Starting a Small Business

Raising Money

Funding (also called capital) is a huge issue for anybody who tries to start up a business. Without it, you won’t have the money to get your business going. That’s why you need to make sure you can figure out how to raise money.

Here we’ll introduce how to get loans and find people who will give you money without making you repay them. On the next page, we’ll introduce a few different ways you can use to save up money to start your business and, if you get benefits, how you can make sure that saving money won’t cause you to lose the cash or health benefits you need.


Credit is money you borrow. For example, if you have a credit card, you are borrowing money whenever you use your card and paying it back when you pay the bill. Credit is extremely important for starting a business, because almost all businesses need loans to get started.

A good credit score will help you get loans or get inventory if your business needs them. Your credit score is a measurement of how well you pay your bills. If you don’t pay your bills on time, don’t make the minimum payments, or go over your credit limit, your credit score will go down. Your credit score is very important because it helps lenders and others decide if you are a “good risk.” If they are going to lend you money or provide you with inventory that you can sell, they want to be as certain as possible that you are going to make your payments.

The bottom line: You won’t be able to get a loan to start your business if you have a history of not paying your bills.

How to find out what your credit score is

To learn if you have a good credit score, you can get a free copy of your credit report from one of the 3 main credit reporting agencies in the United States. To learn more about how to get your free credit report, click here.

Improving Your Credit Score

If you have a low credit score, there are several ways to improve it. One is to get help from the organization helping you with your business plan to see if it can help you figure out why you have a bad credit score and what you can do about it. Another idea is to work with a local nonprofit credit repair specialist. If you open an Individual Development Account (IDA), as described later in this article, your IDA program may also help you solve your credit problems.

Fixing your credit can take time, but is a necessary step toward getting a loan for your business. Among other things, you will probably need to start paying your creditors on time, pay down high balances (the amounts you owe on your credit cards, and stop overusing your credit cards.

Note: Not all credit problems are caused because you haven’t paid your bills. Sometimes you may have a credit problem because there is a mistake in your credit report. If there is an error or a dispute related to your credit report, your lender or a credit repair specialist will be able to help you.

Getting Loans

Even when the economy is strong, it is hard to get loans from banks or credit unions to start a small business. Since 2007, when the U.S. economy went into recession, it has been even harder to get loans. Banks will usually only lend to a business if the business already has at least 2 years of financial data and a very good credit score. If you are just now starting a business, you will probably not meet these standards, since you haven’t yet been in business for 2 years. However, you do have a few other options we’ll explain here:

  • Peer-to-peer lending
  • Microcredit
  • Arizona Technology Access Program Loans

Peer-to-Peer Lending and are websites designed to:

  1. Let persons and small businesses that need money apply for loans
  2. Let persons who have money lend it so that they can make more money in interest than they would if they had left their money in the bank

This is called “peer-to-peer lending” because it is persons making loans to other persons, instead of a bank giving you a loan. Since we’re talking about starting a small business, we’re going to focus on how you can apply for loans.

With these websites, you must first agree to let them check your credit, and you must tell them how much debt (money you owe) and income you have. The website then gives you a letter grade, based on how risky they think it would be to lend to you. The amount of interest you will have to pay on your loan will depend on your letter grade.

Once your letter grade and interest rate have been decided, people who wish to lend will decide whether to loan you part of the money you want to borrow. No one person will lend you the entire amount — they will limit their risk by funding only part of the loan. In the end, you will be borrowing the money from dozens of people, rather than from a bank or a single person. You must agree to repay your loan according to a strict repayment schedule and the website will keep track of your repayments and make sure the lenders all get their money back with interest.


Peer-to-peer lending is one type of “crowdfunding.” Crowdfunding is a new word that describes different ways of raising money from lots of people, instead of getting it from a single bank or person. The Internet is a key way to do crowdfunding, because it lets large numbers of people learn about your business and if a lot of people each decide to provide you with a small amount of capital, their money combined could add up quickly. For example, if 500 people decide to provide you with $10 each, you’d have $5,000 to start your business!

With peer-to-peer lending, the “crowd” will provide you with a loan. There are also well-known websites that can help you raise money that you never have to repay. We’ll introduce crowdfunding websites later (on this page).


Microcredit loans are generally smaller than normal business loans that you could get from a bank. Usually, microcredit loans are for $10,000 or less (they can range from being less than $1,000 to as high as $50,000). Most microcredit is provided by nonprofit organizations that specialize in giving loans to people with low income. It is generally easier to qualify for these loans than it is for loans from a bank, meaning you may be able to get some money to start your business even if you’ve been rejected elsewhere. An additional benefit of microcredit programs is that they may also offer training that can help you learn how to operate your business and manage your money better.

Here are several of the nonprofit microfinance organizations that help Arizonans get loans to start their businesses:

Arizona Technology Access Program Loans

The Arizona Technology Access Program offers 2 types of loans:

  1. Arizona Loans for Assistive Technology (AzLAT) loans. AzLAT loans are for the purchase of assistive technology devices and services for work, recreation, education and independent living.
  2. Self-Employment for Entrepreneurs with Disabilities (SEED) loans. SEED loans reduce barriers to employment for individuals with disabilities by providing affordable loans to buy assistive technology, computers, and other business-related equipment to help Arizonans with disabilities start or expand home-based self-employment.

To learn more about these loans, click here or call 1-800-477-9921 (toll-free) or 602-776-4670 or 602-728-9536 (TTY).

Finding People who will Give You Money

If you think finding a loan can be hard, imagine trying to find people who will just give you money and never make you pay it back! While this may sound impossible, here we’ll actually look at a few options:

The Arizona Rehabilitation Services Administration (AZRSA)

The Arizona Rehabilitation Services Administration (AZRSA) may help you with the startup costs of a small business. To take advantage of this, you must meet the eligibility criteria for Vocational Rehabilitation services and must, with the help of AZRSA, develop a business plan which requires approval by the AZRSA. This is limited to startup costs, may not cover the entire expenses needed, and cannot be used to help with ongoing or recurring financial support.

Note: Your chance of getting this type of funding can depend on your business idea, your Vocational Rehabilitation counselor, and the office where you get services. It is not always available.

Crowdfunding Websites

As we discussed with peer-to-peer lending, there is a new way to find money on the Internet by convincing other people that you have a good idea that is worth funding. While you have to repay the loans provided through peer-to-peer lending, there are other websites that can let you raise money without ever having to repay it. In this way, the money you get is totally free!

The key to getting money with these websites is that you have to have a great idea for a business and convince other people that your dream deserves to come true. They will be giving money out of pure generosity — they won’t get their money back. They are only providing it because they think your idea is good. So, your job is to convince them that you have a great idea and that you are capable of making it a reality.

Kickstarter is the best known of these websites. With it, you can say how much money you need and if you get enough donations to match the amount you requested, you’ll get the money. If you don’t get enough people to offer donations to match what you requested, you won’t get anything. For an example of a disability-related movie project that raised more than $14,000 on Kickstarter, click here.

IndieGogo is another crowdsourcing website. It works a little differently than Kickstarter, because you may be able to keep most of the money you raise even if you don’t match the amount you originally requested. For example, a woman with a learning disability raised more than $1,100 on IndieGogo to purchase sewing equipment she needed to make clothing.

Friends and Family

You’ve probably already thought of friends and family, and it may not be a possibility to get them to lend you or give you money. That said, if you have a great idea for a business and they know you can succeed, you may be able to get them to help. Friends and family are the people who trust you and know you best, which is one of the reasons they may be willing to help you get your business started, even when banks or other programs don’t work for you.

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