SoFi

When you’re thinking of starting a new business, there are plenty of possibilities to consider. But what if you don’t have a large startup budget ready to go? Doesn’t that limit your dreams?

Not necessarily. Whether you’re trying to launch a side hustle to supplement your day job or you just want to be your own boss, there are many businesses you can start that don’t require huge sums of money.

Explore this list of some of the best small business ideas for 2024. The sooner you get started, the sooner your small business might be the next great success story.

1. Online Fitness Trainer

At-home workouts became popular during the pandemic, and it continues to be a favorite go-to for many busy people who want to exercise. If you’re a fitness expert, you may be able to launch an online training business. An easy way to get started and build an audience is by making videos to post on YouTube or sell as a course. According to ZipRecruiter, the average salary for an online personal trainer is $29 an hour or about $52,000 a year.

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2. Web Developer

Developing websites — building and maintaining their core structure — is a technical skill that’s in high demand. It’s also a skill that you can teach yourself through videos, online lessons, and books. Once you’ve mastered and practiced the skill, you can build a portfolio and start pitching clients. All of that takes time and effort but the cost is relatively low.

3. Freelance Web Designer

Web design is a skill set you can market as a freelancer, providing your services to multiple companies that need help with the usability and aesthetics of their sites. You can focus on helping design websites from scratch or on troubleshooting and/or redesigning existing websites, or offer a combination of both. On average, freelance web designers make $45 an hour, according to ZipRecruiter.

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4. Consultant

If you’re wondering what kind of business to start, you might think about consulting in an area you’ve already worked in, like human resources, management, IT, or operations. You can set your own hours, potentially charge more than you earned as a full-time employee, and pick and choose the projects you’ll enjoy the most.

5. Graphic Designer

Starting your own graphic design business is another easy option for people who have the talent and experience. If that’s you, consider launching a website with some portfolio pieces and then pitching potential clients. If you’ve already been a graphic designer for a company, you likely already have everything you need to get started. On average, freelance graphic designers earn $35 an hour.

6. Life Coach

Life coaching can be an extremely satisfying business. You can pick a niche you’re passionate about, like career changes, productivity, health and fitness, or some other idea you find compelling. Getting certified as a professional coach may increase your clout and marketability. While that training probably won’t be free, it might be a good investment. You might also be able to get financing to help cover your tuition.

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7. Tailor and/or Designer

Whether sewing has been a life-long hobby or you picked up the skill more recently, you may be able to turn that interest into a business. You can specialize your services in any number of ways, like making alterations, designing custom home decor like curtains and pillows, or creating hand-sewn crafts to sell.

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8. Resume Writer

Resume writing is always in demand. If this is something you have a knack for, you can either find clients on your own or freelance for a resume agency. On average, resume writer jobs pay $18 an hour, but you may be able to earn more if you have expertise in a specific industry.

9. Online Used Book Seller

Selling used books online can be fun as well as lucrative for bibliophiles. It does involve some startup costs since you’ll need to stock up on inventory, but sourcing inexpensive books from places like thrift stores or yard sales can be fun, too. Once you make your first few sales on a site like Amazon or eBay, you can reinvest some or all of the profits to keep your inventory growing. At some point, you might explore getting a small business loan to grow your enterprise.

10. Interpreter or Translator

If you’re fluent in multiple languages, you can utilize those skills as an interpreter or translator. This is work that can often be performed from the comfort of your own home. Global businesses may not have a full-time need for translation services, so you may be able to step in and help them as a contractor. According to the ZipRecruiter, the average salary for a translator is $28 an hour or $57,200 a year.

11. Pet Walker and/or Pet Care Provider

Pet owners are known to spare few expenses when it comes to pet care. And thanks to all the puppies and kittens that got adopted during the pandemic, a pet walking or pet care business could provide a big market in many locations. Once you land your first few clients, you can then focus on getting referrals from those successes. Nationally, dog walkers make anywhere from $6.73 to $25.72 an hour, but the average hourly wage is $17.

12. Online Course Creator

Creating an online course is a fun way to share your knowledge about topics or skills you’re passionate about. There are many course platforms to choose from. All you need to do is create one or more videos and upload them to the teaching platform. Then simply set a price and, ideally, you’ll soon make some sales.

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13. Digital Download Provider

Creating and selling digital products (like videos or ebooks) is an easy business to set up, plus it becomes increasingly passive as you build up your library of products. From artwork to educational products, you simply upload your creations to your preferred platform so future customers can find your work.

14. Landscaper/Garden Care Professional

Gardening and landscaping have become increasingly popular in recent years. If you’ve discovered that you have a green thumb, consider launching a landscaping or garden care business to help your clients maintain beautiful yards all year long. Explore startup funding options to help finance new equipment if you need it.

Recommended: What You Should Know About Short-Term Business Loans

15. House Cleaner

Cleaning houses is a service that’s in demand in just about every city and town across the country. Decide what particular types of services you’ll offer and collect the necessary supplies. Also consider getting a general liability insurance policy to protect yourself and your new business since you’ll be in other peoples’ homes. House cleaning can pay anywhere from $9.62 an hour to $23.32 an hour, depending on your location and the exact services you’re providing, among other factors.

16. Handcrafted Goods Seller

If you have an artistic knack, consider opening an online shop to sell your own handcrafted goods. You can launch your own website or list your items for sale on an existing platform. You can either build up a stock of inventory first or opt for a made-to-order business model, which can help you save on startup costs.

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17. Dropshipper

Starting a dropshipping business can be ideal for people who enjoy online marketing. As a dropshipper, you curate goods from a wholesale supplier and market them for sale online. However, you don’t hold any inventory. Instead, the supplier handles shipping for you.

18. Interior Designer

It’s easier than ever to launch your own interior design business, especially if you have some relevant design experience (your kitchen makeover!) to include in an online portfolio. There are a number of different services you might offer, like home staging, product curation, or online design plans. Consider picking a particular niche or style when you first get started so you can attract your ideal client.

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19. Tutor

You can start a tutoring business in person, but online tutors are also popular. Pick a subject you’re knowledgeable about, like math, language arts, or English as a second language. There are plenty of online platforms through which you can market your services, or you can network to find students in need of a tutor. How much online tutors can make varies depending on the subject matter and whether they work for themselves or a company but, on average, they make $19 an hour.

Recommended: 15 Side Hustles With Low Startup Costs

20. Virtual Assistant

Starting your own virtual assistant business gives you a lot of flexibility in the type of work you do, as well as when, where, and how much you work. You can offer a range of remote services as a virtual assistant, including managing schedules, sending emails, or even handling marketing activities.

21. Childcare Provider

Opening a home daycare center is a more involved small business idea, but there’s definitely a need for this service. Be sure to check your area’s local rules and regulations about opening an in-home daycare center. It may be helpful to write a business plan to keep track of everything you need to do. Alternatively, you could start small by just babysitting or nannying for one family, or even working as a parents’ helper.

Recommended: Mompreneurs in 2024: A Comprehensive Survey

22. Voice-Over Actor

Video and audio content is increasingly popular, so you could offer voice-over services as your own business. It’s easier than ever to do this as a remote job, plus you can get started with some inexpensive equipment, much of which you may already have, like a microphone, mic stand, headphones, and some recording and editing software. Voice-over work generally pays well — as much as $76.92 an hour. The average hourly pay for voice-over jobs in the U.S. is around $48.

23. Flipper/Goods Reseller

Flipping — finding and reselling or even fixing up and reselling — used items for a profit can be a great business idea if you love bargain-hunting at thrift stores, yard sales, or even clearance shelves. To get started with no budget, you can even flip your own unwanted items from your home on an online auction site. As you make a little money, you might want to start expanding your inventory.

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The Takeaway

Starting any new business takes some work, but the rewards are often worth it. As you get more involved in a new business — and even as it gets more profitable — you may find you need to put more resources into it.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Illinois has about 1.3 million small businesses that collectively employ 2.4 million people — more than 44% of the state’s private workforce. To help small businesses flourish in Illinois, the state offers a number of generous small business grants that can help entrepreneurs launch or grow their companies in the Prairie State. Unlike small business loans, grants typically don’t have to be repaid. While competition for Illinois grants can be stiff, here are five small business grants in Illinois you may want to explore.

Grants for Small Businesses in Illinois

If you’re looking for a small business grant to grow or start your business in Illinois, here are some options to consider.

Illinois Tourism Attraction Grant Program

•  Program description:The Illinois Department of Commerce and Economic Opportunity (DCEO) awards grants to for-profit businesses, nonprofit organizations, and other entities that develop and enhance Illinois tourism attractions.

•  Incentive: Businesses can receive matching grants ranging from $15.000 to $500,000 to help boost tourism in Illinois.

•  General requirements:

◦  Have a valid federal Employer Identification Number (EIN)

◦  Propose a viable project that promotes sustainable economic growth and tourism in Illinois

◦  Have a current System for Award Management (SAM) registration

◦  Have a valid Unique Entity Identifier (UEI) number

◦  Be in good standing with the Illinois Secretary of State, as applicable

◦  Not listed on the Federal Excluded Parties List

◦  Not listed on the Illinois Stop Payment list

◦  Not listed on the Illinois Department of Healthcare and Family Services Provider Sanctions list

•  How to apply: Contact the DCEO if you’re interested in the Illinois Tourism Attraction Grant.

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Illinois Reproductive Health Facilities Capital Grant Program

•  Program description: Illinois offers matching grants to nonprofit and for-profit clinics providing or planning to provide pregnancy-related services in a clinical setting.

•  strong>Incentive: Receive grant awards ranging from $50,000 to $500,000 to help cover capital improvement expenses toward security enhancements or facility upgrades.

•  General requirements:

◦  Have employees, volunteers, or agents who are licensed healthcare professionals

◦  Provide or plan to provide abortion care as defined in the Illinois Reproductive Health Act, as well as one or more of the following pregnancy-related services:

■  Contraception and contraceptive counseling

■  Pregnancy testing

■  Pregnancy diagnosis

■  Pregnancy options counseling

■  Limited obstetric ultrasound

■  Obstetric ultrasound

■  Obstetric sonogram

■  Sexually transmitted infections testing

■  Prenatal care

◦  Have a valid federal EIN

◦  Have a current SAM registration

◦  Have a valid UEI number

◦  Be in good standing with the Illinois Secretary of State, as applicable

◦  Not listed on the Federal Excluded Parties List

◦  Not listed on the Illinois Stop Payment list

◦  Not listed on the Illinois Department of Healthcare and Family Services Provider Sanctions list

•  How to apply: You can access the Illinois Reproductive Health Facilities Capital Grant application on the DCEO website.

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Illinois Federal Grant Support Program

•  Program description: Illinois offers state-based financial assistance to eligible small businesses in Illinois that have also received federal grant awards.

•  Incentive: Receive state-based matching grants ranging from $10,000 to $2 million if you’ve also been approved for specific federal grant awards.

•  General requirements:

◦  Be an Illinois-based organization or business

◦  Be the primary applicant on a federal award application

◦  Have a project proposal where at least 51% of the total project activities occur in Illinois

◦  Have a valid federal EIN

◦  Have a current SAM registration

◦  Have a valid UEI number

◦  Be in good standing with the Illinois Secretary of State, as applicable

◦  Not listed on the Federal Excluded Parties List

◦  Not listed on the Illinois Stop Payment list

◦  Not listed on the Illinois Department of Healthcare and Family Services Provider Sanctions list

◦  Project must be eligible for a specified federal grant program

◦  You agree to provide matching funds toward the project

◦  Applicants for federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are ineligible for this grant but may be eligible for the DCEO’s separate Phase I SBIR/STTR Matching Grant Program

•  How to apply: You can access the Illinois Federal Grant Support Program application on the DCEO website.

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Chicago Small Business Improvement Fund (SBIF) Grants

•  Program description: Chicago SBIF grants can reimburse small business owners for some of the cost of renovating, remodeling, or improving the appearance and viability of eligible commercial properties in the Windy City.

•  Incentive: Receive up to $150,000 in reimbursements for making improvements to eligible commercial properties and up to $250,000 for enhancing eligible industrial properties in Chicago.

•  General requirements:

◦  Be the owner or tenant of an eligible Chicago business property located in a Tax Increment Financing (TIF) district where SBIF funds are available

◦  Have gross annual sales not exceeding $9 million on average over the previous three years if you’re a small business owner
Have a net worth not exceeding $9 million and liquid assets up to $500,000 if you’re a commercial property owner

◦  Have no more than 200 full-time employees if you’re an industrial business owner

◦  Make permanent building improvements to eligible commercial or industrial property in Chicago

◦  Operate an eligible business that’s not one of the following ineligible businesses:

■  Chain and franchise businesses

■  Branch banks

■  Day labor employment agencies

■  Currency exchanges, payday loan operations, or title secured loan stores

■  Pawn shops

■  Fortune telling services

■  Liquor stores and nightclubs

■  Adult uses

■  Track waging facilities

■  K–12 schools

■  Gas stations

■  Firearms dealers

■  Places of worship

■  Smoke shops and cigar lounges

■  Tobacco dealers, including sales of tobacco, nicotine, or similar products and accessories

■  Residential storage warehouses

■  Trailer-storage yards, junk yards, and similar uses

•  How to apply: Access the grant application online through SomerCor 504 Inc., the nonprofit that administers Chicago’s SBIF Grant Program. You can email your completed application to SomerCor.

Illinois State Trade and Export Promotion (ISTEP) Grants

•  Program description: ISTEP is a grant reimbursement program that can help you export your goods and services from Illinois to foreign markets.

•  Incentive: Receive up to $10,000 in reimbursements for eligible business expenses, including website translation and international trade show participation costs.

•  General requirements:

◦  Be an Illinois firm with headquarters or a substantial facility based within Illinois

◦  Be an active small business in existence for at least 12 months

◦  Be profitable with gross annual revenue of at least $250,000

◦  Have products or services that contain at least 51% U.S. and 25% Illinois content or that substantially contribute to Illinois job creation

•  How to apply: Access the ISTEP grant application and web submission form on the DCEO website. Companies applying for or receiving any other local, state, or federal grant funds associated with export promotion generally are not eligible for this grant.

Who Provides Small Business Grants in Illinois?

Local and state government agencies, including the state Department of Commerce and Economic Opportunity and the Illinois Department of Natural Resources, offer a variety of small business grants in Illinois.

Do You Have to Pay Back a Small Business Grant?

Typically, no. Unlike small business loans, small business grants generally do not need to be paid back. However, that doesn’t mean there are no strings attached. Small business grants usually come with terms and conditions and require the recipient to sign a funding agreement. If for any reason you violate the terms of the grant, you may be responsible for paying back the funds.

In some cases, small business grants may require you to spend the money by a certain date. You may also have to provide proof of payment and a written statement detailing how you’ve spent the grant.

Who Is Eligible for Small Business Grants in Illinois?

Local business owners or operators of an enterprise with fewer than 500 employees may be eligible for small business grants in Illinois.

The U.S. Small Business Administration’s Office of Advocacy generally defines a small business as an independent business having fewer than 500 employees. A business with just a few employees, even self-employed individuals, may also be eligible for small business grants.

What Industries Does Illinois Support With Grants?

Illinois offers grants supporting a variety of industries, including:

•  Manufacturing

•  Reproductive health clinics

•  Retail trade (store and nonstore retailers)

•  Tourism

Illinois Resources for SMB Owners Looking for Funding

Here are some resources for small and medium-sized businesses looking for funding in the Prairie State.

Illinois Small Business Development Centers (SBDC)

Illinois Small Business Development Centers (SBDC) are located throughout the state and provide resources for startups and existing small businesses, including:

•  Business training seminars and webinars

•  Marketing research

•  One-on-one business advice and management assistance

SBA District Office in Illinois

The U.S. Small Business Administration (SBA) is a federal agency that provides resources and support to small business owners. The SBA Illinois District Office serves the entire Prairie State with a main office in Chicago and satellite office in Springfield.

Alternative Funding Sources for Small Businesses in Illinois

If you don’t qualify for small business grants in Illinois, you’re not necessarily out of funding options. Here are some other ways you may be able to get the capital you need to launch or grow your business in Illinois.

Illinois Microloan Lenders

Community-based nonprofits may offer microloans of anywhere from $500 to $50,000 to underserved small business owners in New York, such as women and minorities. Interest rates tend to be low (even zero in some cases), and the qualification criteria are often less stringent compared with other business loans.

Microloans can provide an infusion of cash to get a startup off the ground or grow an existing business. However, you may need to provide a microlender with a personal guarantee and collateral in order to secure funding.

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Illinois SMB Term Loans from Private Lenders

Banks, credit unions, and other private lenders may offer business term loans to Illinois business owners. With a term loan, you receive a lump sum of cash up front and repay it over a set period of time, often up to 10 years.

Banks typically require applicants to have at least two years of business history and strong financials, while online alternative lenders generally have more flexible qualification requirements (rates, however, tend to be higher).

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SBA loans for New York Businesses

An SBA loan is a type of SMB loan that is partially guaranteed by the U.S. Small Business Administration and offered by banks and other lenders. Loan amounts range from $500 to $5.5 million.

With an SBA loan, the federal government guarantees to repay most of the loan amount if a borrower defaults. This reduces risk to the lender and encourages them to offer loans to companies they might not otherwise work with. For small business owners who can’t qualify for a traditional business loan, an SBA loan can be a good option.

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Business Lines of Credit

A business line of credit is a flexible small business financing option that allows you to borrow money on an as-needed basis up to a predetermined amount. Similar to a credit card, you pay interest only on the money you’ve drawn. Once you’ve repaid your funds, you can draw on your line again.

Business credit lines are offered by banks, credit unions, and online lenders.

Equipment Loans

If your business needs money to purchase equipment or machinery, equipment financing may be a good option. The equipment you purchase serves as collateral for the loan. Since this lowers risk for the lender, equipment financing often comes with competitive interest rates. Many banks and online lenders will offer financing that covers the full cost of equipment.

The Takeaway

Small businesses in Illinois have a range of options when it comes to grants, whether it’s from a state or local government or private source.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How do you get a small business grant in Illinois?

To find a small business grant in Illinois, you might start by contacting the state’s Economic Development Administration and your local Small Business Development Center. You typically need to submit a grant application as a qualified small business owner to be considered for a small business grant in Illinois.

How hard is it to get a business loan in Illinois?

You typically need to have been in business for at least two years and have strong financials to qualify for a business loan from a bank. Online alternative lenders tend to have more flexible qualification criteria but generally charge higher interest rates.

What is the easiest SBA loan to get approved for?

There’s no guarantee you’ll get approved for any SBA loan, but SBA microloans may be one of the easier ones to get if you’re a new business owner. Startups may be eligible for SBA microloans of up to $50,000. If you’re looking for a streamlined application process, you may want to look into an SBA Express loan.

Photo credit: iStock/AsiaVision

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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When you’re looking for small business loans and financing solutions, maybe to get through a slow period or perhaps to grow your company, it’s a good idea to explore all your options.

In addition to loans, lines of credit, and other financial tools, credit card funding is an option to consider. It’s easy to access, it can be used in many situations, and it can have some pretty great perks, but there are downsides, too, as well as alternatives. Credit card funding for startups can work. But it pays to know all the facts before you make a decision.

What Does Credit Card Financing Mean?

Credit card financing simply refers to using credit cards to make purchases for your business.

Unlike term loans, such as a small business loan, where you get a fixed amount of cash all at once and then pay it back over a fixed period of time, credit card funding works more like a line of credit. You have access to a certain amount of credit and can make a purchase, pay it back, and then have access to the full line of credit again.

Credit cards do tend to have high interest rates. But if you pay off your purchases before the close of a billing period, you won’t rack up any interest. Or, if you can find a credit card that has a 0% introductory interest rate and pay off your balance before the introductory period ends, it can serve as a kind of interest-free small business loan.

Should a Business Owner Consider Using a Personal Credit Card to Fund Their Business?

You probably have a personal credit card, and you might have thought about using the same credit card funding for your business. But if you’re a small business owner, it’s a smart idea to have a separate credit card for business use.
Why?

When you file taxes, you likely deduct business-related expenses. Having a separate card makes your accounting and tax filing easier because it helps you avoid mingling your personal and business expenses.

Cards designed for businesses may also offer benefits intended to be useful to them, like travel and lodging perks and cash back for purchase at retailers like office supply stores. Of course, what’s useful to your business depends on its unique needs, and business cards don’t always have the same protections as consumer cards, so it’s important to read and understand the terms of any card you apply for.

If you’re interested in getting small business funding with a credit card but not sure where to start, consider these top small business credit cards for your company.

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Pros and Cons of Credit Card Funding

Credit card funding does offer many benefits, but it’s not without its drawbacks. It’s a good idea to weigh them both carefully.

Pros of Credit Card Business Funding

Credit card funding offers many benefits if you’re looking for a versatile financing option.

Potential for Rewards

There are many business credit cards that come with rewards programs. For each purchase you make, you can earn points that can be redeemed for travel, gift cards, and/or cash back. This may help offset any fees charged.

Credit Replenishment

Loans for business typically involve a lump sum you receive once in its entirety. But credit cards can be used indefinitely, as long as you pay your balance. Once you pay your balance, you have access to the full credit line again.

May Be More Affordable Than Some Financing

Though credit cards often come with hefty interest rates, they may be a cheaper form of financing than options like merchant cash advances and alternative loans, particularly if you can get a promotional low or 0% interest rate. If you don’t qualify for low-interest bank or SBA loans, business credit cards may be your next best solution.

Cons of Credit Card Business Funding

With any form of financing there are also downsides. Here are a few factors to be aware of.

Can Be Expensive if You Don’t Pay Off Your Balance

Business credit card annual percentage rates (APRs) currently average 22.15%. Those rates are no joke. Keeping a balance on your credit card means you’ll pay more and more for a purchase over time. Paying off your balance in full as soon as you can may keep your financing costs down.

May Have Other Fees

In addition to interest rates, business credit cards often carry other fees, too. You may pay a fee for a balance transfer. If you’re using it to fund your bank account, you may be hit with bank card funding fees. Paying late may result in fees. And there may be annual fees. Read the fine print to understand all potential fees you might be charged.

May Not Provide Enough Capital

Credit cards offer access to a certain amount of credit, but you may need significantly more to start or grow your business. Your card probably won’t cover larger expenses like purchasing real estate or expensive equipment. If your needs exceed your credit limit, you may have to take out an additional loan or business line of credit.

Other Startup Funding Options

Business credit card financing is far from your only option if you’re looking for capital for your business. No matter what your credit score, there’s likely to be a small business financing solution for you.

Small Business Loans

Term loans give you a lump sum of cash upfront that you repay (plus interest) in regular, often monthly, installments over the term of the loan. While banks will typically only lend to businesses with strong credit and at least two years of business history, online lenders generally have more flexible qualification criteria and are also usually faster to fund.

Business Lines of Credit

You already know how a line of credit works, since that’s essentially what a credit card is. However, an actual business line of credit gets you access to a set amount of cash that you can withdraw as needed. You only pay interest on the amount you draw. Once you repay the funds, the full credit limit is available again.

Invoice Financing

If you don’t qualify for other types of financing but have receivables, you might consider invoice financing. With this type of funding, lenders advance a percentage of your unpaid invoice amount — potentially as much as 90%. When your customer pays the invoice, you receive the remaining percentage, minus the company’s fees.

Equipment Financing

If you’re looking to purchase equipment but don’t have good business credit, equipment financing may be worth looking into. The equipment you’re purchasing, whether that’s a computer, a company vehicle, or a threshing machine, serves as your collateral, which means you may get a lower interest rate than with other types of financing.

Merchant Cash Advances

If your business has credit or debit card sales, needs cash quickly, and has poor credit, you might consider a merchant cash advance (MCA). With an MCA, a company gives you an upfront sum of cash that you repay using a percentage of your debit and credit card sales, plus a fee. This tends to be one of the most expensive forms of small business financing.

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The Takeaway

If you need a tool to help you purchase items for your small business, credit card funding has a lot to offer. It’s versatile, may offer rewards, and, depending on your credit, may be more affordable than other funding options.

If you want to explore business financing, small business loans could be a good option.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

Photo credit: iStock/Dmytro Skrypnykov
SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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A business credit card offers a number of advantages over a personal one, such as rewards for business spending and higher credit limits. Having one of these cards can also help you build business credit when you’re just starting out. But is it one of those catch-22s, where you can’t get a business card until you have a business?

Not necessarily. To get approved for a business credit card, you generally need to be earning some type of independent income. However, you don’t need to already have a business. Here’s a closer look at how business credit cards work, their pros and cons, and how to get one even before you officially open a business.

What Is a Business Credit Card?

Business credit cards are similar to personal credit cards except they are more geared toward business owners and people who have business-related expenses. They typically come with higher credit limits than personal cards, and structure their rewards around business-related spending, such as travel, dining, and office supplies.

Unlike personal credit cards, which only report your payment history to the consumer credit bureaus, business accounts primarily report to the commercial credit bureaus. As a result, getting and using a business credit card can help you build a business credit profile, which may help you qualify for other types of business financing in the future.

How Business Credit Cards Work

Business cards work in a similar way to personal cards. You get a maximum spending limit, or credit line, and can charge expenses to the account up to that amount. You also have a minimum payment due each month. As you pay off your balance, your available credit is replenished. If you carry a balance from one month to the next, you will typically pay interest on that balance.

The best business credit cards offer rewards, such as travel points or cash back, for spending in certain categories. Many also offer business-centric tools to track your business spending. In many cases, expense information can be downloaded and easily imported into your business accounting software. Business cards may also allow you to get free cards for employees and set individualized spending limits.

Qualifying for a Business Credit Card

Anyone who operates a business can apply for a business credit card. This includes any type of business structure, including a sole proprietorship, partnership, corporation, or limited liability company (LLC).

Also, you don’t need to have an existing business credit history before you can apply. Business credit card issuers will look at your personal credit history and credit scores. If you do have a business credit history, they will likely look at both your personal and business credit.

Whatever your business set-up, you will likely need to provide information about your business when you apply for a business card, including how long you’ve been in business, the industry you’re in, and your annual business income, plus provide supporting documents.

Recommended: What Are the Tax Benefits of a Limited Liability Corporation?

Are You a Business Owner or Independent Contractor?

You don’t have to be a registered LLC or corporation in order to apply for a business credit card. You can be an independent contractor or simply have a side hustle. As long as you earn money from the work you do, you may be able to qualify for a business credit card.

Do You Have an EIN or SSN?

When filling out an application for a business credit card, there is typically a section asking what kind of business you have and a space to put your business tax identification number.

If you own a business, you can put in your employer identification number (EIN). If you’re a freelancer, you can choose to answer that you’re a sole proprietor. Generally, you can enter your Social Security number as your tax ID number.

Pros and Cons of Business Credit Cards

While you may be able to get a business card without owning a business, the question remains: Should you? Here’s a look at the pros and cons of getting a business card.

Pros

One of the biggest benefits of a business credit card is that it allows you to keep your personal and business spending separate, which can dramatically simplify your life come tax time. In addition, using a business card can help you build business credit, which can help you if you decide to apply for a small business loan down the road.

Another plus is that business cards typically come with higher credit limits than personal credit cards. This is because issuers generally consider both your income and the business’s revenue when determining the credit limit. They will also likely consider both your business and personal credit scores. A higher limit could be useful if your business has steep operating costs, such as high inventory expenses each month.

Many business cards also offer bonus rewards for business-related spending, such as phone bills, online advertising, or office supplies. They may also provide tools that can help you better manage your company’s finances, such as integration with your accounting software and year-end itemized spending reports.

Cons

Business credit cards with generous rewards typically charge an annual fee. So, it will be up to you to decide if the benefits outweigh the cost.

Also keep in mind that business cards generally come with fewer legal protections than personal cards. The CARD Act of 2009 gave a number of consumer protections for personal credit cards, such as limitations on interest rate hikes and fees and prevention of double-cycle billing.

Business card issuers often offer these protections as a courtesy, but they may not in every case.

Though business cards are for business spending, they can still affect your personal credit.
When you apply for a business credit card, the application will likely show up as an inquiry on your personal credit report, which can temporarily cost you a few points on your credit scores. In addition, some business card issuers will report your account payment history to both the consumer and commercial bureaus.

Also be aware that you will likely have to sign a personal guarantee when you get a business card, which means you will be personally responsible for repaying that debt should your business run into financial trouble.

Recommended: What Is Purchase Order Financing?

Alternative Forms of Business Credit

Business credit cards offer a number of perks and can be a convenient way to pay for business expenses. However, they aren’t your only option for business financing. Here are some others to consider.

Small Business Loans

Banks, credit unions, and online lenders offer all types of small business loans. While banks and credit unions typically require at least two years of business history to qualify for a loan, online lenders often have more flexible requirements. These alternative lenders also tend to offer easier applications and faster financing. However, funding amounts may be smaller and interest rates are typically higher.

Equipment Financing

If you’re planning to purchase equipment for your business, you may be able to qualify for equipment financing without already having a business. Because the equipment you’re buying serves as collateral for the loan, this type of financing is less risky for lenders. If you can’t pay the loan, the lender can seize the equipment to cover your debts.

Merchant Cash Advances

If your business generates credit or debit card sales, you may be able to get a merchant cash advance (MCA). With this type of financing, an MCA provider gives you an advance on future business sales, then automatically deducts a daily (or weekly) percentage of your debit and credit card sales until the advance is repaid, with interest. MCAs can provide quick capital to cover cash-flow shortages or short-term expenses, but generally carry a high interest rate.

Recommended: Startup Credit Card Funding

The Takeaway

Business credit cards can make it easier to manage business expenses and are available to all types of businesses, including sole proprietors.

Business cards typically offer business-friendly features, like higher spending limits, bookkeeping tools, and bonus rewards for business-related spending. However, they often come with annual fees and may require signing a personal guarantee.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Can you get a business credit card if you don’t have a business?

Yes. You don’t have to have a registered LLC or corporation in order to get approved for a business credit card. Any income-producing endeavor, whether its dog-walking or freelance web design, can help you qualify for a business credit card.

Is qualifying for a business credit card easier than for a personal one?

Not necessarily. The qualification requirements for either a business or personal credit card will depend on the credit card company. Either way, the issuer will likely look at your income, whether it is from a business or other source, as well as your credit history.

Do business credit cards have to have a name on them?

Typically, business cards will have the name of the business on them, as well as the company owner or an authorized user’s name (which may appear above or below the company name). So if you issue cards to employees, they will have their names on them as well as the company name.

However, if you apply for a credit card as a sole proprietor and your business doesn’t have a registered DBA (doing business as) name, you will only have your name on your business credit card.

Photo credit: iStock/dragana991

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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For entrepreneurs and startups with big business plans, taking the next step to raise capital can require a serious leap of faith. How will the project be funded? Who can help weed out the strong ideas from the weak ones? What will potential customers think of the product itself?

Crowdfunding sites can be a great way to answer those questions and more. These platforms provide access to a large number of potential investors (a.k.a., “the crowd”) who may choose to invest in your project, idea, or business — or not. They provide an alternative route to funding while also allowing you to test-market your business idea.

Read on to learn more about crowdfunding for business, including how it works, pros and cons, and platforms you may want to consider.

What Are Crowdfunding Sites?

Crowdfunding sites are online platforms that allow investors to fund a business or project. So rather than securing an investment from one or two large sources, an entrepreneur can appeal to a larger group of individual investors to raise the capital they need to grow their businesses.

However, that capital doesn’t necessarily come free. In exchange for their investment, investors may receive something in return, such as a reward or equity in the business. In addition, these platforms generate revenue by taking a percentage of the funds raised through the site.

Recommended: What Is Crowdfunding? Definition & Examples

What Are the Different Types of Crowdfunding?

There are four main types of crowdfunding:

1.    Donation-based crowdfunding: With donation crowdfunding, people give money to a person, company, or campaign without receiving anything in return. For example, if someone needs an expensive piece of equipment for a mission-based startup, they might ask for donations to help them make that purchase.

2.    Peer-to-peer lending: With this crowdfunding model, also known as loan or debt-based crowdfunding, backers pledge money as a loan to help a company or campaign get off the ground. The loan accrues interest and has to be repaid within a set period of time.

3.    Reward-based crowdfunding: With rewards crowdfunding, donors receive something in return for their donations. That can range from a discounted product or service to a branded perk like a t-shirt or coffee mug.

4.    Equity-based crowdfunding: With equity crowdfunding, startups or small businesses give away equity or shares of their company in exchange for investment funding from backers. Usually, the more the backers give, the more shares they receive.

What Are the Benefits to Using Crowdfunding?

A few of the advantages of using crowdfunding for a startup business include:

•   Access to nontraditional funding: Entrepreneurs and small business owners may be able to get funds outside the standard sources and avoid the sometimes rigid requirements that accompany them.

•   Sites are often user-friendly: Especially with some of the more popular crowdfunding platforms, it can be easy to tell your startup’s story, feature compelling media and messaging, offer incentives and rewards, and have a one-stop-shop for potential backers to find you.

•   A built-in brain trust: Customers (and backers) are only ever a click or two away. This gives you the chance to call on them for feedback and ideas and field their questions, concerns, and complaints. This continuous communication loop creates a built-in brain trust.

•   Added marketing and media exposure: The more popular the crowdfunding platform, the more eyes on your campaign, and the higher the potential for press coverage and building brand awareness. This can help create buzz about your brand and build your customer base.

What Are Sites for Crowdfunding?

There are many different crowdfunding sites that help you raise funds for your venture. Here’s a look at a few popular crowdfunding sites for small businesses, including pros and cons for each.

Kickstarter

Kickstarter is one of the most popular and best-known crowdfunding sites. Since launching in 2009, it has funded over 200,000 projects and helped people raise over $7 billion. It use an all-or-nothing funding model, which means you have to meet the goal you set within the allotted time or everyone gets their money back.

Kickstarter Pros

•   Massive marketplace with many users

•   High visibility, exposure, and familiarity as a platform

•   Transparent, all-or-nothing funding

Kickstarter Cons

•   A massive marketplace means massive competition

•   You can’t keep your funds if you don’t reach your crowdfunding goal

•   Focused on consumer-facing products

Indiegogo

Indiegogo has helped bring more than 800,000 innovative ideas to life since 2008. Indiegogo lets people solicit funds for an idea, charity, or startup company, and backers can evaluate campaigns and support entrepreneurs and their innovations from the earliest stages of product development.

Indiegogo Pros

•   Campaign creators have options to continue to raise money after a successful fundraiser

•   Two types of funding options: all-or-nothing or keep-what-you-raise

•   Charges competitive fees

Indiegogo Cons

•   May not be the best choice if you do not have consumer products

•   Large site with many competing projects

•   If using flexible funding, you must ship rewards even if you don’t reach your goal

WeFunder

WeFunder is an equity crowdfunding site that, since 2012, has raised hundreds of millions for thousands of founders. Startups can raise anywhere from $50,000 to $5 million through the platform. However, companies often bring around half of their own investors to the campaign, so it helps to already have some traction before turning to the site.

WeFunder Pros

•   Fees are competitive

•   Connects you with a large network of investors

•   Can start raising money in as little as 15 minutes

WeFunder Cons

•   Not a good fit for early-stage startups with limited experience

•   Often need to bring 50% of funds from your own network

•   Equity crowdfunding comes with complex rules and regulations

Fundable

Fundable is a software as a service (SaaS) crowdfunding platform dedicated to getting funding through either rewards or equity. Businesses using its platform have raised more than $570 million since 2012.

Fundable’s main claim to fame is offering hands-on support to startups and small businesses as they navigate the fundraising process.

Fundable Pros

•   Offers a hands-on approach from staff during every step of the process

•   Give you the option of reward-based or equity-based crowdfunding

•   Minimal fees for successful equity campaigns

Fundable Cons

•   Entrepreneurs with rewards campaigns don’t receive any funding if they don’t meet their goals

•   Flat monthly fees can get costly for unsuccessful campaigners

•   Charges a subscription fee that’s required to fundraise

Patreon

If you’re searching for a crowdfunding platform that lets you raise money for your artistic endeavors, Patreon might be a solid fit for you.

Patreon helps artists give their fans exclusive access to their content and insight into their creative process. In doing so, artists can create a recurring revenue stream, feature work their audience loves, and build a connection with their fanbase.

Patreon Pros

•   Helps creators crowdfund continuously

•   Offers rewards-based crowdfunding opportunities and multiple subscription plans

•   Keeps it light on the restrictions in comparison to other crowdfunders

Patreon Cons

•   Some creatures have complained about issues in collecting funds

•   There aren’t any built-in promotional tools

•   Has received criticism for its customer service

Recommended: Installment Loan vs. Revolving Credit

Alternatives to Crowdfunding for Your Business

For some startups, aspirers, and creators, crowdfunding may seem like an ideal way to raise seed funds. However, it’s not for everyone. Here’s a look at some alternatives funding options for your business.

•   Small Business Grants: Grants for small businesses can be a great way to gather funds for a product or project. Grants are lump sums that are awarded to a business or business owner by government, nonprofit, and corporate entities. Unlike loans, grants don’t have to be repaid, although they may have stipulations about how the money can be spent. If you visit Grants.gov, you can find a list of small business grants and search them based on a variety of criteria.

•   Small Business Loans: There are a variety of small business loan options for entrepreneurs and startups that need to borrow funds to grow their company. These include bank loans, Small Business Administration (SBA) loans, business line of credit, online loans, cash advances, and equipment financing.

The Takeaway

Crowdfunding sites are websites that allow investors to select from hundreds of startups and business ventures and invest just a small amount on their growth. There are four main types of crowdfunding: donation-based, debt-based, reward-based, and equity-based.

For a business or entrepreneur, crowdfunding offers a nontraditional funding route that can also help you test-market a business idea and build brand recognition. However, it can take a fair amount of time and effort to run a successful crowdfunding campaign. And, in some cases, you won’t be able to keep any of the funds if you don’t meet your fundraising goal.

In addition to crowdfunding, you can also explore small business grants and small business loans for your business.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

Photo credit: iStock/Prostock-Studio

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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