Founder guides
How to Get Money to Start a Business: Evidence First
Every source of startup money, from a bank to an angel, is asking the same question in different words: will this work? The founders who get funded answer it with evidence. Here are the main options and what each one needs to see.
The main ways to get money to start a business are your own savings and revenue from early customers, loans such as SBA-backed microloans, grants, and outside investors such as angels and accelerators. Whichever you pursue, collect evidence first: customer commitments, a bottom-up market size and a clear plan for what the money buys.
Start with the cheapest money: customers. Revenue from a paid pilot or pre-orders funds the business without giving anything away, and it is also the strongest evidence you can show any other funder.
Key takeaways
- Customer money is the cheapest money, and the best evidence for every other source.
- Loans need a repayment plan; SBA microloans go up to $50,000.
- Grants fund specific work, often research or community goals, with no equity.
- Investors buy equity and want evidence of a large, reachable market.
- Build evidence before the ask: commitments, market size and a plan.
What are the ways to get money to start a business?
Five broad sources: yourself, your customers, lenders, grant makers and investors. Each costs something different and asks for different evidence.
| Source | What it costs you | What they want to see |
|---|---|---|
| Savings, friends and family | Your money, or a relationship | That you have thought it through |
| Customers (pre-orders, paid pilots) | Delivering what you sold | A problem worth paying to solve |
| Loans (bank, SBA microloan) | Interest and repayment | Ability to repay: cash flow, plan, sometimes collateral |
| Grants | Reporting and restrictions on use | Fit with the grant's purpose |
| Investors (angels, accelerators, VCs) | Equity in your company | A large reachable market and evidence you can win it |
How can customers fund a new business?
By paying before the product is finished, through pre-orders, deposits or paid pilots. It is slower to scale than investment, but you keep your equity and prove demand at the same time.
Paid pilots work especially well for B2B: a small fee for a time-boxed trial with an agreed success metric. Our guide to validating a product idea with a paid pilot covers how to set one up. Even a few paying pilots change how lenders and investors see the business.
Can you get a loan to start a business?
Yes, though lenders focus on your ability to repay. In the US, SBA microloans are one route designed for small and new businesses.
The SBA's microloan program offers "loans up to $50,000", and "the average microloan is about $13,000." They can be used for working capital, inventory, supplies, furniture, fixtures, machinery and equipment. The SBA provides the funds through "specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance" (SBA).
Lenders will want a plan showing how the money is used and how it will be repaid. A business plan built on evidence helps.
Are there grants for starting a business?
Some, usually for specific purposes such as research commercialisation, particular industries or communities. They do not take equity, but they come with rules about how the money is used.
One example: NSF's I-Corps Teams program funds teams exploring the commercial potential of research, with requests that "must not exceed $50,000/12 months" (NSF 25-549). Teams are expected to complete at least 100 customer interviews during the program. Grants like this reward exactly the kind of evidence-gathering this guide recommends.
What do investors need to see before funding a business?
Evidence that the market is large and reachable, that customers want what you are building, and that your team can execute. For accelerators, the terms are often published.
Y Combinator publishes its standard deal: "We invest $500,000", made up of "$125,000 on a post-money SAFE in return for 7% of your company" and "$375,000 on an uncapped SAFE" with a most favored nation provision (Y Combinator).
Outside investment means giving up part of your company, so it suits businesses aiming for fast, large growth. Many good businesses are better funded by customers and loans. Our guides to seed funding and startup funding by stage go further.
What evidence should you build before asking for money?
Three things: proof that specific customers want it (ideally commitments), a bottom-up market size, and a plan for exactly what the money will buy.
- Customer evidence: logged conversations, pilots, pre-orders or letters of intent.
- Market evidence: a bottom-up TAM, SAM and SOM, with sources.
- A use of funds: the milestones the money buys, and what you will know afterwards.
NELL's Quick Validate is free and shows where an idea is weakest. DeepValidate adds sourced research on market size, competitors and risks that you can cite in a funding application.
Frequently asked questions
How can I start a business with no money?
Start with a version customers will pay for before it is fully built, such as a service delivered by hand or a paid pilot. Use that revenue and evidence to fund the next step.
What is the easiest way to get money for a startup?
There is no easy route, but customer money through pre-orders or paid pilots is often the most accessible and costs no equity. It also makes loans and investment easier to get later.
How much can you borrow with an SBA microloan?
Up to $50,000, according to the SBA. The average microloan is about $13,000, provided through nonprofit intermediary lenders.
Should I use loans or investors to start my business?
Loans keep your ownership but must be repaid from cash flow. Investors take equity and expect fast growth. Choose based on how quickly the business can produce cash and how large it aims to become.
What do lenders and investors both want to see?
Evidence that customers want what you sell and a clear plan for what the money will achieve. Lenders focus on repayment; investors focus on the size of the opportunity.
Start where you are
Every funder is asking whether this will work. Evidence answers it.
Sources
- US Small Business Administration, Microloans
- NSF 25-549, National Innovation Corps Teams program solicitation
- Y Combinator, The YC Deal
This guide is general information, not financial or legal advice. Loan, grant and investment terms change; check the current terms with each provider.