Roadmap to Funding a Small Business

Looking for capital for your small business? Funding a small business depends on your financial

situation and goals. This guide provides routes to consider as you begin your capital-raising journey.

Roadmap to Funding a Small Business 

situation and goals. This guide provides routes to consider as you begin your capital-raising journey. 

Self-fund Your Business 

Personal fnances and revenue 

from your business may be an option 

to fund your business. While you 

retain your ownership of the business, 

you also assume all risk. For many 

businesses, personal financing 

may not be a viable option. 

Explore External Funding Options 

Funding where the source does not receive an ownership interest in your 

company is often called non-dilutive capital. Examples include grants or loans. 

Grants provide capital that need not be repaid 

and allow you to retain your ownership of the 

business. Consider grants sponsored by federal, 

state, and local governments, universities, or 

non-profits. 

Loans may be available for small businesses from a 

bank or other institution. You will have to repay the 

principal over time along with any accrued interest. 

As with grants, these kinds of lenders do not typically 

take an ownership interest in your company. 

LEARN MORE>>> Additional Resources 

When investors take an ownership interest in your company, it dilutes or reduces 

the portion that you own, so this funding may be called dilutive capital. 

Capital from investors often provides funding in exchange for an 

ownership interest in your company. Common early-stage investors

include friends or family, angel investors, and venture capital funds.

Often these investors seek to own a portion of—or equity in—your

business or debt on negotiated terms. 

DID YOU KNOW? 

Fewer than 6% of entrepreneurs

raise capital from investors.

Source: 2022 Annual Report, p. 25.

Two questions to ask yourself before raising capital from investors 

Am I ready to raise capital from investors?

A number of factors go into being ready

to raise capital from investors. Many

investors will expect the company to

have taken certain steps and prepared

certain documents before seeking capital. 

LEARN MORE>>> Before You Raise 

Am I complying with the rules? 

The U.S. Securities and Exchange Commission (SEC) 

regulates the offer and sale of ALL investment interests 

or securities. Generally, a business may not offer or sell 

securities unless the offering has been registered with

the SEC or falls within an exemption from registration. 

LEARN MORE>>> What is the SEC? What pathways are available? 

Put yourself in 

the driver’s seat! 

Use our interactive navigator tool to

explore the many regulatory pathways 

to raise capital. 

Find the Navigator and more at our

Capital Raising Hub. 

This resource represents the views of the staff of the Office of the Advocate for Small Business Capital Formation. It is not a rule, regulation, or statement of the SEC. The SEC has neither approved nor disapproved 

its content. This resource, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person. This resource does not provide 

legal advice. This resource was produced and disseminated at U.S. taxpayer expense.
 

 

ENGAGE WITH US 

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202.551.5407 

www.sec.gov/oasb 

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