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How to Fund Your Startup Without Giving Up Equity

Janet Gershen-Siegel
November 14, 2017
Fund Your Startup Credit Suite

Fund Your Startup Smartly and Keep Your Dream Going

Need to fund your startup? We can show you how to get cash without having to sell off a good chunk of your dream.

Do you understand how to fund your startup without giving up equity? As a new organization, by definition, you have no or little business credit history, so it can be challenging. But don’t worry! Here are some ideas which work.

Fund Your Startup With Crowdfunding

You have got to get your startup off the ground, and that means you need developmental capital.

You may want to try a company like Kickstarter. However, make sure you read through the fine print, as many crowdfunding websites demand you give all the funds back if you do not make your objective by the conclusion of the crowdfunding campaign.

Note: Indiegogo has a flexible funding option. Also, crowdfunding websites take a percentage of the donations, and they normally press to have you deliver on your commitments.

Donors can become weary of crowdfunding spiels. Straightforward startups may not do so well. Crowdfunding tends to work best for scenarios where the contributors can directly connect with the product or service, so product lines which aren’t quite on the shelves yet, or artistic undertakings, may do well. But basic gizmos which never really change won’t draw in brand ambassadors and, by extension, probably won’t get donors too excited.

Fund Your Startup With Vendor Credit

Trade credit is when you get credit from a starter vendor. Pay them on schedule, preferably early. This counts towards your credit score, and helps it more than anything.

Demolish your funding problems with 27 killer ways to get cash for your business. Get money FAST.  Via Credit Suite

Fund Your Startup With Microloans

An additional option is the microloan, which you can’t even get from a regular lender. In its place, you get a microloan from a microlender. Try the Association for Enterprise Opportunity to locate a nearby microlender. A microloan is just what it sounds like; it’s not a lot of money. Still, if your business only needs something like $500 – $35,000, then a microloan could work.

Fund Your Startup With Factoring

Another alternative is invoice factoring, where your company gets a percent of the cash from pending invoices fronted by the factoring company. The factoring company then goes directly after any company which owed you cash, and collects on it on their own.

Therefore if a retailer owes your startup company $1,000 on a twelve-month payment basis, you might hand that invoice over to the factoring company to get something like $950 in a week. The factoring company would then collect the total from the retailer.

This allows you to extend credit or negotiate longer-term payment plans in exchange for other, more advantageous terms. So this can be deals such as getting a seller on board with your new startup. You can do so without keeping a bunch of what are essentially IOUs for months at a time.

But keep in mind, this option works best if you are already up and running. For a very early stage startup, it’s probably not going to work.

Fund Your Startup By Establishing Fundability™

What does it mean when we claim a company has established Fundability? It’s time to start thinking of your business—and business credit in a whole new way.

Let’s get that Fundable meaning out of the way from the very beginning.

Fundable: of or capable of being funded; deserving of being funded.

Fundability™ Interpretation: the Business Credit Context

Here, Fundability also implies—able to be funded by a loan provider or a credit provider.

This is what credit providers and lenders wish to see. But let’s step back for a moment.

Why Fundability Matters

You’re a business owner. And like every other business owner, since the start of time, your business needs money.

There are a few ways for companies to get money. In general, the main ways for corporations to get money are to:

  1. Market products or solutions
  2. Market assets like land, vehicles, tools, or office space in buildings they possess
  3. Receive crowdfunding
  4. Get angel investing or venture capital payments, or
  5. Borrow cash.

For the purposes of Fundability, only #5 matters.

Lenders and credit providers want to see if your corporation is a good credit risk. They wish to know that you can pay them back.

Fraud Runs RampantStartup Biz Credit Suite

Complicating issues is the problem of fraud. Per a 2009 Experian report, “fraud-related costs for U. S. businesses are more than $50 billion annually.”

As a result of so much fraud, loan providers and credit providers examine credit applications very meticulously.

They look for all types of ways to tell you and your business no when you come to them for cash. For banks and the like, business legitimacy makes all the difference in the world. No legitimacy, then no funds. It’s that simple.

As a result of their alert checks for fraud, banks and credit providers check many different facets of your credit or financing application. They look at numerous aspects of your corporation, as well, and even at you, the owner.

Your objective is to abate their fears of fraud. And the way to do this is by getting rid of every factor they might potentially see as a reason to say no to offering you money.

Demolish your funding problems with 27 killer ways to get cash for your business. Get money FAST.  Via Credit Suite

Fund Your Startup: Fundability Data Details

Fundability all starts with your industry.

Fund Your Startup and Check Your Industry

Some industries have a tougher time getting funding of any sort.

Industry Selection High Risk or Restricted

Generally, restricted and high risk industries have some things in common. There may be high risks of injury at work. Or the industry may engage in a great deal of cash transactions.

Industry Aligned on All Records

This is the concept of congruency, and it arises over and over. Business credit reporting bureaus and lenders check your company meticulously. One of the main ways they do this is by strictly looking for matching records.

As a result, if your records do not all match, it turns up as if missing. Missing records trigger a rejection, as a lender assumes fraud on its face. It is essential to make sure each record, all over, is identical.

It goes beyond industry. It’s also corporate name, address, phone numbers—everything! These must look the same all over, like in IRS records; documents with Dun & Bradstreet, Experian, and Equifax; all licenses required for your corporation; and incorporation documents.

Copy/paste this info; don’t chance it with retyping.

Business Name

Adding a risky business type into your business name causes funding denials. There is nothing deceitful in keeping the name of a high risk or restricted industry out of a company name.

All corresponding pages list uniform business data and ownership

It is best practices to keep a record of every single place where your corporation has a listing. Then correct them every time things change.

Fund Your Startup With a Professional Website

A professional website is a must. A small business needs a professional-looking web site. It must have hosting from a provider like GoDaddy. Do not use Weebly or Wix. It must be your domain, not domain.wix.com. Use Upwork for people who can help you get set up. Get a professional logo from Fiverr.

Industry aligned

Look at the more successful competitors in your space. You don’t need to copy another website, and it isn’t in your best interests to do so, anyhow. Yet feel free to copy from a few of their better ideas. If those concepts work for them, then they might help you, too.

Business owners listed

Showcase the owners of your corporation.  Clients and leads want to know who they’re dealing with.

Business name and address uniform

Congruency is a requirement here too.

Special characters

It’s like the exclamation point in Yahoo! Don’t do this, if you can in any way help it.

Because there are likely to be people inputting your company name into internet browser address bars. Adding special characters makes it harder for them to do that.

Industry in name

Do not put the name of a high risk or restricted industry in your business name! There is nothing deceptive or deceptive about this.

Available with state

Check your name with your Secretary of State – it may have to be unique.


Any site must be searchable. Don’t make search tough on clients and prospects. Because when they go to another website to find what they want, they may not return.

Business Address

This must be an actual physical building. It must be a deliverable physical address. For retail establishments, it should not be a residential address or a PO Box. Don’t use UPS mailing addresses. Some lenders don’t approve and fund unless this requirement is fulfilled.

PO Box PBSA (Post Box Street Address)

Lenders and credit providers recognize these are actually post office boxes. And they see these as being non-legitimate ‘addresses’, the same as post office boxes.

Physical or virtual office (CMRA) in the same state where business is incorporated

Fortunately for business owners, virtual offices are in all states and many metropolitan areas. We recommend Alliance Virtual Offices, Regus, and DaVinci.

If your area does not have virtual offices, talk to regional entrepreneurs. A virtual office space must have CMRA privileges. This means the facility is registered with the US Postal Service as a commercial mail receiving agency.

Mailing address vs. physical address

In the same vein as the caution against a PBSA, you need an actual physical address versus a mailing address.

Business Phone Number

Your company must have its own phone number. It must be toll-free.

Uniform business number

Once again, congruency is an outright necessity. It must only be used for your company.

Mobile and Residential Numbers

A cell or residential phone number as your primary business line could get you flagged as un-established. But VOIP (voice over internet protocol) is all right.

Voicemail content

Your voicemail greeting should, at an absolute minimum, inform the caller who they have reached and when you’re open again or at least can return their call.

Business 411 Listing

You must list your business telephone number on 411. You can do so on ListYourself.

This is necessary for most credit providers, lenders, vendors, and even insurance providers to approve you. Check your record to see if you’re listed. See to it your info is accurate.

Business name and phone number uniform

As always, congruency is vital here.

Time in Business

The amount of time you have been in business is an indication of integrity and fundability to lenders and credit issuers.

Incorporation date

This is when a corporation starts. So the quicker you incorporate, the better.

Business license issue date

A bank or credit provider doesn’t consider your company to truly be in business if you’re missing crucial licenses.

Business Bank Account

You need a separate business bank account. This is to keep funds separate from personal accounts. Commingling personal and business funds and expenses is a recipe for an IRS audit. The easiest way to keep it all separate is to have separate bank accounts.

Bank account open date

This helps with Fundability because, the older your business bank account is, the more proof you can offer to show you can pay back a loan.

Actual business account (not personal)

To open a business bank account, the business owner must submit added documentation versus a personal account. This includes business registration paperwork. It can often (not always) include proof of having an EIN.

A business bank account lists both the owner and the business. It may require a certain minimum balance to avoid maintenance fees. Fees in general are higher than for personal business bank accounts.

Business name, address, and ownership uniform

Congruency is a requirement, as in all other areas.

Checking account history

Banks keep credit ratings which help them decide if to loan your business money. Partly, these ratings are based upon your historical actions with reference to your corporation bank account.

A rating of Low-5 is normally believed to be the minimum rating for funding. This requires a deposit of at least $10,000 into your company bank account. Keep it there for at least 3 months. On top of that, make consistent deposits.

NSFs and Negative balances

Writing checks with insufficient funds (NSFs), or keeping negative balances can spoil your bank score. A constant, maintained minimum balance of $10,000 can, for the most part, make these a thing of the past.

Business Entity

A business entity defines issues of liability, and it makes a difference when it comes to taxes.

The best business entity for fundability is a corporation. Corporations are legally separate from their owners. The choice between a C-corporation, an S-corporation, or an LLC is yours. Speak with an attorney or a skilled tax specialist to discover which is the best possible choice for you.

Sole proprietorship

A sole proprietorship says the business owner is it when it concerns liability and tax obligations. There is no true separation between owner and business.


Any complete corporate name should include any documented DBA filing you use.

But if you are a sole proprietor, the best thing to do is to incorporate. If you have already filed a DBA, you still have to move onto a corporate business entity. And only look at a DBA as an interim step on the way to incorporation.

Good standing

Check with your Secretary of State to assure they have all the necessary details for your company. Make certain that you are in good standing with them, and your entity is active. You must submit annual reports and pay a fee yearly to stay active.

Foreign filing

A foreign LLC is a limited liability corporation developed in one state but then registered in another state. It isn’t an LLC developed outside of the United States. A separate registration is essential since laws between states vary.

Registered agent

A corporation must choose a registered agent they indicate on the Articles of Incorporation. The agent accepts service of process. They get legal and tax documents on behalf of the corporation.

Business owners, name, and address uniform

Congruency is a requirement here, as it is in all other areas.

Date acquired

This counts toward time in business. The longer ago, the more Fundability™ your corporation has.


Visit the IRS website and get a free EIN for your corporation. This is also where you pick a business entity like corporation, LLC, etc.

To open a corporate bank account at all, you need an EIN, so get this out of the way first. Use IRS form SS-4. Fill it out, and mail or fax it to the appropriate office. The form has this info.

EIN issue date

Apply for your EIN as soon as possible, so you have it for filing tax returns and making bank deposits.

Business name, address, industry, contact information, and ownership uniform

Congruency is a necessity on your EIN application, as it is in all other areas.


Business email addresses must be professional, something like [email protected]

Company domain

Company email must be on the same domain as your firm. Do not use generic free email solutions like Gmail, yahoo, or msn.

Uniform on all records

As everywhere else, congruency is a necessity for email records.

Business Licenses

A firm must have every license essential for running. These licenses all must be in the perfect, exact business name, address, and telephone numbers.

This means not only state licenses, maybe also city licenses. Consult your Secretary of State’s office for the state where your company is incorporated. If you do business in more than one state, then check their Secretary of State offices too.

Business name, owners, and ownership uniform

Congruency is a requirement on your business licenses, as it is in all other areas.

Fund Your Startup With Excellent Business Credit Reports

Fundability often depends upon company credit.


The most significant and best-known corporate credit reporting agencies (also called CRAs or bureaus) are D&B, Experian, and Equifax.


This bureau is strictly focused on business credit.

A PAYDEX Score from Dun & Bradstreet runs from 0 to 100. This score has a basis in payment details on report to the agency or to data-gathering firms partnering with the CRA.

Experian report

Comparable to Dun & Bradstreet and Equifax, Experian additionally gathers details available in various public records together with info from collection agencies, credit card firms, and various other databases.

Equifax report

An Equifax report depends greatly on how your business interacts with various banks and traditional lenders like credit card providers.

Business Data Agencies

These companies accumulate data and offer it to the business credit reporting agencies.


CreditSafe offers alternative credit, where they base some scoring on utility and rent payments. These payments are normally not taken into account by other CRAs unless they’re late. CreditSafe reports these payments whether positive or negative.

These can include power, gas, water, and phone. Other third-party payments like Credit Suite, CRM, and software can be included.

LexisNexis Report

LexisNexis is where a lot of loan providers get data from. This is info relating to likelihood to pay, or not. Lenders compare LexisNexis information to what you put on your financing application. If the application and LexisNexis do not match, then the lender denies you a loan. They see incongruity as fraud.


The SBFE is a not-for-profit entity collecting data on small businesses from its members. The members are the owners, and they are loan providers. The information is then used to assemble thorough credit info used to make credit decisions.

This is where CRAs and LexisNexis get details from. This detailed info covers a large selection of information about you. A funding application is denied for any inconsistencies.


FICO uses its SBSS (Small Business Scoring Service) Score to integrate consumer bureau, monetary, application, and business CRA data. And FICO then validates their SBSS models for deals like credit line transactions, term loans, and commercial card obligations up to $1 million. Their idea is to evaluate how your small business pays off all sorts of loans.

Business credit providers use the FICO SBSS score as a tool to choose if they should authorize a loan to your corporation. The SBA uses this score to authorize or approve firm loans. It comes from both business and consumer credit history.

Identification Numbers

CRAs use identification numbers to designate your company.


The BIN (Business Identification Number) comes from Experian’s BizSource.

D-U-N-S #

Start at the D&B website and get a free D-U-N-S number. If there is no D-U-N-S number, then there is no record. Your D-U-N-S plus three payment experiences gets you a PAYDEX score.

Demolish your funding problems with 27 killer ways to get cash for your business. Get money FAST.  Via Credit Suite

Fund Your Startup With Good Business Credit History

This is the single most important driver of corporate credit scores. In turn, this affects fundability profoundly.

Late repayments impact a business credit score for years. If you pay corporate financial obligations off, as fast and completely as possible, you can make a very real difference in credit scores. No other aspect of business management more directly influences business credit scores.

UCC Filings, Liens and Judgments

If the business owner has bad consumer credit, lenders commonly get a UCC blanket lien if they do provide business financing. A UCC blanket lien is a note on your credit report. It says the bank has an interest in all your firm’s assets up until you repay the loan completely. Therefore, there may be dire effects if you default.

The same is true for any type of lien. A lien isn’t quite the same thing as collateral. The property which is subject to the lien is the collateral.

UCC filings, liens, bankruptcies, and court cases are a matter of public record. Lenders and credit providers consider them when deciding if your corporation has Fundability™.

Total number of trade accounts and highest credit limit

Trade accounts come from credit issuers which give you starter credit when you have none. Terms are often Net 30, versus revolving.

The more trade accounts, the better. In general, at least 5 – 8 are necessary to move onto credit cards which are harder to get. But pay attention to your highest credit limit.

This is an important figure for credit issuers and lenders. For example, unsecured financing can result in a loan related to the amount of your highest revolving credit limit account. So by definition, the higher your highest credit limit, the more you can get from this form of financing.

In addition, some credit issuers want to see a particular high credit limit before they issue credit to your business. In general, a few high credit limit accounts do more to enhance business fundability than a large number of very low credit limit accounts.

Age of trade accounts

This should correlate more or less directly with time in business.

Financial data

Without your business’s financial data, lenders and credit providers wonder if they can trust your statements about your business’s financial solvency.

Open and closed accounts

Opening and responsibly using business credit accounts can help you enhance your available credit and credit rating. The key is to use your credit.

Closing accounts has a direct impact on overall credit history. Once a card in good standing is closed, it falls off a credit report eventually. Once it’s gone, the history which went along with it is gone, too. A card in good standing can be closed by the card owner or by the credit provider if the card owner hasn’t been using the credit. This is different from a card closed in poor standing, where that info sits on your credit report longer.

By closing accounts, you tank the average age of your accounts.

Business Information

The most important issue with company data is to be absolutely sure it is consistent everywhere.

Business name, address, contact information, and ownership uniform

Congruency is a requirement in your company CRA records, as it is in all other areas.

Fund Your Startup and Provide Your Financial Statements

Many credit providers and loan providers not surprisingly want to see corporate financial statements.

Business Financials

These include if your business is making a profit, and financial estimates for upcoming quarters.

Business tax returns

Some alternative loan providers offer credit lines for $50 – 150,000. They often only want tax returns versus all income paperwork. If over $100,000, you must to provide a P&L and balance sheet. Approval amount is often 10% of annual sales per firm tax returns.

Business financial statements (company/accountant prepared or audited)

Common business financial statements include your income statement, statement of retained earnings (also called the statement of owners’ equity), company balance sheet, and statement of cash flows.

It dramatically and positively affects fundability to have these documents prepared or at least audited by an accountant or an accounting company.

# of years tax returns filed

This must be the same as your years in business, even when your business loses money.

Reported income and expenses

These should be proportionate with the kind of income and expenses expected from the owner of a business of your size, age, and industry.

Taxes up to date

If tax payments are slow or late, then banks and credit issuers believe your payments to them could follow the same pattern.

Fund Your Start and Provide Your Personal Financials

In particular for newer businesses, credit issuers and lenders want to see personal financials.

Personal financial statements and tax returns

NSFs show you’re overextending yourself. But responsible financial stewardship and on time filings help with fundability.

How many tax returns can be offered

These show a bank or credit provider how you manage funds.

Reported income and expenses

Are your reported income and expenses commensurate with the sort of earnings expected from the owner of a company of your size, age, and industry?

Debt to income

This is all monthly debt payments as divided by gross monthly income. This number is how lenders and credit providers measure your ability to pay creditors and pay back what you borrow.

Child support and criminal record

Whether payments are current, and if you have a criminal record, affect fundability.


Like business credit reporting agencies, there are CRAs for personal credit.

Experian, Equifax, and TransUnion

Experian and Equifax report on business and personal credit. TransUnion only reports on personal credit.

Data Agencies

These companies collect data and provide it to the personal credit reporting agencies.


Some banks and other credit issuers use ChexSystems for more data on your personal credit habits.


Lenders use LexisNexis data to cross-check loan applications. They want to see if loan criteria are met. They want to see if what you claim on your application jibes with the records. And they want to know if it’s likely your business will fail.


This score contains payment history, amounts of owed, length of credit history, credit mix, and new credit. Together, the first three elements comprise over ¾ of your FICO.

Personal Credit History

It matters as much as business credit history.

Accounts over limit

Any accounts over limit can tank fundability as they show a lack of financial responsibility.

Authorized users

Are the authorized users on your accounts strangers paying to piggyback on your credit? That’s just barely this side of legal and often a prelude to fraud. Most credit issuers and lenders see it as proof of intent to commit bank fraud.

Short sales

In a short sale, you try to sell your house for less than you owe. But this can only be if the lender agrees. If the house sells, the lender keeps the proceeds. Often, homeowners must be 90 or more days late for the lender to consider it.

Short Sale Consequences

Lenders report a short sale to TransUnion, Experian, and Equifax as a charge off, settlement, deed-in-lieu of foreclosure or loan settled for less than the amount due. The way a lender reports the short sale can significantly impact the damage to your credit score.

A short sale drops your personal credit score as much as 100-150 points. The higher your credit score to start, the more it falls.

Short sales can stay on your credit report up to seven years. But foreclosure and bankruptcy harm your credit score even more.

Settled debt

If you pay your debts off, it is a plus for fundability.

Foreclosures and Bankruptcies

Both can negatively impact fundability.

Amount, age, and number of late payments

The larger and later your late payments are, the worse. The same is true if you have a lot of late payments.

Opened accounts

If you have fewer than five, your file may be seen as “thin” which can negatively impact your credit scores and, in turn, fundability.

Financing facilities reported

In general, major retailers and banks on a report correlate with a longer and more favorable personal credit history.

History length

A shorter credit history is generally not seen as favorably as a longer one.


More than two recent inquiries is seen as proof of credit shopping, which harms fundability.

Utilization per credit card/line

Credit utilization rate is the credit in use, then divided by total available credit. Keep this ratio at about 30% or less. Experian checks utilization rate both overall and per credit card.

Fund Your Startup By Perfecting the Application Process

Even the process of applying can affect fundability.

Application Submission

How are you submitting your application? What does your lender or credit provider prefer?


Your most recent three months’ worth of bank account management loom large. This is due to a number which banks keep but don’t publicize, the bank rating.

A bank rating measures the average minimum balance kept in a business bank account for three months. A $10,000 balance ranks as a Low-5, a $5,000 balance rates as a Mid-4, etc.

Be sure to keep a minimum Low-5 bank score. This means an average $10,000 balance for at least three months. Without a minimum of a Low-5 score, most banks assume a business has little to no ability to pay off a loan or a business line of credit.

Lender negotiations and online, paper, or in person application

In particular, an application presented in person allows for a dialogue and negotiations.

Lending product selected

Don’t try for a very large loan the first time around. You probably won’t get it. By proving financial responsibility, lenders are more likely to loan to you, and to loan you more.


Many lenders prefer working with certain industries. So, it pays to ask. If the bank is more comfortable with your industry, then it helps your fundability cause.

Business name, address, and ownership verifiable

Without ownership documents, fundability nosedives.

Fund Your Startup Without Giving Up Equity, on Balance

Keep records consistent. Set up your business legitimately, with a domain, phone numbers, address, etc. Get all ID numbers, and register with the IRS. Set up your business bank account for fundability. Keep business financials organized and prepared by a competent professional. Get your personal credit ‘house’ in order. Then, you can more easily fund your startup.

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