By: Sean Salas, Co-Founder and CEO of Camino Financial

Editor’s Note: Camino Financial is online marketplace that evaluates businesses and matches them with non-bank lenders. Different from a bank, the Company focuses on lending to small businesses seeking $5,000 to $500,000 in debt financing, and can fund a loan in as little as four days. For more information visit:

Getting start-up funding is never simple. It requires familiarizing yourself with many different options, and narrowing them down to the best option(s) that make sense for your business. Moreover, it requires capital planning. I know what you’re thinking, another “advisor” writing about creating a BUSINESS PLAN. Rest assured, the following article outlines 6 tangible steps to get start-up capital:

Step 1: Get Your Paperwork in Order

It is going to be difficult to get capital if your business is not legally formed. If you have questions on the proper legal formation, see our blog post on the topic (click here).   Also, apply for an Employer Identification Number for tax and other business related purposes.

Step 2: Go See Your Banker

Don’t have a banker? I highly recommend working with a community bank, which is likely to be much more small business friendly compared to a national bank. A bank will likely not give you a loan today, but may lend to your business in the future. Develop a rapport with a banker, look into their business credit cards and open a business checking account.

Step 3: Analyze the Numbers

Whether you are barely starting a business or generating modest revenue, measure the performance of your business and set performance goals. Be sure to identify your business cash needs over the course of the next 12 months. Last but not least, make sure you establish reporting systems to track performance (e.g., QuickBooks, Xero).

Step 4: Type Cast Your Business

Depending on the growth profile of your business, your capital options may significantly be different. At the expense of overgeneralizing, I’ve narrowed 4 types of businesses and your business should likely fall into one bucket (only one):

  • Young Small Business, like a one unit restaurant, retailer or beauty salon
  • Fast Growing Start-up, like Uber 5 years ago
  • Product Launch, like the product-oriented businesses featured on Shark Tank (e.g., PipCorn)
  • Solopreneur, loan wolf seeking the dream either in accounting, bookkeeping, legal advisory or something else amazing

Step 5: Assess Your Funding Options

Once you have determined the type of business you are in, take a look at Figure A below to identify the capital options best suited for your business. This list is comprehensive, but by narrowing your options based on the type of business you are operating, I just saved you 100 hours of work. Thank me later.

Figure A: Funding Options by Business Profile

Early Stage

Small Business

Fast Growing


Product Launch Solopreneur
ACH Loan

Credit Cards


Friends & Family

Grant Programs
Incubator Program

Invoice Financing

Merchant Cash Advance


Mortgage Refinancing

Peer-to-Peer Loan

Personal Savings

PO Financing

Private Investors


Venture Competitions

Sean Salas-How to Fund your Start-Up
Figure B: Start-up Funding Options


Description Pros Cons
ACH Loan Term loan with a daily payment schedule for businesses with at least 1 year in operation · Quick credit decision & funding within days

· Build business credit

· Convenient source of growth capital

· High interest rates from 10-40%+

· Daily repayments may create liquidity constraints

Credit Cards Revolving personal or business line of credit · Quick credit decision

· Open line of credit for working capital

· Exceeding 50% of credit availability will hurt credit

· Cannot refinance personal credit cards with business debt

Crowdfunding Leverage your personal network and fundraise capital among friends and investors · Access cheap capital (even at 0% interest rate loan)

· Great early exposure to business/product

· Time and planning intensive

· Difficult to raise above $50,000

Friends & Family Seek capital from friends & family in exchange for equity · Raising capital from people of mutual trust · Mix personal and business?



Grant Programs Monetary award to carry out charitable public work (see list on · No cost


· Only available to specific types of organizations
Incubator Program Apply to an incubator program in exchange for equity · Exposure to future investors and fellow entrepreneurs

· Resources & office space

· Expensive if equity is required to join (e.g., Y Combinator)
Invoice Financing Advance on accounts receivable or invoices outstanding · Convenient way to unlock liquidity · Not growth capital
Merchant Cash Advance Use credit card transaction volume to underwrite a cash advance · Pay as you earn money; if you don’t earn, you don’t pay

· Convenient access to growth capital

· High interest rates from 20-60%+

· Too expensive to fund working capital

Microloan Loan of $0-25,000 from local micro-enterprise development organization · Affordable interest rates between 7%-15%

· Access to technical assistance

· 2-3 weeks for funding

· Difficult to borrower above $20,000

Refinancing Mortgage Refinance mortgage and pull out capital for “start-up” funds · Indirect access to low cost capital below 6% · Places personal assets at risk


Peer-to-Peer Loan Borrow online via peer-to-peer lending platform · Quick credit decision & funding within days

· Convenient source of growth capital

· High variance of interest rates from 10-40%

· Credit decision heavily weighs FICO score

Personal Savings Self-fund business · Maintain ownership of business · Depletes personal assets if start-up does not succeed
PO Financing Growth capital using purchase orders as collateral · Accessible to businesses earning $0 revenue

· Personal credit not an issue

· Usually paired with invoice financing

· High fee payouts

Private Investors Fundraising equity or debt capital through private investors · Strategic investors create value beyond capital · Equity is expensive

· Time and planning intensive

Supplier Work with suppliers to defer payback of inventory and other supplies · Interest free capital · Beware of straining supplier relationships
Venture Competitions Present business plan in venture competitions to access free capital · Free capital

· Exposure to future investors

· Time and planning intensive

· At risk of getting no money

Step 6: Plan for the Future

Make sure you prep to get a bank loan – it’s cheaper A LOT CHEAPER. In next week’s blog, we are going to prep you to get access to a bank loan, while you are starting your business.   The future success of your business may rely on its ability to access cheap sources of capital. Be prepared, if not, rest assured smart competitors will be.

Perspectivas Profesionales is a monthly section in El Mundo Boston featuring the leading Latino voices from the world of business and entrepreneurship. For more content like this click here. Puedes leer este artículo en español aquí.

8-perspectivas_sean salasSean Salas is the CEO and Co-Founder of Camino Financial. He has a BA in Political Economy of Industrial Societies from UC Berkeley and a Masters in Business Administration from Harvard Business School.


Please enter your comment!
Please enter your name here