business credit cards are among the most popular capital resources and considered revolving credit, meaning you’re able to take out money as you need it and pay it back as you’re able to. Credit cards need to be used responsibly as they tend to have incredibly high-interest rates. However, this can be a great option to increase your working capital. You can find in this post the right business credit card that better fits your needs and goals.

Camino Financial

Camino Financial is a non-traditional lender that provides businesses terms loans between $5,000 to $400,000  Our business loan requirements are more flexible than those in a traditional bank. Among other features, we extend finance to borrowers with bad credit, and no collateral is needed to apply for one of our loans. Our application process is simple and fast. All you have to do to start is submitting your loan application. It will take only a few minutes and it won’t impact your credit. You’ll receive an instant response informing you if you have been prequalified. In 24 hours one of our business loan experts will get in touch with you and guide you through the rest of the process. You could have the funds you need within 5 to 10 business days!


To Sum Up

As an entrepreneur, you know that raising business capital can be difficult, especially when dealing with traditional lenders. You’ll find that the strict requirements, high-interest rates, exhausting application process, and long waiting times to receive your funds make traditional business loans more trouble than they’re worth.

Hopefully, the alternative capital resources listed in this post have helped you better understand all of your options for generating cash for your small business. If your business is in need of financing, consider applying for a business loan at Camino Financial for flexible requirements, friendly terms, and an easy and quick process.


Check if you
qualify for a loan