Start with what the money has to do
Define the purpose, the amount and the expected return. The best funding is the one whose cost is clearly smaller than the profit it creates.
Write one sentence: "We need $X to do Y, which should add $Z in profit by month N." If you cannot fill in the blanks, you are not ready to raise.
This also tells you the type of money to seek. A one-time equipment purchase fits a term or equipment product. A repeating cash gap fits a line of credit. A business that could grow tenfold may suit equity. Use our loan ROI guide and how to calculate ROI to put numbers on it.
Debt: borrow and repay
Debt gives you cash now in exchange for scheduled repayment with interest or fees. You keep ownership, but you must pay whether sales are strong or not.
Common forms include term loans, lines of credit, equipment financing and SBA loans. Costs and speed differ widely: SBA loans are usually lowest cost and slowest, while faster products generally cost more. Read the guide to business debt and short-term vs. long-term loans.
Advantages: you keep control and the cost is known. Risks: fixed payments can strain you in a slow month, and many loans require a personal guarantee. Always convert any offer to a total cost and a monthly-equivalent payment before comparing.
Revenue-based funding: repay as you earn
Revenue-based financing repays from a share of sales, so payments rise and fall with revenue. It suits businesses with steady but uneven sales.
Instead of a fixed monthly amount, repayment follows your revenue. In a strong month you pay more and in a weak month you pay less. The total cost is set up front, and the payback period shifts with sales.
It is faster to arrange than a bank loan, but total cost is usually higher than bank debt, so the money should earn well above that cost. See revenue-based financing and factor rates for how pricing works.
Equity: sell part of the company
Equity brings cash without monthly payments, but investors own a share forever. It makes sense mainly for businesses built to grow very large.
Equity sources include friends and family, angel investors, venture capital and private equity. The cost is not interest. It is a permanent share of profits and often a say in decisions. Read how to find investors and capital, equity and debt.
Equity is hard to price. Giving up 20 percent of a company worth millions later can cost far more than a loan. For a stable local business, it is rarely the cheapest route.
Compare options on the same scale
Compare total cost, payback time, payment size, speed, collateral and control. A table of these basics prevents surprises.
| Route | Ownership | Repayment | Typical speed |
|---|---|---|---|
| SBA loan | Kept | Fixed payments | Weeks to months |
| Term loan | Kept | Fixed payments | 1 to 5 days |
| Line of credit | Kept | Pay on what you draw | 24 to 72 hours |
| Revenue-based financing | Kept | Varies with sales | Fast, same day possible |
| Equity | Shared | None | Months |
See total cost of a funding offer and the offer comparison worksheet before you sign anything.
Where ROI Funder fits
ROI Funder places debt and revenue-based products from $5,000 to $5,000,000 for businesses with 6+ months in operation, $20,000+ monthly revenue and 500+ FICO.
ROI Funder does not place equity investments. It works with a network of funders and matches each file to those that fit it. Products include working capital, term loans, a line of credit, equipment financing and SBA loans.
A complete file, meaning the application plus 3 months of business bank statements, can be funded the same business day when approved. Applying takes a few minutes, uses a soft credit pull and carries no obligation to accept an offer. Compare the payback before you say yes.
Frequently asked questions
What is the cheapest way to raise capital?
Usually your own profits, then low-rate debt such as SBA loans. Cost depends on speed, your profile and what the money earns.
Can I raise capital with bad credit?
Yes, in some cases. Funders may weigh revenue and bank activity more heavily, though cost is typically higher with weaker credit.
How long does it take to raise capital?
Debt can take days to weeks depending on the product. Equity usually takes months.
Should I use debt or equity?
If the money produces a predictable return and you can service payments, debt keeps ownership. Equity suits high-growth companies that can share upside.