You don’t need a revolutionary idea to start a business. You only need a good idea – and the ability to get it off the ground. For aspiring business owners that means lots of perseverance and hard work. Unfortunately, developing a good idea into a viable business also means paying start-up costs.

Start-up costs are the amount of money you will ultimately spend while creating a new business (or purchasing an already established business). For small business owners, start-up costs often include several of the following:

  • Utilities
  • Insurance
  • Filing fees
  • Equipment
  • Staff payroll
  • Research expenses
  • Inventory and supplies
  • Marketing and advertising
  • Website design and hosting
  • Office, retail or warehouse space

Start-up costs are rarely a minor expense. Even an average food truck costs around $80,000, and funding a new restaurant requires an average of $125,000 worth of new equipment alone. The cost of entry into the construction industry is more accessible, as opening a new roofing company can cost as little as $15,000. That is still a lot of money to most people, but there are fortunately many ways to finance start-up costs.


Credit Card

Several available credit cards are geared toward financing a business, and will reward the cardholder for charging their expenses with cash back or some other incentive. Even if you do not use a credit card to finance your actual start-up costs, having a card solely for future business expenses will greatly help you to keep your personal and business expenses separate.

A business credit card is just like a personal one: Your credit score will determine your chances of receiving both approval and a good interest rate. But before you go the credit card route, check to make certain whether a business loan with more favorable terms is available – one often is. Also exercise caution taking out cash advances, as they typically come with significantly higher interest rates than standard credit card debt.



The average American household has just over $17,000 in savings. That means many people already have the money in place to fund (or at least partially fund) a new business. The main benefit to financing start-up costs with your own cash is avoiding debt. Paying back a loan with interest is never a savory prospect, especially if your new business has negative cash flow during its formative months.

If you decide to finance your business exclusively through bootstrapping, make certain ahead of time that you have extra money to pay unexpected expenses. Also make sure you are comfortable with the risk, as your money is nonrefundable if your new business fails.

If you have trusted friends or family members, you could alternatively ask for their help financing your start-up costs. People within your social circle will most likely charge you lower interest than a financial lender, if they charge interest at all. Just make sure you’ll be able to pay a relative or acquaintance back one day soon, as unpaid debt places enormous strain on a relationship.


Angel Investor

Also known as a private investor, an angel investor agrees to finance start-up costs in consideration of part ownership of the company. You may find the prospect of partnering with such an investor unsavory if you wish to maintain complete control over your business – or you believe you have an idea that will ultimately produce an incredible return on investment. 

On the plus side, an angel investor will not give you a loan that you’ll eventually have to pay back with interest. They will only expect you to fulfill your end of the bargain by building a successful and profitable business, which uncoincidentally was already your goal from the start.


SBA Microloan

The federal government’s Small Business Administration (SBA) microloan program provides loans up to $50,000 to help Americans establish and develop small businesses. Microloans are available through intermediary lenders, which are community-based organizations that are qualified to assess business plans and identify eligible borrowers.

An SBA microloan may be the best option for a smaller business that will pay proportionately smaller start-up costs, and its interest rate is often lower than what private financial institutions are willing to offer. A competitive rate is a great advantage for a business owner who would rather get their footing without the prospect of long-term debt hovering over their head.


Business Loan

Business loans are available for a wider range of needs than the SBA microloan program was established to accommodate. A business loan can cover acquisition, improvement, development or equipment costs for new and existing businesses alike. A business loan that is designed to be paid back over the long term may actually work to your advantage depending on your unique financial needs.

A business line of credit can serve the same purpose as a business loan, although it works on a slightly different principle. Whereas a business loan provides a large sum of money upfront and is repaid according to the lender’s schedule, a line of credit functions more like a conventional credit card: The borrower draws on their credit line to make essential purchases while also making monthly payments. A business line of credit is flexible, and you will only pay interest relative to the amount you have borrowed, yet it may not supply enough money to get a new business completely off the ground.

Would you like to finance your new business start-up costs through commercial lending? We welcome you to contact Wadena State Bank or visit one of our locations in Wadena, Deer Creek or Bluffton in person today. We will help you navigate the financing process so your new business has its greatest chance at success.