Creative Financing Ideas: 21 Experts Share Top Tips on How to Creatively Finance Your Small Business

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Due to their size, small businesses have constantly changing financial needs based on the health of the company and the rate of business growth. So when it comes time to obtain financing, small businesses have to consider their options carefully in order to remain financially successful in the long term. While taking out a line of credit is the typical solution, it’s often neither the preferred nor the most viable option for many small businesses.

Since Direct Capital‘s primary mission is to help small businesses solve their financing needs, we wanted to uncover some creative financing tips that can help small businesses who don’t want to go the traditional route. To do this, we asked some successful small business experts this question:

“What’s your single best creative financing tip for small businesses?”

See what our experts said below:

Meet Our Panel of Small Business Finance Experts:

Marc ScheipeMarc Scheipe

Marc Scheipe is the CFO, Sage North America, a business management, bookkeeping & accounting software company, and has an extensive background in finance with more than 20 years in financial services. He’s also a former small business owner. And he volunteers for a number of charitable causes, including Susan G. Komen. In 1990, he started his career in the U.S. Navy as an FA-18 strike/fighter pilot. While in the Navy, he attained the rank of lieutenant commander and held various roles in operations, training, and maintenance. He is a distinguished graduate of the U.S. Naval Academy and earned his MBA from Harvard Business School. In addition, Marc is a certified Six Sigma Black Belt and a TOPGUN graduate.

Although people don’t normally think of this as financing, the best tip is…

To look at the length of time that a small business receives/disburses payments.

By reducing the time when money is received from customers and extending the time when payments are made, a small business can significantly improve cash flow and can effectively create a source of financing.

Sabrina ParsonsSabrina Parsons

Sabrina Parsons is an SMB expert and CEO of Palo Alto Software, the leading maker of planning and tracking software for small businesses on the market. As CEO, Sabrina is a staunch supporter of entrepreneurs and often mentors her small business customers on effective financial planning techniques.

Here is my advice to small businesses looking to get creative with their finances:

Use your accountant.

Small businesses rarely use their accountant to their fullest potential. You’re already paying them, so why not use their expertise as much as possible?

The best accountants not only know your business’s financials front to back, but they should be able to help you make smart strategic decisions concerning your finances. Beyond data entry, they can help explore lending options, investment options and tax credits based on their extensive knowledge of your business to meet both short- and long-term goals. Further, they will be the most informed of the newest and best tech tools to help run your business.

You’re their customer — your accountant should be able to tell you how to better run your business.

Kevin BarnicleKevin Barnicle

Kevin Barnicle is the Founder and CEO of Controle, an information governance software and consulting company.

My best creative financing tip for a small business, particularly one that is just starting out, is…

To use your 401k funds to self fund the company. That is exactly what I did.

I found out through research there is a little known secret that you can use your old 401k funds to use to fund and finance your business. I used mine to start a business in 2012. Without this technique I don’t believe I would have ever been to start my company. Now we are in our 4th year, have 30 employees and will do somewhere between $10-$15 Million in revenue this year. Everyone should look into it!

Krista PaulKrista Paul

Krista Paul is the Founder of, a Techstars company that helps travelers and loyalists manage all of their miles and points in one central dashboard, alerts them when points are expiring, and helps them find award travel redemption opportunities in all of their programs.

This is my story, which I believe will help any small business owner looking for creative financing advice…

I founded my company in 2008 and have executed on many different ways of financing it’s growth. We bootstrapped, raised angel capital, and even took some financing from a traditional VC. We grew the company to about 20 employees before we started getting cease and desists from the airlines, because they didn’t want us managing their member’s loyalty data. Our endless negotiations dried up resources and we had to start laying off employees in 2012 as we decided whether or not to raise more money or try to sell the company.

As the Founder, I was responsible for keeping the company afloat and a roof over my head. My hands were tied because we no longer looked like a great investment and I couldn’t just leave the company and move on and lose all of my investor’s money. Instead, I turned to the homesharing economy, and specifically used Airbnb to finance my company for over a year.

Airbnb is the most disruptive website in the travel/hospitality industry where anyone can rent out their extra space (couches, rooms, homes, condos, vacation properties) to anyone else. Airbnb is free to join and they take a portion of the guest and host fee in exchange for providing a platform in 99% of the countries worldwide and managing and streamlining the booking process.

Airbnb now has over 350,000 hosts, who are just ordinary people, renting their spaces in 192 countries. Last year alone, they booked 10 million rental nights in homes, apartments, rooms, and spaces.

I live in a 5-bedroom in an up and coming neighborhood in Denver. Initially I started renting out my back room, and after finding that I was able to easily get 100% occupancy in just over a month, I couldn’t believe the opportunity. I ended up moving out of my master bedroom upstairs into a smaller room, and renting out three rooms full-time on Airbnb. I was also living with strangers full-time, but I was paying my mortgage, keeping the company afloat, and only putting 4-5 hours a week into my Airbnb business! It was the perfect financing!

Today, I can proudly announce that Airbnb financed my company for an entire year, through acquisition discussions, and ultimately to an acquisition at the end of 2013.

I continue to rent out a room today and have guided many of my entrepreneurial friends through using Airbnb to fund their businesses.

The model works!

Mike MichalowiczMike Michalowicz

Mike Michalowicz is a an Entrepreneur, Business Expert and Author. By his 35th birthday, he had founded and sold two multi-million dollar companies. Among other innovative strategies, Mike created the “Profit First Formula”, a way for businesses to ensure profitability from their very next deposit forward. Mike is now running his third million dollar venture, is a former small business columnist for The Wall Street Journal, is the former MSNBC business makeover expert, is a popular keynote speaker on innovative entrepreneurial topics; and is the author of Profit First, The Pumpkin Plan and The Toilet Paper Entrepreneur, which BusinessWeek deemed “the entrepreneur’s cult classic.”

Hands down the most important financing tip is this:

You MUST be profitable first.

Financing is a powerful tool to grow your business. But you need to ensure that you grow in a way that will further foster what is already working. You want to grow the profitable elements of your business so that you can become more profitable.

Focus on building your business with a healthy profitable foundation. Then fuel your profits with financing. Plus there is a bonus… a financially healthy company gets better terms.

Jock Purtle

Jock PurtleJock Purtle is the CEO of Digital Exits, a consulting & brokerage firm,

My single most creative tip for financing a small business would be…


Crowdfunding is most successful for businesses that can provide an emotional appeal for their product or service. provides a list of expert reviews of what the author considers to be the best crowdfunding sources here, and their article also provides a link to a directory of crowdfunding sites.

When one thinks of crowdfunding, the usual assumption is that people would work their social networks (Facebook friends, Twitter followers, etc) to raise the funds.  However,’s list also provides links to crowdsource networks that provide micro-loans such as the Endurance Lending Network, which connects business owners with non-traditional lending sources, as well as private equity crowdsourcing sites.

Crystal L KendrickCrystal L. Kendrick

Crystal L. Kendrick is the President of The Voice of Your Customer, a marketing firm that assists clients to penetrate niche markets using surveys, focus groups, secret shopping and media campaigns.

My top creative financing tip to small business owners is…

Look for needed resources and funding using non-traditional options. If you do not receive the funding to purchase what you need to grow your business, look for resources to acquire what you need to grow your business.

Most new and emerging small business owners think that it is very easy to obtain a loan from the bank where they have an established relationship. Unfortunately, this is not true for most businesses, especially, professional services firms that require operating capital to pay for employee salaries, training, software and other business-related services. Many small business owners spend quite a bit of time and resources preparing application packets and meeting with bankers, only to be disappointed when they are rejected.

As the owner of a small professional services firm who was rejected by several banks, I soon learned that it was easier for me to focus on generating sales for my business and earning more profits. While my approach may not have been the most cost effective or easiest for my staff, it was the only way that we could grow the business. Over the years, we learned about several grants and programs that provided access to the training, software and business-related services that we were planning to purchase with the loaned funds.

Specifically, we applied for and received workforce development grants from local government agencies and non-profit organizations to hire and train new employees, and to offer tax credits for hiring employees. These grants typically reimburse small business owners for wages and training costs for new employees. We also worked with the small business development programs at local universities to train our employees, develop websites and electronic media, and provide legal advice. Additionally, we worked with local chambers of commerce to access needed software and databases, to allow our employees to attend business training courses.

Babak HafeziBabak Hafezi

Babak Hafezi is the CEO of Hafezi Capital International Consulting & Investing. He has advised numerous clients in strategy development, market entry strategies as well as service improvements to small, medium and Global Fortune 500 Companies and CEOs, including Morgan Stanley Private Wealth Management who sought his advice on the Groupon Initial Public Offering (IPO). Hafezi Capital’s Consulting department focuses on providing clients with help in revenue growth, corporate organization, capitalization and internationalization.

My creative small business financing tip is as follows:

Work with someone who deeply understands your goals and develops business plan that will allow you to use the capital effectively. Understanding what the client needs and understanding the various types of capital is critical to obtain fast an effective financing.

By taking the time and understanding how much capital they want to raise, how they want to raise it, and what the various needs are, we can develop a business model and plan that allows us to drive clients to the best capital within the market space, be it Private Equity, Private Capital, Venture Capital, Bank Loan, or Angel Investments. Being focused, and understanding who will give them what, and preparing our clients is critical in their achievements in business.

Lori CheekLori Cheek

Lori Cheek is an Architect turned Entrepreneur, Founder and CEO of Cheekd— a mobile dating app that makes missed connections obsolete. Lori is a Shark Tank Veteran and was recently listed as The Digital Dating Disruptor and One of the Top 10 CEOs to Watch.

Coming from a career of making $120K a year, I’ve bootstrapped my business for nearly five years and have had to get extremely creative in funding my startup and have become quite the expert in saving money while building my startup. My tip for small business owners is…


I launched my business in May of 2010, had hired a PR firm a couple of months before launch and got a couple of articles written. After paying them nearly $10K, I realized I had more passion for the subject, had tons of connections to start out and could do what they were doing and decided to go for it. The growth of my startup has been solely dependent on PR and Marketing alone. On a shoestring bootstrapped budget, I wasn’t able to continue paying a PR firm. As a very creative, social, ambitious and passionate entrepreneur, I decided to take on the responsibility on my own.

After I launched my business in May of 2010, I simply mailed a lone black Cheek’d card that read, this card could change your life. in a plain black envelope to 20 of the main journalists in New York City. This stunt cost $12.50 and a few weeks later, we were featured on the cover of The New York Times Styles Section and coined as the next generation of online dating. That article lead to our site crashing for hours, orders from hundreds of customers all over America, inquiries from all over the world and finally this email from Oprah Winfrey’s Studio:

“Hello, I am a producer at The Oprah Winfrey Show. I am looking to talk to Lori Cheek about I can be reached at 312.633.**** Thank you and I look forward to hearing from you soon.”

We never ended up on Oprah, but the interview with their studio could have been the most exciting day of my life! I’ve been doing my own PR for the past 4 1/2 years. Ten thousand dollars lighter and a few years wiser, I’ve been covered in just about everything from The New York Times to Tech Crunch and Forbes. Our press has extended internationally now and we currently have customers in 47 states in America and 28 Countries Internationally.

Don’t just think outside the box; Get rid of the box! Be creative. Think Guerrilla. And if that doesn’t work, sometimes it just doesn’t hurt to ask. I’ve ended up on the news many times by just calling up the news channels and asking them if they’d be interested in featuring my business. It’s sometimes that simple. I would say the most crucial thing in getting Media Coverage is a subtle yet persistent approach…

Leonard P. RaskinLeonard P. Raskin

Leonard P. Raskin is Founder and CEO at Raskin Global, an MD Investment Firm and Financial Planners. Leonard is also a Registered Representative and Financial Advisor of Park Avenue Securities, LLC (PAS), a registered broker-dealer and investment advisor that provides securities products and advisory services. Raskin Global is not an affiliate or subsidiary of PAS.

My best financing tip for a small business is…

To own significant cash value life insurance.

As a result, the policy, as an asset, can continue to grow tax deferred over time and most importantly can serve as collateral to a bank for borrowing. Currently, bank rates on this type of secured debt is i the high 2% low 3% range. No small business can get money this cheaply. Additionally, it secures the business value for the owners key people or family, making term life insurance unnecessary.

Jessie Seaman, EsqJessie Seaman

Jessie Seaman, Esq. & E.A. is a Licensed tax professional for Tax Defense Network, LLC, a tax resolution company. She is an extremely valued member of Tax Defense Network’s staff as the leader of the company’s business tax team. Jessie received her Juris Doctorate from Florida Coastal School of Law and is a member of the Florida Bar Tax Section. Jessie also pursued her enrolled agent certification because she wished to supplement her law degree with the specific specialization in IRS tax law required in an enrolled agent.

A creative but bafflingly simple method of economy comes from how you handle your taxes and all things related. Here are some key focal points on how to stretch your business dollar:

  • Get a consultation on what entity structure will be most favorable for your business with regard to your tax liability: Corporation, Corporation taxed under sub-chapter S, Partnership, LLC, LLP, Sole Proprietorship, etc. This may be the most important decision a business makes in their infancy stages.
  • Be sure to take the allowable deduction for start-up. You can deduct up to $5,000 of research and development and start-up costs.
  • Section 179 Depreciation: You may depreciate the full value of an asset the first year. However, only do this if the business expects a profit, otherwise this will be a waste time because no tax will be due.
  • Hire veterans, the IRS provides a tax credit for business owners that employ VETS.
  • At a minimum, hire a professional the first year so they can educate you on what expenses are allowable, how to categorize them, what to depreciate and how quickly, and advise you on common credits you may be eligible for.

Linda ParryLinda Parry

Linda Parry, Esq. is Chief Executive Officer of Product Launchers, a company that has introduced products from gourmet chocolate making kits and filtered water bottles to the multi-million dollar As Seen on TV product, STRUTZ arch supports. They’re not manufacturer’s representatives. They’re entrepreneurs that happen to understand a thing or two about representing products and garnering placement in stores, catalogs and on home shopping networks.

What’s your single best creative financing tip for small businesses?

Save paper!

Automate banking (you won’t pay for checks), don’t print presentation materials – the client wants a digital copy anyway, forget formal letterhead (pocket the savings!), office documents can be shared on the Google Drive and you’re reducing your carbon footprint, which just sounds nice.

John TurnerJohn Turner

John Turner is CEO of UsersThink, a tool that gives anyone with a landing page feedback on demand, helping them increase conversions and improve UX.

What’s your single best creative financing tip for small businesses?

For the very beginning stage, I suggest using your early customer research/development period as an opportunity to validate what you’re offering by accepting paying customers.

This sounds obvious, but there are a lot of people who get too nervous when their ideas or offering are too early or not fully formed, but there’s no better group to get feedback from than those who have agreed to pay you.

Using that early group both as research in how to develop your company, and to use that money to help you build out your vision, is the ultimate 1-2 punch for small businesses who are just getting started.

Debbi KingDebbi King

Debbi King is a Personal finance expert, wealth coach, motivational speaker, and author. She owns The ABC’s of Personal Finance, a personal finance coaching firm. She coaches individuals and couples and teaches financial literacy to teens and adults all over the country.  In 1998, she filed for bankruptcy, and armed with the wisdom and knowledge she learned rebuilt her financial life and now teaches others how to win in the area of their money. She has authored 2 books: “The ABC’s of Personal Finance” and “26 Weeks to Wealth and Financial Freedom”. In 2012, The ABC’s of Personal Finance won the Christian Choice Book Award. Debbi also hosts a weekly radio show and is a money contributor for several other radio shows.

My best financing tip for small businesses is…

To build your business without debt – self-finance if you will.

Debt adds a major risk to an already risky decision. Starting a small business is a dream for many and in this world can be accomplished easily. However, when you add debt to the equation, it can fail before you even begin to see the real dream. Start slow if you need to and grow from your profits. The turtle wins the race every time.

Ilene DavisIlene Davis

Ilene Davis, CFP(R), MBA is an Independent Financial Consultant and Certified Financial Planner (CFP), a designation she received in 1984. In her work, she helps both business and individuals create and implement wealth accumulation programs – a “Financial Freedom Fund” of your own. Her goal is to make every client a Wealth Accumulation Master. You can connect with Ilene on Linkedin.

One creative financing tip I have suggested to people with new business is…

To do what I call a drawdown or on account loan.

This is where likely customers would put money on account, and then each time they make a purchase, half is paid for by the loan and half is paid in cash. This provides the business with startup / operating capital, but also provides both ongoing cash flow, and if there aren’t enough interested lenders, it might mean there aren’t enough interested customers either.

I also recommend that those lenders, as interest on their loan, get a discount on each purchase.

Joey JelinekJoey Jelinek

Joey Jelinek is the Founder and CEO of GroundBreaker, Inc., a leader in equity-based real estate crowdfunding. Before founding GroundBreaker, Joey spent his career fundraising for institutional real estate owners on Wall Street. Joey secured over $6 Billion in real estate financing while at CBRE, issued over $8 Billion in real estate securitizations while at Morgan Stanley and collaborated on $435 Million of mixed-use developments while at ZOM. Joey experienced the painful and tedious process of private fundraising when he founded Byron Partners, a small balance real estate investment firm.

The easiest way to obtain short-term financing for your small business is…

An aggressive social-media based crowdfunding campaign.

And I’m not talking about using donation-based funding because that has all other types of difficulties. You can now raise funds from accredited investors under Title III of the JOBs Act and unaccredited investors under Title II of the JOBs Act. With these laws in place, it is legal, and with social media, it is possible to get the word out. If your business is compelling enough, you could target investors for minimum commitments of $5,000 each until you raise a considerable chunk of capital for your business.

Zac JohnsonZac Johnson

Zac Johnson is an entrepreneur, online marketer, blogger, author and podcaster. He is also CEO of, an online training community that helps entrepreneurs who are starting a brand or business remove the frustrations and get on the right path as soon as possible.

What’s your single best creative financing tip for small businesses?

Take Advantage of Internet Services.

Gone are the days when a business needs thousands of dollars in upfront costs just to get started. Today anyone can start a business of their own on a minimal budget through the use of the many online services, marketing and management tools available. Take advantage of automating your business through social media tools like HootSuite, accepting payments and sending out invoices through services like Freshbooks, Paypal and Stripe and also eliminating the need to travel around the world by using live conferencing tools like GoToWebinar and Skype.

Aja McClanahanAja McClanahan

Aja McClanahan is a Database consultant, business owner and the main contributor at Principles of Increase, a website that provides useful tips and information for Family, Faith and Financial Freedom. Aja and her husband paid off all their personal and business debt in 2013 and are now on a mission to retire before 40 and build incredible wealth.

After over 12 years in business and having used credit cards and even loans from placing like Accion. Hands down the BEST tip for creative financing is…

To actually be creative and figure out how to get the money yourself.

Either reduce your lifestyle, sell your boat or wait to start until you have the money. I am bootstrapping with NO DEBT and have never been more financially solvent (or profitable).

Alan StarostAlan Starost

Alan Starost is a Principal and Consultant for Dialstar, where he develops and executes tactical marketing plans for financial services businesses to achieve promotional goals and brand recognition.

My tip for creative small business financing is…

Intellectual property insurance.

A client of mine developed an insurance product that backed the evaluation of a business’s intellectual property. The insurance policy was then used as collateral for a bank loan.

David BakkeDavid Bakke

David Bakke is a Small Business Expert at, a personal finance website and guide to building wealth.

What’s your single best creative financing tip for small businesses?

One more creative way to finance a small business is to ask friends or family members for help. In particular, older folks who have a solid retirement portfolio built up, but may not be earning a decent return on some of their investments.

If you can offer them a more attractive ROI for their money (but less than what you would pay on a small business loan for example) it’s a great way to save cash. Just be sure to put the agreement in writing so both parties know exactly what’s involved. Using an attorney experienced in small business is a good idea.

Candice CarusoCandice Caruso

Candice Caruso is a Business Funding Expert and President of Pango Financial, the leader in providing online and on-the-go business funding solutions to entrepreneurs and small businesses at the lowest cost without compromising value. Candice comes from a successful career as an executive in the small business service industry. She brings 17 years of experience in the areas of business financing, business management, startup, retirement planning and compliance. She specializes in franchise and small business funding and has had the opportunity to help finance thousands of businesses throughout the United States over the years. Her goal is to enable entrepreneurship and marry conventional with alternative business funding tools.

The single best creative financing tip I can provide to a small business owner is…

Exploring the possibility of investing their own retirement savings into their privately held business or franchise.

This can be accomplished through a retirement plan design known as Rollovers as Business Startups. This type of retirement plan allows you to buy stock in your own non publicly traded business tax deferred and without penalty. Rollovers as Business Startups empower the business owner to invest in their dream of business ownership to enable startup or growth. Once the funds have been invested in the business these dollars can be used as equity to secure a conventional bank loan or SBA 7(a) loan. This type of retirement plan is very popular with individuals pursuing franchise ownership. Some eligible retirement accounts:

  • 401(k) plan
  • Profit sharing plan
  • Traditional or Simple IRA
  • Thrift savings plan
  • 403(b) pre-tax
  • Governmental 457(b)

Note: Roth Accounts are not eligible for rollover to a qualified plan.

The entrepreneur doesn’t incur early-withdrawal penalties in this scenario because it is still an asset of a qualified retirement plan sponsored by the business. The purchase of your C corporation’s common stock by your ROBS plan is exempt from the prohibited transaction rules under Section 4975(d) (13) of the IRC and Section 408(e) of ERISA if:

  • the purchase of stock by your DreamSpark plan complies with adequate consideration,
  • no commission is charged for the purchase of your C corporation’s employer stock,
  • the DreamSpark plan is an eligible individual account plan as defined in section 407(d) (3) of ERISA.

These rules also apply to an Employer Stock Ownership Plan (ESOP).

While it may seem risky to invest your retirement funds in a non-publicly traded company starting a business is risky no matter how it’s funded.

The Rollover as Business Startup plan design allows entrepreneurs to take control of their financial success by:

  • Investing as little or as much as is preferred
  • Saving thousands in interest fees
  • Protecting personal credit
  • Maintaining a strong employee benefit
  • Providing a long term wealth building tool
  • Starting a business or recapitalize
  • The potential to position for faster success
  • Having funds available as equity for a conventional or SBA 7(a) loan

This strategy is commonly utilized by individuals exiting corporate America who have saved up in excess of $50k in retirement savings over the years. They typically have great credit and own homes. They have decided to use their retirement as an investment in their own non publicly traded business. This plan is also a tool to continue saving and building for retirement and an employee benefit program to the company’s eligible employees.

About Direct Capital

Direct Capital has been helping small businesses access the capital they need for over 20 years. In that time, we’ve helped more than 70,000 small businesses and we aren’t stopping there. With the recent acquisition by CIT, our equipment financing and small business loan products have never been better or easier to obtain. For more information on who we are, what we do, and how we can help your business grow, visit our website!

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