How (and Where) to Get Private Funding for Your Business

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There are more than 33 million businesses in the US as of 2023, according to the U.S Small Business Administration. Out of those businesses, 82% of them collapse due to lack of enough cash flow.

Most small businesses and solo enterprises fail to secure financial support from large banks because of credibility factors. Others are considered risky, and that's why they walk out of banks empty-handed despite having a detailed plan.

So, if financial institutions have denied you a loan for your business, don't worry. There are many lending alternatives that can help, including private funding.

Private financing aids are offered by non-bank individuals, such as angel investors. And there are compelling reasons to go the private lending route to secure funding for you business.

The process of applying and processing private loans is not complicated. The requirements are also less as compared to those needed by banks.

Moreover, private lenders specialize in certain areas of businesses that provide sound guidance and expertise.


Types of Private Funding for Business


As earlier mentioned, there are many types of private lenders. They include the following:


1. Angel Networks


An angel network is a group of investors who invest collectively. Working as a group helps them to have more efficient operations and to provide mutual support.

Apart from private financial aid, angel networks offer mentorships and solid advice. Their terms and conditions on the amount and purpose of the loan also vary.


2. Crowdfunding Sites


Crowdfunding is the act of funding projects by raising money from many people. Typically, the process is done online. There are many registered crowdfunding sites on the internet today.

Each site offers different terms and methods for incentivizing investors. Before you choose one, go through the requirements first.


3. Private Equity Firms


Private equity firms are considered to be the traditional path to investors' funding. They give large amounts of cash to startups with potential growth.

The objective of private equity firms is to sell stake after the investment. They can, however, take years before they reap profits.


4. Online Lending Platforms


New lending solutions have emerged on online platforms following the stringent restrictions with bank loans. Online private financing includes non-traditional lending sources and peer-to-peer platforms.

They could also be large investors looking for small businesses to lend and get profits in return. Before applying on any, carry out thorough research to find its credibility.


5. Social Networking Sites for Professionals


Apart from LinkedIn, where you can still find the right investors, several networking sites have been launched. Their primary aim is to connect borrowers with all types of investors across different business segments.

They give global connections. Thus, they are not restricted to the geographical location of the borrower.


6. Incubators and Accelerators


If your startup is still a baby, working with an accelerator or incubator will grow and nourish it. These investors are highly beneficial to small businesses, as their main aim is to finance and watch them grow.

Apart from the funds, they advise and even set up a physical space for your office. If you get the best incubator, they can turn your small business idea into a multi-million investment company.


7. Startup Launch Platforms


Some companies have launched platforms which provide information and financial assistance to investors. The startups offer extraordinary services as they do not only provide financial aid but also offer mentoring courses.


8. Small Business Administration (SBA)


Traditional funding sources, such as small business administration, are still reliable sources of private financing. Primarily, they offer grants and loans to small businesses. In return, they expect to get a stake in your business.


9. Personal Marketing Effort


You can make an effort to make investors locate you instead of spending time looking for them. With concerted personal marketing efforts, you can attract multiple private financing investors who only lend when they see the efforts.

The best areas to meet them can be through your website, blog posts, Quorum conversations, traditional media outlets, and guest posts.


10. Friends and Family


It's easy to get family or friends investors since they already know and believe in what you do. However, when using this avenue, remember to be professional to avoid risks.

Make sure that you have an alternative just in case you lose their investment. You can easily lose your personal relationships.


How to Secure Funding from Private Investors


Careful preparation is the main key to finding and securing financing from a suitable private lender. Before you approach the investors, make sure that you are well prepared.

Investors will want to confirm that you have good knowledge of your niche. They will also want to see you with an organized plan and the potential for growth.

So, before you ask for the loan, create a good business plan which indicates how you will use the money. Your plan should include detailed strategies and realistic sales projections.

If possible, conduct a market analysis to connect with customers and improve offerings. Decide how much money you will ask for, and then compile the entire plan into a presentation.

Understand the strategy and practice your pitch well, so that you can be well positioned to convince the investors. Once you are done with your business plan, start looking for private investors.

Try all the above-mentioned private lenders through both personal and professional networks. If you have collateral, look for a good hard money lender to finance you.

To get the best lenders, create a list of the possible available sources, and try them all. Compare their terms and conditions, go through their reviews, and make comparisons.

By so doing, you will get the one which fits your personal needs.




A loan is not easy to secure, even when it involves private funding because you still have to convince investors that your business is worth the investment. According to an NSBA survey27% of enterprises said they were unable to get business funding, despite meeting the requirements.

You may not be flooded with many investment offers, and your application may be rejected several times, but don't lose hope. Keep on trying, because a rejection only means that you haven't met the right investor for you. The right one is out there. Keep looking and you will find them.

George Mathews is a journalist, content strategist, and staff writer at He covers different topics from business to health and tech stories for the publication.