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Six Ways to Creatively Fund a Startup Without Using Equity During a Recession Cycle

Reviewed by Ty Crandall

November 14, 2023
Recession Cycle Credit Suite

Creative Recession Cycle Funding For New Businesses

As an entrepreneur, raising money for your new startup business can seem hard to execute. You’ve probably seen dozens of competition funds out there, so you have chances to secure funding. Ultimately, you want funding for your startup to come from investors. But getting investors can be impossible for a new startup. Recession cycle funding for startups can happen.

Using your equity might seem like the best idea to fund your business as you wait for investors to come. Most new startup business owners, fall prey to taking out the equity to fund the business before the revenue starts rolling in. You don’t have to take out equity to fund your startup. It’s not necessary. The success of your business solely comes from decisions you make as the business owner.

Here are some ways to creatively make money for your new startup without taking out of your equity.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

Recession Cycle Funding: Crowdfunding

Use Kickstarter. There’s a method to the madness in using Kickstarter to fund your startup. First, do your research before pitching your idea to Kickstarter. Find out if there’s another project they have approved like your startup. So if they deny your idea, refer to similar projects they have approved. And when you ask for money from Kickstarter, be realistic and ask for money to help you survive for a few months. Don’t forget to spread the word to your friends and family asking them to help fund your start up.

Recession Cycle Funding: Bootstrap

Put your Money in First. When you first start out, tap into your own saving accounts, home equity, retirement accounts, etc. This might seem a bit risky, but you should invest in your own startup venture before you expect other investors to put money into it. Most investors will want to see the owners of the business have invested some of their own cash in the business to show confidence.

But there can be some issues with bootstrapping your business.

Still, here are some ways to bootstrap to build more financial resources.  

Share and Save on Services and Equipment

Share office services and equipment. You’ll probably need to get a co-work space where you can share the office space and equipment with other business owners. This will help you cut the cost of renting an office space and paying the high monthly rent.

Use the computers and servers you have. Don’t go out and buy new equipment when you start your startup. Use the computers, software, and desks, etc., you already have. Don’t spend extra money renting new equipment.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

Recession Cycle Funding: Grants

Pursue non-dilutive capital. Look for government grants to get more money for your startup. Cities and states have grant programs offering low-interest rates on loans. Having access to these resources give startups the ability to qualify for large sums of money.Get Recession Startup Financing Without Giving Up Equity

Recession Cycle Funding: Startup Business Credit Cards

Business credit cards can be a great way to get a startup off the ground.

We looked at a number of business credit cards, and did the research for you.

Per the SBA, business credit card limits are 10 – 100 times that of personal cards.

You can get a lot more money with business credit. And you can still have personal credit cards at stores. So you would now have an added card at the same stores for your company.

You don’t need collateral, cash flow, or financials to get business credit. This is still true during a recession cycle.

Benefits can vary. So, make certain to choose the benefit you would prefer from this assortment of alternatives.

Credit Cards for Fair to Poor Credit, Not Calling for a Personal Guarantee

Brex Card for Startups

Look into the Brex Card for Startups. It has no annual fee.

You will not need to provide your Social Security number to apply. And you will not need to supply a personal guarantee. They will take your EIN.

Nonetheless, they do not accept every industry.

Likewise, there are some industries they will not work with, as well as others where they want added documentation. For a list, go here: https://www.brex.com/legal/prohibited-restricted-activities/.

To determine creditworthiness, Brex checks a business’s cash balance, spending patterns, and investors.

You can get 7x points on rideshare. Get 4x on Brex Travel. Also, get triple points on restaurants. And get double points on recurring software payments. Get 1x points on everything else.

You can have poor credit scores (even a 300 FICO) to qualify.

Find it here: https://brex.com/lp/startups-higher-limits/

Business Credit Cards for Fair Credit

Capital One® Spark® Classic for Business

Take a look at the Capital One® Spark® Classic for Business. It has no yearly fee. There is no introductory APR offer. The regular APR is a variable 24.49%. You can earn unlimited 1% cash back on every purchase for your company, without any minimum to redeem.

While this card is within reach if you have fair credit scores, beware of the APR. But if you can pay on schedule, and in full, then it’s a bargain.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-classic/

Business Credit Cards with No Annual Fee

No Yearly Fee/Flat Rate Cash Back

Ink Business Unlimited℠ Credit Card

Check out the Ink Business Unlimited℠ Credit Card. Past no yearly fee, get an introductory 0% APR for the first one year. After that, the APR is a variable 14.74 – 20.74%.

You can get unlimited 1.5% Cash Back rewards on every purchase made for your company. And get $500 bonus cash back after spending $3,000 in the first 3 months from account opening. You can redeem your rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®. You will need excellent credit to get approval for this card.

Find it here: https://creditcards.chase.com/business-credit-cards/ink/unlimited

Company Credit Cards with a 0% Introductory APR

Blue Business® Plus Credit Card from American Express

Take a look at the Blue Business® Plus Credit Card from American Express. It has no yearly fee. There is a 0% introductory APR for the first 12 months. After that, the APR is a variable 14.74 – 20.74%.

Get double Membership Rewards® points on everyday company purchases like office supplies or client dinners for the first $50,000 spent annually. Get 1 point per dollar afterwards.

You will need great to outstanding credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/bluebusinessplus-credit-card/

Cards for Cash Back

Flat-Rate Rewards

Capital One ® Spark® Cash for Business

Check out the Capital One® Spark® Cash for Business. It has an introductory $0 yearly fee for the first year. After that, this card costs $95 each year. There is no introductory APR deal. The regular APR is a variable 18.49%.

You can get a $500 one-time cash bonus after spending $4,000 in the initial three months from account opening. Get unlimited 2% cash back. Redeem at any time without minimums.

You will need great to excellent credit scores to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash/

Cards for Rewards That Never Expire

Capital One® Spark® Cash Select for Business

Have a look at the Capital One® Spark® Cash Select for Business. It has no annual fee. You can get 1.5% cash back on every purchase. There is no limit on the cash back you can get. Also earn a one-time $200 cash bonus when you spend $3,000 on purchases in the first 3 months. Rewards never expire.

Pay a 0% introductory APR for 9 months. Then pay 14.49% – 22.49% variable APR afterwards.

You will need good to outstanding credit to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash-select/

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

Recession Cycle Funding and You

Your absolute best business credit cards hinge on your credit history and scores.

Only you can pick which features you want and need. So be sure to do your homework. What is outstanding for you could be catastrophic for somebody else.

And, as always, make sure to establish credit in the recommended order for the best, fastest benefits.

Recession Cycle Funding: Takeaways

Raising money during a recession cycle might feel a little overwhelming. It takes time to build up funds to start a new business. But you don’t have to feel you have to use your equity to fund your new business. There are so many other ways you can find money to help your business grow. Don’t get focused on making quick money. Think about the long-term growth of your company, and how your decisions today will affect its finances in the future. Develop a plan to find money from different resources before using company equity. And yes, you can even do this during a recession cycle.

About the author 

Janet Gershen-Siegel

Janet Gershen-Siegel is the seasoned Finance Writer and a former content manager at Credit Suite. She has been admitted to practice law for over 30 years, with a focus on litigation and product liability, and is a published author, with writing credits at Entrepreneur, FedSmith.com and BusinessingMag.com.

She has a BA in Philosophy from Boston University, a JD from the Delaware Law School of Widener University, and a MS in Interactive Media (Social Media) from Quinnipiac University.

She regularly writes for Credit Suite, which helps businesses improve Fundability™, build credit, and get approved for loans and credit lines.

Her specialties: business credit, business credit cards, business funding, crowdfunding, and law

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