Fundraising options that small businesses can use now

This post was originally published on Jun. 2, 2020, and was updated on Dec. 5, 2020.

As the COVID-19 pandemic continues, many small businesses are looking for ways to quickly infuse cash into their operations. And, as many people are starting new businesses during this time, they’re looking for their own financing options. To help you find a source or two of funding, here are a few fundraising options for small businesses you can exercise right now.

Rather than depending on small business loans, there are a few options where you can get smaller investors like family and friends to help you out, as well as a few options for alternate sources of funds.

In this video, we spoke with David Bruce, Senior Director, Global Partner Development at PayPal, Carolyn Rodz, CEO and co-founder of Hello Alice, and Kryistyna Hook, Regional Director for the Better Business Bureau about cash flow strategies that small business owners can use now:

Pre-sell services.

For restaurants, this means selling gift cards. For service businesses, it means selling services in advance, such as landscaping, IT services, HVAC maintenance, and so on.

Create a subscription plan.

Similar to pre-selling services, you can create a subscription plan and sell packages for different levels of services. The packages can include more features, longer times, early releases, and more. Ask people to commit to a length of time and offer discounts for committing to an annual plan.

Use a crowdfunding platform.

There are plenty of crowdfunding options, like GoFundMe, Indiegogo, and Kickstarter. If you’re looking to start a business with a fixed dollar amount (say, $10,000), you can ask people to contribute to your account until you reach it. Be warned: Some of these platforms will only give you the funds if you reach your goal. Others, like Indiegogo, will give you whatever you can raise.

Editor’s Note: GoDaddy has partnered with GoFundMe to support the Small Business Relief Fund during the COVID-19 crisis. Start a GoFundMe to be eligible for a $500 matching grant from

Solicit ongoing monthly contributions.

Some artists and content creators use a crowdfunding platform called Patreon, which allows people to make regular monthly contributions without being asked each month. They enter a credit card number, select a pledge amount, and Patreon will withdraw that amount on a specific day (e.g. the 15th of every month).

The nice thing about these fundraising options is that they are not loans in the strict business sense. You don’t have to pay them back (though you do have to provide the service or goods!), and there’s no interest charged on the amount you receive.

While friends, family, and future customers are good sources for fundraising options for small businesses, they’re not the only ones. There are other sources of alternative financing available to you. These are the more official types of funding, including loans and lines of credit.

Small business loans.

Whether it’s through a bank, the Small Business Administration, or other lending institutions, this is often the first fundraising option people think about. However, it’s the hardest to get, especially for small businesses that may only need a computer and graphics software. It’s often easier for bigger enterprises to borrow $250,000 than it is for a graphic designer to borrow $5,000 this way.


These are smaller loans — between $5,000 and $10,000, usually — and they’re typically not from a bank. Microloan websites get capital from investors who want to see a return. You apply for a loan, different investors kick in their money, and you repay the funds in a set amount of time, plus interest. The investors’ ROI is your interest payment.

Invoice factoring.

This is more for companies that regularly have unpaid invoices that are causing a cash flow problem. You sell your unpaid invoices to a factoring company (called a “factor”) for 85 – 95% of the value of the invoice. The factor then pursues your customer to pay the invoice. When the customer has paid the invoice, the factor will send you the remaining amount, minus a 1 – 5% collection fee.

Invoice financing.

This is different from invoice factoring. Here, you can borrow a line of credit based on the amount of your outstanding invoices. You’re still responsible for collecting the payments from your customers though. This is useful for things like covering payroll when you know an invoice will be paid on time. (It’s not a great solution when you have to collect on invoices that are traditionally late.)

Online loans.

Rather than going to your bank or the SBA for a business loan, you can apply to an online lender for funds. These lenders often have less stringent requirements than the banks do, but their fees and interest rates are going to be a lot higher. This is not necessarily a good option for a business that’s just starting out and is still uncertain of their own success.

These are just a few available fundraising options for small businesses, and there are plenty of people who will tell you that one option is better than all the others, but it’s important to do your own research.

Talk to fellow small business owners and entrepreneurs and ask them for advice, recommendations, and resources. The more people you talk to, the more you can get a better idea of the different fundraising options for you.

Finally, go to for more resources and to learn more strategies for getting through these tough times.