Sources of small business funding that don’t dilute your ownership

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When you’re on the hunt for small business funding, you may come across some striking headlines. They go something like this: “Startup raises $360 million in Series B funding round.” These million- and billion-dollar investments, powered by angel investors and venture capitalists, are impressive. But there’s a big caveat for small business owners. This kind of small business funding is dilutive. 

Dilutive funding is when you receive money for your business in exchange for giving away some ownership of your company. It’s a lucrative fundraising source if you’re a rapidly growing startup. But if you’re like 60.4% of small business owners, you simply need cash for working capital. Diluting your ownership too early could cause issues if you hold funding rounds later on. 

There’s no need to start “slicing up the cake.” Most small business funding sources are non-dilutive, so you can keep control of your company while getting funded. We’ve put together an overview of the most popular non-dilutive financing options for small business owners. Compare your choices using this simple guide. 


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A “loan” doesn’t just refer to a long-term borrowing agreement with a bank. Small business loans come in many shapes and sizes. They range from credit cards and traditional business lending to flexible lines of credit and cash advances, each with unique pros and cons. 

Term loans

Terms loans represent classic business lending. It’s the first stop for many entrepreneurs ready to grow their company. Term loans are offered by banks, credit unions, online lenders, and non-bank financial institutions. Broadly, your options are divided into short-term and long-term loans.

Short-term loans are built to offer immediate funding and encourage fast repayment. Generally, they provide fewer funds and higher interest rates than long-term loans. Online lenders, however, have made it easier for entrepreneurs to get approved for short-term loans, especially entrepreneurs with bad credit. Although the payback period is shorter, the quick application turnaround may work in your favor.

Getting approved for long-term loans is more challenging. Traditional banks have strict requirements and a history of turning away new, small businesses. Companies with the most success are typically over two years old, have strong revenue, and a good credit score. If your personal credit history is shaky or you lack collateral, a loan may not be available to you. 

Credit cards

A business credit card offers revolving credit and extends your purchasing power as long as you have it. It’s a powerful tool for both daily spending and ongoing asset purchases. 

You can ask your card provider to reassess your credit limit periodically. And with some cards, your on-time payments are reported to the two major credit bureaus, Experian and Dun & Bradstreet. That means a credit card effectively functions as a short-term loan where your available funds and credit score increase — but your payments don’t. 

The personal guarantee is what separates good business credit cards from the best credit cards. When you sign a personal guarantee, you put your personal assets at risk if your business can’t make its payments. If you use a credit card for funding, look for ones that don’t include this built-in liability. And if you’re getting blocked by banks, consider the Brex corporate card for better business spending. 

Lines of credit 

A business line of credit (LOC) is a short-term business loan with a twist. You’re approved for a certain credit limit and you borrow against it. Like most short-term loans, repayment terms range from a few months to a couple years. There are two main reasons that LOCs are so popular: You only pay interest on the amount you use, and your funds bounce back once they’re repaid. 

For example, imagine a bank extends you a line of credit worth $60,000. You use $25,000 to purchase new machinery and hire a freelancer. The bank will only charge you interest on the $25,000 until you pay it off. When you pay back the borrowed amount, the available funds are automatically replenished. 

You’ll need a solid credit score to get approved for an LOC. At least 36% of small businesses were denied some of the funding they requested because of their poor credit score. So, start improving your score as soon as possible. 

SBA loans

A loan funded by the U.S. Small Business Administration (SBA) is an excellent resource for most small business owners. It’s government-backed, so lenders face less risk of a defaulted loan. In turn, they offer better interest rates to borrowers. 

SBA loans are available through banks, credit unions, nonprofits, and beyond. That means you can choose the lender that gives you the best odds of approval without compromising on the type of loan you receive. 

Coronavirus pandemic relief loans 

The CARES Act made it easier to get approved for some SBA loan programs and expanded others to offset the effects of the COVID-19 pandemic. Here are some of the programs that were created or expanded:

  • Paycheck Protection Program (PPP)
  • 7(a) loan program
  • Microloan program

See if you’re eligible for any of the SBA’s small business relief funds

Merchant cash advance (MCA)

A merchant cash advance (MCA) lets you borrow against your future credit card sales. It has the highest approval rate of all types of small business funding, with an estimated 85% of applications approved. When it comes to MCAs, the most important factor is your monthly credit card sales. 

Most MCA providers require $2,500 to $5,000 in credit sales each month. You’ll likely have to provide bank statements showing your average card transactions and sales history. And like lines of credit, most MCAs need to be repaid within six months to a year. 

That said, this is one of the best options for business owners with bad credit. Once you’re approved, funds are nearly instantaneous. In many cases, your repayments are automatically deducted, so you don’t have to worry about paying late. If there are any factors that make you ineligible for the other loans mentioned here, consider an MCA.


Grants offer free funding to cash-strapped small businesses, so it’s no wonder they’re highly sought after. In most cases, only registered businesses in good standing can apply. From there, each small business grant will come with its own special eligibility rules and requirements. 

Research grants

You can find research grants at the federal, state, and local level. How you're allowed to use your funds depends on the grant provider. They range from small seed grants to test products to multi-year funds for prolonged research and hiring. For the best chance of success, search for opportunities specific to your industry or locality. is a great place to start looking. 

SBIR and STTR programs

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs allow U.S. small business owners to research and develop health-related ideas that have a strong potential to enter the consumer market. Dive into both programs on the National Institutes of Health (NIH) website, and be sure to review our NIH grant application tips before you apply. 

Minority grants

If you’re a minority business owner, you’re more likely to face additional obstacles to getting small business funding. Minority grants seek to bridge that gap. They serve a variety of groups, from female entrepreneurs to military veterans in need of startup capital. Here are 10 minority grants you may be eligible for. 


In 2019, businesses received an average of just 28.5% of the funds they requested. Denials were due to low credit scores, outstanding debt, poor cash flow, and other similar factors. 

Crowdfunding doesn’t take that into account. It’s an increasingly popular way to raise funds you can’t find elsewhere or supplement what you’ve already earned. 

You can use peer-to-peer platforms or choose sites that cater to investors and institutions only. There are several kinds of crowdfunding you can try out, but avoid equity crowdfunding if you don’t want to give up any ownership.

Growing your funds alongside your business

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Once you secure your funds, you need a place to store them. And while there are many ways to finance your business, there’s only one account that lets you spend, save, and grow your money in one secure place. It’s a cash management account (CMA). 

A CMA like Brex Cash gives you total control over your capital while delivering better returns than most high-yield savings accounts. 

With Brex Cash, you can:

  • Handle your daily checking needs with zero transaction fees
  • Earn industry-leading interest on your cash
  • Receive regular payouts like an investment account

Don’t let unnecessary checking fees dilute your new small business funding. 

Brex Cash is offered by Brex Treasury LLC, a registered broker-dealer and member FINRA and SIPC. Brex Cash is a program that allows you to elect to automatically place your cash balances into certain money market mutual funds. Brex Treasury LLC is not a bank, your Brex Cash account is not a bank account, and it may not offer all of the services and protections that banks may offer. The cash you deposit into your Brex Cash account will not be stored at a bank.

You could lose money by investing in a money market mutual fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund and you should not expect that the sponsor will provide financial support to the fund at any time.

Brex Treasury LLC is not an investment adviser, and therefore investors should consider the investment objectives, risks, and charges and expenses carefully before investing. See program disclosures and the applicable fund prospectus for details and other information. Contact us for a copy of the fund prospectus and recent performance data. You should read the prospectus carefully before investing.

Brex Treasury LLC does not charge transaction or account fees. However, money market funds bear expenses and fees. Fees are subject to change. Yield is variable and may fluctuate as market conditions change.

Brex Treasury is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at Securities in your account are protected up to $500,000. For details, please see

This is not an offer, solicitation of an offer, or advice to buy or sell securities, or to open a brokerage account in any jurisdiction where Brex Treasury LLC is not registered.

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