Small businesses use various sources available for start-up capital:

• Self-financing by the owner through cash savings, equity loan on his or her home, and or other assets 
• Loans or financial gifts from friends or relatives 
• Grants from private foundations, government or other sources 
• Private stock issue 
• Forming partnerships 
• Angel investors 
• Loans from banks, credit unions, or other financial institutions 
• SME finance, including collateral-based lending and venture capital, given sufficiently sound business venture plans.

Some small businesses are further financed through credit card debt – usually a poor choice, given that the interest rate on credit cards is often several times the rate that would be paid on a line of credit at a bank or a bank loan. Recent research suggests that the use of credit scores in small business lending by community banks is surprisingly widespread.

Moreover, the scores employed tend to be the consumer credit scores of the small business owners rather than the more encompassing small business credit scores that include data on the firms as well as on the owners. Many owners seek a bank loan in the name of their business; however, banks will usually insist on a personal guarantee by the business owner.

In the United States, the Small Business Administration (SBA) runs several loan programs that may help a small business secure lo Answer: In these programs, the SBA – guarantees a portion of the loan to the issuing bank, and thus, relieves the bank of some of the risk of extending the loan to a small business. The SBA also requires business owners to pledge personal assets and sign as a personal guarantee for the loan.

The 8(a) Business Development Program assists in the development of small businesses owned and operated by African Americans, Hispanics, and Asians. Canadian small businesses can take advantage of federally funded programs and services. See Federal financing for small businesses in Canada (grants and loans).

On October 2010, Alejandro Cremades and Tanya Prive founded the first equity crowdfunding platform for small businesses in history as an alternative source of financing. The platform operates under the name of Rock The Post.