Once you’ve completed your business plan and determined your business structure, the next step is to figure out how much money you need to start and operate your business. Then you need to look into what kind(s) of financing your business may qualify for. Financing can come from borrowing or raising money.

There are a few different options for borrowing money as a startup. They can include traditional, and nontraditional lenders. Traditional lenders include banks, which can have strict rules and requirements tied to the loans. Nontraditional lenders could include nonprofit and community lenders.

We encourage you to work with a SBDC business mentor, accountant, or financial professional to make the best decision about financing your business.

Financing options are available from the following lenders:

Traditional Banks

SBA Loans

Banks, savings and loans, credit unions, and other specialized lenders participate with the US Small Business Administration (SBA) on a deferred basis to provide SBA guaranteed small business loans to businesses meeting certain criteria.

To apply for a 7(a) general small business loan, businesses must meet the following eligibility:

  • Operate for-profit
  • Be small, as defined by SBA
  • Be engaged in, or propose to do business in, the United States or its possessions
  • Have reasonable invested equity
  • Use alternative financial resources, including personal assets, before seeking financial assistance
  • Be able to demonstrate a need for the loan proceeds
  • Use the funds for a sound business purpose
  • Not be delinquent on any existing debt obligations to the U.S. government

7(a) loans have a maximum loan amount of $5 million. SBA does not set a minimum loan amount. For more information about 7(a) loans, click here.


The SBA Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000 and can be used for: working capital, inventory or supplies, furniture or fixtures, and machinery or equipment. For more information, click here.

Grow Santa Cruz Loan Program

For growth financing, the City of Santa Cruz formed a partnership with the National Development Council, one of the oldest not-for-profit corporations specializing in community and economic development, to offer the Grow Santa Cruz Loan Program.

Here are the larger qualifying conditions:

  • The business must be a for-profit entity;
  • It must be with within Santa Cruz city limits;
  • It must be financially healthy and in need of expansion capital;
  • Acceptable uses for these funds can include: machinery and equipment, acquisition of land and buildings, construction, renovations and tenant improvements;
  • This is not a venture program and cannot provide funds for research and development or to satisfy equity or near-equity needs.

Average loans will range from $50,000 to $300,000 as permitted by the US Small Business Administration at or below market rates, for terms up to 25 years depending on the proposed use of funds.

For more information contact us using the form at the bottom of the page or by emailing [email protected].

Alternative Financing

If you don’t qualify for many of the traditional loan options you can consider some alternatives.

A Business Line of Credit

A line of credit can be helpful if you need short-term working capital. Unlike a business loan, you can apply for a line of credit before you need it and use it only when you need it. Repayments are only made as, and when, money is borrowed. Lines of credit can be used to fund inventory, purchase new equipment, overcome cash flow issues, etc. Of course, there are drawbacks - such as accumulated debt.

Credit Unions

An attractive option for small business owners, these member-owned, not-for-profit financial cooperatives offer a range of savings, credit and financial services that emphasize affordability. They also offer higher savings rates and lower loan rates than traditional banks. Credit unions offer their own term loans (many with flexible repayment schedules and the opportunity to pay down loans ahead of time without penalties), lines of credit, as well as SBA loan programs.


Crowdfunding is the process of raising money to fund what is typically a project or business venture through many donors using an online platform. Some popular platforms include Kickstarter and Indiegogo. We’ve had many Santa Cruz businesses find success in launching their product through crowdfunding. The most important aspect of this method is developing your story and connecting with the community and those who would be interested in investing in your product. A compelling story that reaches people on a personal level can draw in a committed following that’s willing to invest and tell their friends about your product. Before embarking on a crowdfunding campaign, get familiar with the U.S. Securities and Exchange Commission rules and requirements. You’ll find the information here.