Did you know that the process of finding a loan takes the average small business owner about 33 hours? That’s almost a week away from the more important work of running your business. Even worse, much of this time is wasted looking for financing in the wrong places.

The good news: Finding the capital you need doesn’t have to take that long. By leveraging technology, financing sources are creating new options that better fit small business owners’ financing needs. As a result, there are more financing options than ever for businesses like yours.  

In this eGuide, we’ll provide an insider’s perspective on the best ways to get the capital you need to grow your business.

Traditional vs. Online Lending

Industries such as bookstores, real estate, and travel agencies have been transformed by online platforms. Now, small business financing is going through the same kind of transformation. Companies such as OnDeck, Lending Club, BillFloat, and Kickstarter are changing the way entrepreneurs search for and obtain capital by using technology to address specific financing needs.

Let’s take a closer look at some of the most popular new financing options available to small businesses, including nonprofit lenders, crowdfunding, invoice financing, online business loans and loan-matching sites.


Nonprofit lenders look for businesses whose missions coincide with theirs and offer them small business loans or microloans (as little as $5,000 or $10,000). Depending on the lender, you may pay low-interest rates and fees or no interest at all.

GOOD FIT FOR: An eco-friendly clothing retailer that donates a percentage of each sale to charity, is located in an underserved community, and seeks $10,000 for expansion



Small business owners visit crowdfunding websites to promote their business ideas to an audience of individuals who want to invest money in small businesses. The individuals support the small business with financing.


In donation or purchase-based crowdfunding, individuals donate money to a company or small business owner in exchange for receiving products, perks, or rewards. For example, suppose you are trying to launch and market a new smartphone accessory and need $50,000 to do so. On a crowdfunding site, you may find several hundred people to donate $50 each, 100 people to give $100 each, and a few people who are willing to give $1,000 each in return for obtaining the product.

In investment crowdfunding, businesses seeking financing sell equity stakes in their companies in exchange for infusions of capital from individuals. For example, the smartphone entrepreneur in the previous example might find 10 individuals willing to invest $5,000 each in exchange for a combined 10% equity stake in the business. Crowdfunding sites may charge a fund-raising fee based on a percentage of the funds raised or charge a monthly fee during the fund-raising process. If you use investment crowdfunding, you’ll have to give up equity to investors. 

GOOD FIT FOR: A startup business owner with an idea for a new type of kitchen accessory who needs $15,000 to design and manufacture the first 5,000 units

POSSIBLE SOURCES FOR CROWDFUNDING: IndieGoGo, Kickstarter, RocketHub, GoFundMe


In invoice financing, a business sells its accounts receivable to a third party. Invoice financing has been around for a long time, but newer companies such as BlueVine and Fundbox have brought the whole process online, simplifying it considerably.

Small business owners may pay a fixed payment on the fully advanced amount of their outstanding invoices, or pay a percentage of their outstanding invoices and then pay the remainder when they receive payment.

GOOD FIT FOR: A baked goods manufacturer that sells to hotel chains and has $70,000 in outstanding invoices from customers due in 90 days. The company is facing an immediate cash flow crunch and needs $23,000 for short-term working capital.



Online business loans are a relatively new source of financing that provides faster approvals than typical bank loans. You apply online, the lender reviews your application, and you’ll know if you’re approved or denied within minutes. If you are approved, your loan can be funded in as little as one day to two weeks.  Online business loans offer fixed interest and fixed payments. Payments are usually automatically debited from your business bank account on a daily, weekly, or monthly basis.

Be aware that the easier it is to obtain capital, the more expensive that capital will be. Traditional bank loans cost less but are difficult to obtain. Financing from online lenders costs a bit more but is easier to get. 

So how do you decide when the cost of capital is worth it? Consider both the interest rate and the term of the loan.

For example, the choice between a loan at 67.5% APR and one at 22.5% APR may seem simple. However, when you consider the term of the loan, the answer is different than it may appear at first.

If you borrow $10,000 over six months at a 67.5% APR, your total cost of interest will be $1,500. However, if you borrow $10,000 over four years at 22.5% APR, your total cost of interest is $4,800.

GOOD FIT FOR: Well-established restaurant generating steady revenue that seeks $75,000 to add outdoor seating



If you aren’t sure where you need to go online to find capital, a loan-matching site is a great start. Visit a loan-matching site, fill out a profile of your business, and you will be matched with the most appropriate lenders for your financing needs—lenders seeking businesses exactly like yours. Depending on your profile, you may be matched with a traditional lender, an online lender, a credit union, or other alternatives.

LOAN-MATCHING SITES: SBA Linc, BoeFly, Fundera, Lendio

Learn how OnDeck can help your small business.

Entrepreneurs reviewing financing options together at table in home