Owner Of Delicatessen Standing In Shop. concept: Mom and Pop Business Funding
By: omunoz
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What is the Best Mom and Pop Business Funding Alternative?

In business, money makes money, and without capital, your company won’t be able to grow: you won’t be able to hire more employees, buying equipment, or remodel your store, not to mention reaching more customers.

Accessing mom and pop business funding is crucial for these companies to grow and survive during difficult times. But there’s a problem: without a good credit score, it’s almost impossible to apply for loans with traditional banks.

Most mom and pop business owners are faced with this scenario every day. So, they look for different financing alternatives for their businesses, some uncommon or ineffective. 

In this article, we’ll take a look at the most common options for mom and pop business funding, as well as their pros and cons. 

Mom and Pop Business Funding: Most Common Alternatives

Of the 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… the list is endless.

Although the impact of these small businesses is undeniable, their challenges are just as big. 

On the one hand, their small size limits their operations’ scope, putting them at a disadvantage in the face of much more powerful businesses.

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

But still, there are other options. But how convenient are mom and pop business funding alternatives?

1. Merchant Cash Advance (MCA)

Merchant Cash Advances are available to businesses that have good credit and debit card sales. 

This product is designed for businesses that need immediate capital. The advances are paid a percentage of the sales made with cards or daily or weekly fixed debits. 

To get an MCA, you’ll need a valid ID, your bank statements, and your 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.
  • The fees are adjusted depending on the performance of your business. If sales are low, so are the payments.


  • Annual rates usually vary between 80% and 120%, but they can go as high as 400%.
  • If your sales are low, it will take longer to pay off the debt.
  • These loans are not subject to Federal Regulation.
  • Its high fees and daily payments can affect your cash flow.
  • There is no advantage to early payments.

2. Lines of credit

Lines of credit are fixed amounts of money offered by financial institutions, and you can use as much as you need, when you need it, as long as you don’t go over the limit. You only pay what you used, not the total credit limit you have (much like a credit card).

Businesses can use this form of financing to cover unexpected expenses, to buy inventory, or pay payroll. You can access funds between $15,000 to several million, but the amount depends on your credit score, your financial solvency, and your credit history.


  • Interest is paid only on the money used, not the total.
  • You can invest the funds freely.
  • It helps you improve your credit history.


  • Interest rates tend to be high.
  • Banks charge annual or even monthly fees for lines of credit.
  • It’s not a very accessible option because of the large number of requirements.
  • Sometimes it is necessary to offer collateral.
  • Its approval can take months.

3. Grants

Grants are one of the most popular mom and pop business funding alternatives.

Grants are financial incentives offered by federal agencies, private organizations, and foundations whose purpose is to help small businesses.

The grants are also used to reward initiatives that have the potential to become successful companies. Grant amounts vary, depending on the agency or organization, but can range from a few thousand dollars to several million. 

The requirements for obtaining a grant also change depending on who gives it.


  • You don’t need to pay the money back; it is yours to use in your business.
  • Many organizations offer these grants, which means that there are many opportunities to access one.


  • It can be difficult to get a grant because they have very stringent requirements.
  • There are very strict rules about how money can be invested.
  • You have to compete with many other entrepreneurs for limited funds.

4. Personal loans

When you think about capital for your company, personal loans might not be the first thing that comes to mind, but if your business is young and you do not meet all the requirements for a bank business loan, a personal loan can be a good alternative. 

Commonly, mom and pop business owners apply for this type of credit to invest in their businesses. 

To be approved, lenders will consider your personal credit score and income. You can receive between $50,000 and $100,000, with interest rates ranging from 5% to 23%. An origination fee is also charged, which ranges 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.


  • If your credit score is low, it will be very difficult to get one.
  • The funds are limited.
  • It does not help you create a business credit history.

5. Home equity loans or second mortgages

Many small business owners cannot access financing, and when they think of alternatives to get funds, a second mortgage or a home equity loan seems like the only option. This type of financing is a loan that uses your home as collateral. If you do not pay the loan, the bank can take possession of your house to pay the debt. Because their patrimony is at risk, business owners think of them as “high risk.”

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

This form of mom and pop business funding has terms of between 5 and 20 years. You will need to submit property information, tax returns, and personal financial records, as well as 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 the loan is secured (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 you can’t pay.
  • If your property’s value ​​decline, your equity will also decrease.
  • There are several closing fees to pay, which are usually high.

6. Friends and family

Borrowing from friends and family is easier than going to a bank, and that’s why many business owners prefer this alternative. But getting money from someone you know shouldn’t mean skipping formalities.

If you want to use this financing option, it is advisable to make a written agreement or contract in which the payment conditions and the consequences of defaulting are clear. It would be even better if a lawyer reviews the document.


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


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

7. Microloans

Microloans are another mom and pop business funding alternative. These are very short-term, minimum loans, with low-interest rates, designed for these companies. They can range from $500 to $50,000. 

The interest rates are low and vary between 5% and 20%. Depending on the lender, you have to make weekly or monthly payments.


  • With some lenders, you do not need to have a credit score.
  • The requirements are easier to meet.
  • The application process is fast, and the disbursement of funds is usually very fast, too.


  • Depending on what you need, the amounts may be low.
  • The repayment term is shorter than a traditional loan (it is still enough time to pay).
  • Sometimes you cannot use the funds in any way you want: the lender may have guidelines for using the capital. 

Portrait Of Couple Running Organic Food Store Together. concept: Mom and Pop Business Funding

Camino Financial Helps Mom and Pop Businesses

At Camino Financial, we know that what you want most is for your business to thrive. And we want to help you make that happen! 

We offer small business loans and microloans. They are easily accessible, and they adapt to your needs.

You don’t need huge annual earnings or pre-existing credit history to access one of our financial products. You just have to make sure that you have been in business for at least 9 months and have annual sales of $30,000.

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

In addition to having very competitive annual interest rates (they range from 12% to 24.75%), they are also fixed.

As for the repayment terms, these range from 24 to 60 months.

The best of all is that we offer higher amounts than what you could get with the other alternatives that we already mentioned. You can receive from $10,000 to $400,000 as fast as 2 to 10 days.

Mom and Pop Businesses Funding: Your Options at a Glance

🏪CollateralLoan amountFeesInterest RatesAccepts ITIN?No-credit-history approval?
Merchant Cash AdvanceNoUp to $1 millionVaries (High)80% – 400%✔️
Lines of creditIn some casesFrom $15,000 to several millionAnnually and/or monthly5% – 20%
GrantsN/AThousands of dollars up to several millionN/AN/A
Personal loansIn some casesUp to $100,000An origination fee of 1% to 8%5% – 23%
Second mortgage/Home equity loansYesUp to 80% of the property’s valueAppraisal, issuance, and legal5% – 7%
Friends and familyN/AVariableN/AN/A✔️✔️
Camino Financial loansNoFrom $10,000 to $400,0005%12% – 24.75%✔️✔️

Get Mom and 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, terms, and make sure you meet all the requirements. Also, make sure how fast funding is and, above all, 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 our loan application today and discover instantly if you prequalify for one of our loans!



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