female business owner in her mom and pop shop
Camino Financial
By: camino-financial
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Mom And Pop Business Funding Guide: Best 7 Options

Accessing mom-and-pop business funding is crucial for these companies to grow and thrive.

And while it’s complicated to get loans with traditional banks, thankfully, many other lenders are willing to give funding to these small business owners.

This article will look at the best funding options for mom-and-pop shops.

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Table of contents
1. What are mom & pop businesses?
2. The funding difficulties mom pop businesses face
3. Mom pop business funding: 7 best alternatives
4. Get mom pop business funding
5. FAQs

What Are Mom-And-Pop Businesses?

Mom and pop shops are small, family-owned businesses. They’re usually brick-and-mortar stores, but some might be online retailers.

These businesses offer customers an alternative to big companies’ anonymous, transactional experience.

Mom and pop businesses share a few key characteristics:

  • ownership by a single-family or a small group of families
  • relatively limited upside potential
  • they are essential cornerstones of their local communities
  • focus on offering a warm, personalized service

When you buy from these independent businesses, you can expect to build a rapport with the owners because they want to ensure that every customer has a positive experience.

Mom and pop business owners’ day-to-day activities involve everything from sales, production, bookkeeping, and more.

The Funding Difficulties Mom And Pop Businesses Face

Of 28.8 million small businesses in the United States in 2016, 19.3% were family-owned

You can find them in all sectors: convenience stores, car mechanics, hardware stores, restaurants, beauty salons, pharmacies, etc.; the list is endless.

Although the impact of these small businesses is undeniable, many business owners face many challenges.

On the one hand, their small size limits their operations’ scope, putting them at a disadvantage with bigger businesses.

On the other, their low income and generally low credit score don’t make it easy to access traditional loans.

In business, money makes money, and without capital, your company won’t grow: you won’t be able to:

So, they look for other financing alternatives for their businesses.

Business Loans For Mom And Pop Shops: Your Options at a Glance

OptionCollateralLoan amountFeesInterest ratesAccepts ITIN?No previous credit history approval?
Camino Financial MicroloansNoFrom $5,000 to $30,0005%2.4% – 4.75% (monthly)YesYes
Merchant cash advanceNoUp to $1 millionVaries (High)80% – 400%NoYes
Line of creditIn some casesFrom $15,000 to several millionAnnually and/or monthly5% – 20 %NoNo
GrantsN/AThousand of dollars up to several millionN/AN/ANoNo
Personal loansIn some casesUp to $100,000An origination fee of 1% to 8%5% – 23%NoNo
Second mortgage / Home equity loansYesUp to 80% of the property’s valueAppraisal, issuance, and legal5% – 7%NoNo
Friends and familyN/AVariableN/AN/AYesYes
Get Approved For A Microloan Today

Mom And Pop Business Funding: Most Common Alternatives

We have listed the best mom & pop business funding options.


An excellent mom-and-pop business funding alternative is microloansThese are very short-term loans with low-interest rates, designed for companies with minor capital requirements.

At Camino Financial, we offer microloans with minimal requirements, a fast and easy online application, and quick disbursement of funds.

  • The loan amount can range from $500 to $30,000.
  • The annual interest rates vary between 28.8% and 57%.
  • Repayment terms range from 24 to 36 months.

We know that what you want most is for your small business to thrive. And we want to help you make that happen!

You don’t need substantial annual earnings or have been in business for several years to access one of our financial products. You just have to have been active and registered for at least 9 months and have annual sales of $30,000.

To apply, you also need to present your SSN, but if you don’t have one, no problem! Your ITIN number will do.


  • We offer fixed monthly payments.
  • The requirements are easier to meet.
  • The application process is fast and completely paperless (we use apps like Plaid to simplify the process).
  • You can “graduate” to a better loan after 8 timely payments.


  • Depending on your needs, the amount may be low.
  • The repayment term is shorter than other loans (it is still enough time to pay).

Learn more about microloan pros and cons

Merchant cash advance (MCA)

Merchant Cash Advances are perfect for companies that need immediate capital and have good sales.

Businesses receive advances of a percentage of the sales made with credit card and debit card sales.

To get merchant cash advances, you’ll need a valid ID, bank statements, and tax return. You can receive from a few thousand dollars and up to $1 million.

You will have to wait two to five days to receive the money, though, and you will have up to 18 months to pay it back.


  • Fast application and approval process.
  • Doesn’t need collateral.
  • This option adjusts the fees based on the performance of your small business. For example, if sales are low, so are payments.


  • Merchant cash advance rates are usually between 80% and 120%, but they can exceed 400%.
  • If your sales are low, it will take longer to pay off the debt.
  • These loans are not subject to Federal regulations.
  • Its high fees and daily payments can affect your cash flow.
  • There are no benefits to early payments.

Lines of credit

Lines of credit are essentially fixed amounts of money offered by financial institutions. You can use these as much as you need, when you need them, as long as you don’t exceed the limit.

You only pay what you used, not the total credit limit.

Businesses can use this form of financing to:

You can access funds between $15,000 to several million, but the amount depends on your credit score, financial solvency, and credit history.


  • You pay interest only on the money used, not on the total.
  • It helps you improve your credit history.


  • Interest rates tend to be high.
  • Banks charge annual or even monthly fees.
  • It has many requirements.
  • Sometimes it is necessary to offer collateral.
  • The approval can take months.

You can also use a credit card to finance your business. On the other hand, if you have a lot of debt, you can use a business loan to pay off your credit cards.


In a way, grants are like loans; the difference is that you don’t have to pay them back.

They are financial incentives offered by federal agencies, private organizations, and foundations to help small businesses thrive.

Mom-and-pop grant amounts vary depending on the agency or organization, ranging from a few thousand dollars to several million.

Usually, requirements for obtaining mom-and-pop grant funding are very stringent.


  • You don’t need to pay the money back; it is yours to use in your business.
  • Many organizations offer these grants.


  • The requirements make it challenging to get a grant.
  • There can be very strict rules on how you can use the money.
  • You have to compete with many entrepreneurs for limited funds.

Personal loans

If your small business is new and you do not meet the requirements for a commercial loan, personal loans can be an excellent mom-and-pop business funding alternative.

It is possible to use a personal loan for business purposes.

A lender to a mom-and-pop shop will consider your personal credit score and income to approve your application. You can receive between $50,000 and $100,000, with interest rates ranging from 5% to 40%.

They can be a fast alternative business funding option.

Lenders also charge an origination fee from 1% to 8%.


  • You are free to invest the funds in any way you choose.
  • Generally, you don’t need to put up collateral.
  • Interest rates are relatively low.
  • The application process is simple, and approval is fast.


  • It doesn’t help build business credit.
  • If your credit score is low, getting one won’t be easy.
  • Funds are a bit limited.

What is better, a personal loan or a business loan?

Home equity loans or second mortgages

If small business owners cannot access more traditional types of commercial financing, they can get a second mortgage or a home equity loan.

This type of “high risk” loan uses your home as collateral. If you do not make your loan payments, the bank can take possession of your house to pay the debt.

A similar option is home equity lines of credit, which are a line of credit that uses your home as collateral.

This option has terms of between 5 and 20 years. You will need to submit property information, tax returns, personal financial records, and other documents. You can receive up to 80% of the value of your property.


  • You can get very high sums (depending on the value of your property).
  • Since it’s a secured loan (using your home as collateral), they offer low-interest rates.
  • There’s a lot of flexibility in how you can use the loan.
  • If the value of the property increases, so will your equity.


  • You put your home in jeopardy.
  • If your property’s value ​​decline, your equity will also decrease.
  • There are several closing fees to pay, which are usually high.

Friends and family

Borrowing from friends and family is the go-to alternative for many small business owners who can’t access bank loans.

If you decide to ask your loved ones for money, we recommend not skipping formalities.

If you want to use this financing option, it is advisable to make a written agreement or contract. Here, the payment conditions will be, and the consequences of non-compliance will be clear.

It would be even better if a lawyer reviewed the document.


  • Funds are easy to access: there is no approval process.
  • Terms can be much more flexible than with banks.


  • The terms and conditions may change unexpectedly if there’s no written agreement.
  • It can deteriorate personal and family relationships.
  • To raise all the capital you need, you may need to approach several people.

Get Mom & Pop Business Funding

A loan can make a difference for your small business and help you compete against bigger companies.

There are multiple alternatives, but you need to study each one carefully to choose the one that best suits your needs.

Compare interest rates, fees, and terms, and make sure you meet all the requirements. Also, ensure that the mom-and-pop business funding is fast and that it is enough for your financing needs.

At Camino Financial, we don’t leave any businesses behind. We want to help you find the loan that will help you secure the future of your small business.

Fill out our loan application today and discover instantly if you prequalify for one of our loans!

Apply now!



What are mom and pop stores?

Mom and pop businesses are typically family owned and operated companies.

These types of businesses are in smaller communities and offer a more personal service than larger businesses or chains.

Mom and pop stores often have close relationships with their customers and are part of the community.

What are mom and pop business funding alternatives?

A few mom-and-pop business funding alternatives are available, such as loans from family and friends, credit cards, and microloans.

Each option has its own pros and cons, so it’s essential to do your research before deciding which is right for you.

How to get a small business loan?

To get a small business loan, you must first find the right lender. You must shop around and compare rates to find the best deal.

Then, you will need to fill out an application. This will include information about your business and your financial history. The lender will use this information to determine if you are a good candidate for a loan.

After you submit your application, the lender will review it and decide. If they approve your loan, you’ll have to sign a contract before you receive the money.


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