Finance
How to Get Funding for a Business
Knowing how to get funding during economic downturns and periods of rapid growth can be a key differentiator for success.
Blaise Radley
Editorial Strategist
Workday
Getting external funding is a standard—and often necessary—part of growing a business. In 2025, 59% of employer firms sought external financing, most often to support their day-to-day operations (56%) or move quickly on expansion initiatives (46%).
Knowing how to get funding as a business owner, then, isn’t only about raising money in tough moments but strategically choosing the right capital at the right time to support where the organization is heading.
Nearly 60% of employer firms sought external funding in 2026, most often to support operations or expansion.
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How to Get Funding for a Business
Due to the large number of reasons that businesses seek out capital, there is no single process for getting funding. Whether you’re seeking out angel investors to raise capital in exchange for equity or a line of credit to purchase inventory impacts the approach.
What is consistent is the work required to prepare for each path. Successfully identifying funding opportunities requires you to align your business’s cash reality with the expectations of the funding source.
The seven steps below outline the strategy how businesses typically get funding:
Step 1: Define the Use of Funds and Timing
Before pursuing any funding, your business must be clear about what the capital is meant to support and when it’s needed. This usually means answering:
What specific activities will the funding pay for?
How long does the capital need to last?
What will change if the funding is not secured?
This step matters regardless of funding type. Lenders, investors, and alternative funders all evaluate requests based on how clearly capital is tied to execution.
Step 2: Prepare Financial Information Based on Funding Type
The type of financial information you’ll need to prepare is dependent on the funding type. Different funding sources focus on different financial signals:
Debt financing: Lenders typically focus on historical financials, cash flow consistency, and coverage of repayment obligations.
Equity financing: Investors focus more on growth trajectory, market potential, and how funding accelerates scale.
Revenue-based or hybrid funding: Funders evaluate revenue stability, customer retention, and how repayments scale with performance.
Bootstrapping or self-funding: Businesses rely on internal cash tracking to manage growth and liquidity without external review.
In all cases, the business needs financials that explain how cash moves through the business and how funding changes that picture.
Step 3: Identify the Right Funding Sources for the Structure
Next, it’s critical you identify the right funding source for your business. Funding comes from specific counterparties, and each funding type flows through different channels.
Debt: Commercial banks, credit unions, private lenders, or equipment financiers
Equity: Angels, venture capital, private equity, or strategic investors
Revenue-based funding: Specialized revenue-based lenders or alternative capital providers
Businesses typically narrow the field by stage, deal size, and industry fit. Time is often lost when companies pursue capital from sources that don’t fund their type of business or structure.
Step 4: Engage in Structure-Specific Conversations
Once a potential funding source is identified, the business has an initial working conversation to confirm fit before deeper diligence begins. What happens in practice depends on the funding type:
Debt: Review cash flow, repayment capacity, and proposed terms (repayment schedule, covenants, collateral).
Equity: Discuss growth plans, ownership and control expectations, and long-term return goals.
Revenue-based or hybrid: Review revenue history, repayment mechanics, and flexibility under different performance scenarios.
The purpose of this step is to determine whether the structure and expectations align. If they don’t, the process usually stops here.
Time is often lost when companies pursue capital from sources that don’t fund their type of business.
Step 5: Respond to Diligence and Finalize Terms
At this stage, the funder is verifying information already shared and determining whether to move forward. Businesses are often asked to provide:
Documents requested, such as financial statements, forecasts, contracts, ownership records, or details on existing obligations
Answers to follow-up questions about operating assumptions, risks, and constraints
Agreement to proposed terms to confirm they are workable in practice and aligned with how the business operates
This step concludes when both parties reach agreement on terms and conditions, clearing the way for capital to be finalized and deployed.
Step 6: Close and Integrate the Capital
Once funding closes and capital is received, the business shifts from fundraising to execution. It must put controls, reporting, and decision rights in place to ensure the capital is used as intended. This requires:
Recording new funding correctly in the general ledger and updating cash balances, debt schedules, or equity records
Setting up required reporting, such as lender reporting, investor updates, covenant tracking, or revenue monitoring
Aligning operating plans to the funded use of capital, including hiring, spending, or investment timelines
Assigning ownership for repayment, reporting, and compliance responsibilities
Monitoring performance against the assumptions used to secure the funding
This step is complete when capital is fully reflected in financial systems, reporting obligations are active, and execution begins according to the agreed business plan.
When Does a Business Need Funding?
Businesses seek funding when operating demands or growth ambitions outpace available cash. This often happens when a company absorbs additional costs to maintain continuity or takes on risk in pursuit of a longer-term payoff before revenue catches up.
In practical terms, funding becomes necessary when execution requires resources the business cannot generate quickly enough on its own. Contrary to common assumption, seeking funding is not a signal of distress or success—it’s a function of timing. Companies raise capital in both strong and constrained positions.
Situations where funding becomes necessary include:
Bridging cash-flow gaps: Growth, seasonality, or long sales cycles can create timing mismatches between revenue and expenses.
Investing ahead of revenue: Expansion, technology upgrades, or strategic hires often require upfront capital before returns materialize.
Managing volatility or disruption: Market shifts, supply-chain disruptions, or unexpected demand changes can strain liquidity.
Extending runway during transition: Businesses refining their model or repositioning for the next phase often need capital to execute.
Each of these moments points to the same question: What is the business trying to accomplish that its current cash position can’t support? When the answer is compelling enough to justify external capital, it’s time to think seriously about how to get funding and which options best fit the situation.
Funding is more than a safety net—it’s a strategic tool.
Final Takeaways for Decision Makers
Funding is more than a safety net. It’s a strategic tool that, when used well, can help companies accelerate growth, innovate more rapidly, and pursue opportunities that would not be possible with internal cash flow alone.
Businesses that handle funding well are clear about what the capital is for and how it will be used. That clarity makes it easier to choose an appropriate funding structure, move through diligence efficiently, and reduce risk by setting fair expectations.
Ultimately, knowing how to get funding for a business is about alignment. When funding reflects the realities of how the business operates—and is treated as part of the operating plan rather than a separate exercise—it supports execution without introducing avoidable strain.
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