Owner Of Delicatessen Standing In Shop. concept: Mom and Pop Business Funding
By: omunoz
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Best Mom and Pop Business Funding Alternatives

Accessing mom and pop business funding is crucial for these companies to grow and survive during difficult times.

But there’s a problem: it’s almost impossible to apply for loans with traditional banks without a good credit score.

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

As a mom and pop business owner, you face this scenario every day. So, they look for other 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.

Table of contents
1. What are mom and pop stores?
2. Mom and Pop Business Funding: Most Common Alternatives
2.1. Mom and pop merchant solutions
2.2. Microloans
2.3. Lines of credit
2.4. A mom and pop grant
2.5. Personal Loans
2.6. Home equity loans or second mortgages
2.7. Friends and family
3. Camino Financial Helps Mom and Pop Businesses
4. All Your Options at a Glance
5. Get Mom and Pop Business Funding

What are mom and pop stores?

Mom and pop stores are small, family-owned businesses. They may be brick-and-mortar stores or online retailers. Still, they share a few key characteristics: ownership by a single-family or a small group of families, relatively limited upside potential, and a focus on personal service.

Mom and pop stores offer shoppers an alternative to the anonymous, transactional experience. When you buy from a mom and pop store, you can expect more personalized service and more opportunities to build a rapport with the owners.

In many cases, mom-and-pop store owners run the day-to-day operations of their businesses. So, they have a vested interest in ensuring that every customer has a positive experience.

Mom and Pop Business Funding: Most Common Alternatives

There are many mom and pop business funding options considering that 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, 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?

Mom and pop merchant solutions

A merchant Cash Advance (MCA) is available to businesses with good credit and debit card sales.

This product exists for companies that need immediate capital. These businesses receive advances as a percentage of sales made with cards or fixed daily or weekly debits.

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 business. 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 Regulation.
  • Its high fees and daily payments can affect your cash flow.
  • There is no advantage to early payments.


Another mom and pop business funding alternative are microloansThese 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.

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 (much like a credit card).

Businesses can use this form of financing to cover unexpected expenses, buy inventory, or pay payroll. 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.
  • 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 many requirements.
  • Sometimes it is necessary to offer collateral.
  • Its approval can take months.

A mom and pop grant

One popular mom and pop business funding alternatives are grants

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

The grants are also used to reward initiatives that have the potential to become successful companies. Depending on the agency or organization, grant amounts vary 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 many opportunities to access one.


  • It can be challenging to get a grant because they have very stringent requirements.
  • There are very strict rules on how you can invest the money.
  • You have to compete with many other entrepreneurs for limited funds.

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 approve, 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 runs 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 won’t be easy to get one.
  • Funds are a bit limited.
  • It does not help you create a business credit history.

Home equity loans or second mortgages

This mom and pop business funding is for small business owners that cannot access financing. 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 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 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.

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. 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.


  • 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.

Camino Financial Helps Mom and Pop Businesses

At Camino Financial, we have some great mom and pop business funding options for you.

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

OptionCollateralLoan amountFeesInterest ratesAccepts ITIN?No-credit history approval?
Camino Financial LoansNoFrom $ 10,000 to $400,0005%12% – 24.75%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 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, and 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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