The average interest rate on a business credit card as of April 26, 2023, was 18.78%. With the federal funds rate at its highest since 2007, credit card annual percentage rates, or APRs, are also at record highs. – Share of companies using this funding source: 7.3% Read on to learn more about the five most common sources of business startup capital. In 2021, for instance, the Biden administration awarded $154.2 billion in federal contract dollars to small businesses, up $8 billion from the previous year. Sources like federal grants have also become more popular in the wake of the COVID-19 pandemic, and support for small businesses is on the rise. Other sources of startup income in both categories include a loan from family or friends, venture capital funding, or leveraging earnings from an existing business. According to the SBA, 3 in 4 new businesses use personal savings roughly 1 in 5 use a bank loan (19%). When considering startup capital, there are two main categories of funding new businesses use: equity and debt. Percentages were recalculated from base figures to exclude companies that responded they didn’t need startup or acquisition capital or didn’t know their source of capital.
This 2018 survey is the most recent data on capital funding sources and continues to be referenced by reputable sources, including the Small Business Administration. Using Census Bureau Annual Business Survey data, altLINE compiled the most common sources of business startup and acquisition capital.
Many small business owners can use their own equity to launch their businesses, but others will have to take on debt in the form of credit cards or loans. Not only do you need a great idea and a solid business plan, but you’ll need to gather the funds to get your organization off the ground.
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