Alternative Funding Options for Small Businesses: 6 Ways to Get Capital When Banks Say No

Webinar Wednesday, Episode 378

Traditional bank financing isn’t accessible to every small business — and that’s okay. There are more paths to capital than most business owners realize. In this episode of Webinar Wednesday, CSUB SBDC Director Kelly Bearden walks through six alternative funding options that can open doors and give your business a clearer path to the capital it needs.

What the data tells us about small business funding

Before diving into solutions, Kelly polled the audience to understand the real barriers business owners face. The results were telling:

Biggest barrier to funding

Credit score and collateral topped the list — the two most common reasons traditional banks say no. If this is your situation, alternative funding may be exactly what you need.

How businesses have funded in the past

Personal savings and credit cards dominated the responses — proof that most small business owners are already using alternative funding, often without calling it that.

Kelly’s Top Picks

6 alternative funding options every small business owner should know

No. 1

Crowdfunding

Platforms like Kickstarter allow you to raise money from the public in exchange for rewards, products, or perks — not equity. A live example featured in the webinar: the Yosemite Film Festival campaign raised 45% of its $15,000 goal within 48 hours of launch. Key success factors include planning pledge tiers, building your email list before launch, creating an authentic video (80% of successful campaigns have one), and using AI tools to research what has worked in similar campaigns. Crowdfunding also doubles as inexpensive market research — validating that customers will actually pay for your product before you invest further.

No. 2

Bootstrapping

Bootstrapping means creating and preserving capital by living frugally, delaying investments that dilute ownership, and reinvesting revenue back into the business. It’s not glamorous, but it keeps you in full control and avoids the cost of outside capital. For many startups and early-stage businesses, bootstrapping is the smartest first step.

No. 3

Accounts receivable financing

If your business sells to other businesses (B2B) or government agencies (B2G), your outstanding invoices are an asset you can borrow against. Accounts receivable financing lets you access cash now rather than waiting 30, 60, or 90 days for payment. It’s particularly effective for high-growth businesses that need working capital to fulfill large orders while building the track record needed to qualify for traditional credit lines.

No. 4

Low-cost credit cards

When used strategically, credit cards can function as a flexible, low-cost line of credit. Cards with APRs in the 10–11% range — often available to business owners with good credit — can provide cheap short-term capital for expenses, inventory, or operations. The key is always knowing your Annual Percentage Rate and paying balances strategically to avoid compounding costs.

No. 5

Strategic partnering and joint ventures

A strategic partner can bring customers, resources, or capital in exchange for a mutually beneficial relationship — without the complexity of a traditional loan. Joint ventures allow two businesses to pool resources for a specific project or market opportunity. Done right, these partnerships can provide the capital infusion your business needs while also opening new revenue channels.

No. 6

CDFIs and community lenders

Community Development Financial Institutions (CDFIs) are mission-driven lenders that serve businesses that don’t qualify for traditional bank financing. In Kern County, Valley Strong Credit Union and Alta One Credit Union offer CDFI-style programs. Additional options include USDA rural programs (for communities under 50,000), state financial development corporations, CDBG over-the-counter funds (federal Community Development Block Grant funds that can finance projects like a $3 million lodging property), and hard money loans for real estate purchases.

Also Worth Knowing

More alternative funding options to consider

Kelly also covered several additional funding approaches worth exploring:

401(k)/IRA retirement fund strategies

Using retirement funds to capitalize a business (ROBS) is a legal, tax-advantaged strategy. Read our full breakdown in a previous blog post.

Equipment leasing

Leasing equipment rather than buying preserves working capital and keeps debt off your balance sheet — while still giving you access to the tools your business needs to operate and grow.

Combine multiple funding sources

Don’t feel limited to one source. Combining multiple funding streams with different rates and terms is a legitimate strategy — just always calculate your weighted average cost of capital so you understand the true cost.

Industry-specific lenders

Many industries have specialized lenders who understand your business model and risk profile better than a general bank. Trucking, agriculture, healthcare, and construction all have niche lenders worth exploring.

Economic corner: Why this matters right now

Kelly opened the episode with a consumer spending and credit bubble warning. With consumer debt at record levels and spending showing signs of stress, traditional lenders are tightening their standards — making alternative funding options more important than ever for small businesses that need capital to grow, stabilize, or weather economic uncertainty.

The takeaway: don’t wait until you need capital to start exploring your options. Build relationships with alternative lenders, CDFIs, and community resources now — before a funding gap becomes a crisis.

Not sure which funding option is right for you?

The CSUB SBDC offers free one-on-one advising to small business owners throughout Kern, Inyo, and Mono Counties. Our Capital Access Center advisors can help you evaluate every funding option — traditional and alternative — and build a strategy tailored to your business and your goals.

Watch the full webinar

This blog post covers the highlights, but the full episode includes a live crowdfunding campaign check-in with SBDC Eastern Sierra Business Consultant Jim Thomsen, a deep dive into the Capital Corridor data on why alternative funding matters, and a live Q&A with attendees.

▶ Watch “Alternative Funding Options for Small Businesses” on demand →

Alternative Funding Crowdfunding Small Business Funding CDFI Capital Access Accounts Receivable Bootstrapping Kern County Inyo County Mono County Webinar Wednesday

Kelly Bearden — CSUB SBDC Director

Kelly Bearden leads the CSU Bakersfield Small Business Development Center, serving small business owners throughout Kern, Inyo, and Mono Counties. The SBDC provides free one-on-one advising and helped local businesses access nearly $9.9 million in capital investment in 2024.