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How Much Is a Small Business Loan?




When it comes down to it, business loan costs depend on a number of factors—the loan amount, the interest rate, the repayment schedule—and of course, the type of loan product and the lender.

This being said, however, a small business loan amount from an online lender can range from as low as $2,500 to as high as $500,000. Interest rates can range as well—from as low as 7% to as high as 80%. Therefore, the amount of financing you qualify for and the amount it ultimately costs truly depends on what kind of business loan you’re applying to and how qualified your business is.

So, how much is a small business loan really? Which ones are most affordable, and which ones should you try to avoid if possible?

In this guide, we’ll explain how much a business loan costs—discuss the factors that go into the overall cost of a loan, as well as break down typical costs product by product.

How much is a small business loan? | Costs summarized

Of all the factors that go into determining the overall cost of a small business loan, one of the biggest factors is the type of business loan you’re talking about.

From traditional term loans to merchant cash advances, there are a variety of ways to finance your business. For an overview, you can refer to the cost chart below to find out exactly how much a small business loan will cost, product by product.


Cost Range (APR)


Repayment Frequency


Five to 25 years


Medium-term loans


One to five years

Bi-monthly or monthly

Business lines of credit


Six months to five years

Weekly, bi-monthly, or monthly

Short-term loans

10% to 110%

Three to 18 months

Daily or weekly

Invoice financing

10% to 65%

As long as it takes your customer to pay the invoice

Invoice financing company collects the fees you owe once your customer pays the invoice

Equipment financing


One to five years


Merchant cash advances (MCAs)

40% to 350%

Automatically deducted through your merchant account until you’ve repaid in full

Daily or weekly

What determines the cost of a business loan?

In order to truly answer the question, “how much is a business loan,” it’s important to understand the different cost factors that contribute to the overall cost of a financial product.

Of course, as we mentioned above, the type of financial product you choose will play a role in cost; however, other factors—namely interest rates and fees—will play a significant role as well.

After all, if you’re looking for a $50,000 loan, the total cost will be much higher if your interest rate is 20% than if it’s 7%.

This being said, these cost factors will vary both based on your business’s qualifications—i.e., the better your qualifications, the lower your interest rate will be—as well as the way the lender operates—i.e., some lenders are more likely to charge higher interest rates or additional fees.

With this in mind, let’s break down the most common factors and how they contribute to the overall cost of business financing.

Interest rates

As we mentioned, interest rate is one of the most influential factors in the overall cost of a business loan.

The interest rate you receive will depend on the type of product, lender, and your business’s qualifications. Again, as we mentioned, the lower the interest rate, the lower the cost of the loan.

This being said, however, it’s important to note that not all business loan interest rates are quoted the same way—with the most notable difference between a simple interest rate and APR.

A simple interest rate is the amount (expressed as a percentage) that a lender will charge on the principal (the loan amount) for your use of the funds. In contrast to APR, a simple interest rate only represents the amount you’ll be charged for borrowing the capital—it does not include any other fees a lender might charge (which will explain in more detail below).

Therefore, because an APR incorporates simple interest as well as additional fees, this percentage is a much more accurate reflection of how much a business loan will actually cost you.


Depending on the lender you’re working with and the type of business loan you’re applying to, you might face a variety of different fees on top of your simple interest rate.

A lender might charge:

  • Documentation fees

  • Origination fees

  • Loan processing fees

  • Late payment fees

  • Account maintenance fees

  • Guarantee fees

  • Closing fees

  • Prepayment penalties

These fees can range from as little as 1% of the loan amount to as high as 5% or more.

Overall, these fees can significantly increase the total cost of your business loan—which, once again, is why it’s important to distinguish a simple business loan interest rate from its APR. The APR will show a clearer picture of how much the business loan will actually cost you.

How much is an SBA loan?

Now that you have a better sense of the factors that contribute to business loan costs, let’s explore the typical costs of different loan products.

Starting with one of the most affordable loan products out there, the rate on an SBA loan typically ranges from 7% to 8% APR.

Why is the APR on these loans so low?

In short, SBA loans are so affordable for two major reasons: First, they’re loans issued from a bank—and bank loans are some of the most affordable financing products available. Second, the SBA’s guarantee on the loan encourages bank lenders to lend to small businesses at lower interest rates (because they have less risk in doing so).

SBA loan rates

When it comes down to it, the cost of an SBA loan is made up of a few different elements.

First, the SBA loan rate you receive is determined by the current prime rate, plus an allowable spread of rates that is designated by the bank lender you’re working with. However, that bank is subject to a maximum rate they’re allowed to charge on top of the prime rate.

For the SBA’s most popular loan product, the 7(a) loan, a lender can charge no more than 2.25% on top of the prime rate for loans with terms of less than seven years. For 7(a) loans with terms longer than seven years, the most a lender can charge on top of the prime rate is 2.75%.

This being said, however, the reason SBA loans generally have a 7% to 8% APR (not just around 6.5%), is because the SBA does charge at least one fee for guaranteeing the loan that’s usually passed onto the borrower.

The actual percentage that you’re charged in an SBA guarantee fee depends on the loan’s maturity and the amount the SBA actually guarantees. If your SBA loan is less than $150,000, you won’t have to pay a guarantee fee.

For an SBA loan that’s more than $150,000, with a maturity of one year or shorter, the guarantee fee will be 0.25% of the portion guaranteed. Loans between $150,000 and $700,000 with terms of more than one year will have a guarantee fee of 3% of the guaranteed portion. Finally, SBA loans of $700,000 or more will have a guarantee fee of 3.5% of the guaranteed portion.

All in all, therefore, when it comes to the APR of SBA loans, you’ll typically see about 7% to 8%. This, of course, can vary based on the SBA loan program, your lender, and your business’s qualifications.

How much is a medium-term loan?

Overall, a medium-term loan from an online lender ranges from 8% to 30% APR.

Luckily, when it comes to the cost of this type of business term loan, things are pretty straightforward.

In almost every case, a medium-term loan will come with a fixed interest rate that gets charged on the principal of the loan amount. Additionally, with most medium-term loans, you’ll pay the lender back with fixed monthly payments.

Your repayment to the medium-term lender will, again, not only include interest repayments but also any fees the lender charges.

Medium-term loans from online lenders are, in structure, most comparable to traditional term loans you get from a bank. The rates on a medium-term loan, however, are a little higher than what you’d find at a bank.

Medium-term loan rates

Although medium-term loans are some of the most affordable financing products on the market, they’re still a little more expensive than what you’d find at a bank or with an SBA loan.

This is largely due to two factors.

First, whereas banks have notoriously tight credit for small business owners (only lending to the most qualified borrowers), online lenders offering medium-term loans will work with less-qualified borrowers.

Therefore, because medium-term lenders will work with slightly less qualified borrowers, they’ll charge a slightly higher interest rate. This slight increase in what they charge in interest rate compensates for the fact that they’re lending to riskier borrowers.

In the absolute worst case you can’t pay back your loan, the lender has already gotten a fair amount of the money they lent back from the higher interest payments.

Additionally, another reason why medium-term loans have slightly higher rates is due to the time it takes for a medium-term lender to fund your loan.

Whereas a bank takes a long time to fund (a few weeks to a few months), online or alternative lenders use technology to fund loans much more quickly—sometimes within a few days. As you might expect, you pay for this speed with higher interest rates on the loan.

How much is a business line of credit?

The wide range of costs for business lines of credit comes from the fact that there are two variations on a general business line of credit: a short-term line of credit and a medium-term line of credit.

Like medium-term loans and short-term loans, medium-term lines of credit typically have repayment periods of 12 to 18 months or longer, whereas short-term lines of credit have repayment periods of less than a year.

Business line of credit rates

This being said, as you might expect, medium-term lines of credit are comparable to medium-term business loans in that they’ll have large capital amounts, a lower interest rate (starting at 8% APR), and a slightly longer time to funding.

Short-term lines of credit, on the other hand, are like short-term loans in that they offer fast, more accessible capital, but they’ll come with higher interest rates (up to 80% APR for short-term lines of credit)

Additionally, it’s worth noting that the rates you see for a business line of credit don’t function exactly the same as a term loan. Whereas you’re charged interest on the total loan amount with a term loan, you’re only charged interest on the funds that you draw from your business line of credit.

Similarly, you might see slightly different fees included in the cost of a line of credit. Some lenders charge a draw fee every time you draw on your credit line, some charge a penalty fee if you don’t draw from your line within a certain period of time, and some charge monthly fees to keep your account active.

How much is a short-term loan?

As we briefly mentioned above, short-term loans are more costly than their medium- or longer-term counterparts. Rates for these loans start at around 10% APR, but they can reach triple digits.

Overall, the reasons that short-term loans can become so expensive are similar to why medium-term loans are more expensive than bank loans.

First, like medium-term lenders, short-term, online lenders are more likely to work with less qualified borrowers and they justify this risk with higher interest rates. Additionally, short-term loans are typically one of the fastest forms of financing—and as we mentioned, the faster a product is to fund, the more expensive it’s likely to be.

Short-term loan rates

Ultimately, short-term loan rates will be quoted much in the same way as any other term loan.

On the other hand, these loans must be paid back over a much shorter time frame (anywhere from three to 18 months) with either daily or weekly payments. This shorter term means that each payment will be sizable in comparison to those that you’ll find with an SBA or long-term loan.

Moreover, it’s worth mentioning that, although many short-term loans will be quoted with simple interest rates or APR, some lenders quote the cost of the loan as a factor rate (like 1.2).

This being said, a factor rate is simply a multiplier that tells you the total amount you’ll pay the lender back. As an example, say you were quoted a factor rate of 1.35 on a $10,000 short-term loan over a 12-month term. The total amount you’d repay, therefore, is $13,500 ($10,000 x 1.35).

In this case, although it looks like your interest rate is 35%, factor rates do not convert to interest rates in this way.

With interest, the cost is 35% of the total loan amount—but with factor rates, all of the interest is charged to the principal when the loan or advance is originated—unlike a loan quoted with APR, where interest accrues on the principal amount as it gets smaller and smaller as more payments are made.

How much is invoice financing?

At the end of the day, the cost of invoice financing comes out to about a 10% to 65% APR. However, there are nuances to the cost structure of this financing product.

Here’s how it works:

With invoice financing, an invoice financing or factoring company advances you a percentage of the value of your outstanding invoice—usually around 85%.

As an example, therefore, let’s say you have a $100,000 outstanding invoice.

The financing company will advance you $85,000, holding the remaining $15,000 in reserve. Some invoice financing companies will charge a processing fee (usually around 3%) on the reserve amount right away.

Now, you wait for your customer to pay their invoice (while you use the advanced cash for your business). Every week that it takes your customer to pay their invoice, the invoice financing company will charge what’s usually called a “factor fee” on the reserve they’re holding—in this case, the $15,000 reserve.

So, say your customer pays the invoice in two weeks, and the invoice factoring company was charging a 1% factor fee each week. In this example, they will then take 2% of the total invoice amount, or $2,000, in factor fees. When you get the remaining reserve back, you’ll end up with $10,000 after the company takes the 2% in factor fees and 3% in a processing fee.

In this way, the cost of invoice financing is simply a convenience cost you need to pay in exchange for the advance of capital you’re receiving.

How much is equipment financing?

With equipment financing, like invoice financing, you’re receiving capital for a specific purpose—to purchase equipment.

In this case, because an equipment financing company is loaning you money to purchase the equipment, you’ll be paying more to finance that equipment than you would be if you were to pay for it out of pocket. The tradeoff makes sense, however, if you can’t afford that kind of large expense or don’t want to deplete your cash storage with such a large purchase.

This being said, the APR range on equipment financing varies from 8% to 30%, with your actual rate depending on the equipment you’re buying and your qualifications.

Other than that, the cost structure of equipment financing is pretty straightforward—mirroring that of a traditional term loan.

As an example, say an equipment financing company offers you an equipment loan of $10,000 at a rate of 12% over a three-year term.

With a 12% APR, your $10,000 piece of equipment will end up costing you $11,957.15 all together (with monthly payments of $332.14).

How much is a merchant cash advance?

Finally, of all the business loan products we’ve discussed, the merchant cash advance (MCA) will be the most expensive.

APRs for a merchant cash advance can reach as high as triple digits—and therefore, you should consider any and all options you have before opting for an MCA.

Merchant cash advances are often so expensive because these companies work with less qualified borrowers and charge a factor rate—which can be misleading when it comes to the total cost.

Let’s consider an example:

Say you’re advanced $40,000 with a factor rate of 1.20.

Using your factor rate formula, take $40,000 multiplied by 1.20—$4,800. This amount is what you’ll pay the merchant cash advance company back by allowing them to take a fixed percentage of your daily credit card sales.

This is where factor rates can be confusing—at first glance, you might think that your interest rate is 20%—but you have to convert the factor rate into APR.

Say that, in this example, you’re allowing the merchant cash advance company to take 20% of your future credit card sales, and you expect to bring in $45,000 a month in credit card transactions.

This being said, you’d repay your merchant cash advance in 160 days with daily payments of $300—meaning, at the end of the day, your merchant cash advance held a steep 85.43% APR.

Therefore, once again, merchant cash advances should be a last resort when it comes to business financing. Along these lines, before you take on an MCA, you’ll want to use a merchant cash advance calculator to determine how much this loan product will actually cost and whether or not your business can afford it.

The bottom line

As you can see, the answer to “how much is a small business loan” varies based on the type of financing product—among other factors.

Although we’ve listed the APR ranges you’re most likely to see, the APR you’re quoted at will depend on the lender you’re working with, as well as your business’s qualifications.

Ultimately, when you’re looking for debt financing, you want to ensure that you understand any and all costs that your business will face through the borrowing process. In this way, the right loan product for your business is not only the one that will best meet your needs but also one that you can afford.

Therefore, you’ll always want to compare different options to make sure you’re getting the lowest rate possible on your financing.

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Finance & Accounting

Small Business Funding: Exploring Options and Strategies



Small businesses recognize the key role of funding in propelling their growth, as every dollar invested paves the way for opportunities and prosperity. That said, securing funding is often a critical step for small businesses to start, expand, or sustain their operations.

While funding options may vary depending on the business’s stage and needs, it’s essential for small business owners to explore the available options and develop effective funding strategies. Read on to explore various funding options and strategies that can help small businesses obtain the necessary capital for success.

1. Self-Funding and Bootstrapping

Self-funding, also known as bootstrapping, involves using personal savings or assets to finance your small business. This option allows you to retain full control over your business and avoid debt. However, it may limit the initial capital available and may require personal financial sacrifices to invest in your business’s growth.

2. Friends and Family

Seeking financial support from friends and family members is a common option for small business owners. It involves borrowing money or receiving investments from people you have personal relationships with. While this option may offer flexibility and lenient terms, it’s essential to approach such arrangements professionally and have clear agreements in place to avoid potential conflicts.

3. Small Business Loans

Small business loans are a traditional funding option offered by banks, credit unions, and other financial institutions. These loans provide capital with a defined repayment schedule and interest rate. Small business owners need to present a solid business plan, financial records, and collateral to qualify for a loan.

It’s crucial to carefully review terms and interest rates to ensure the loan is manageable for your business.

4. Crowdfunding

Crowdfunding platforms allow businesses to raise funds from a large number of individuals who contribute varying amounts. This option leverages the power of the crowd and can provide not only financial support but also help validate your business idea and build a community around your brand.

Effective crowdfunding campaigns require compelling pitches, engaging rewards, and strong marketing efforts to attract backers.

5. Grants and Government Programs

Various grants and government programs are available to support small businesses in specific industries or locations. These funding options often have specific eligibility criteria and application processes. Research local, regional, and national grant programs relevant to your business’s industry or specific needs.

Applying for grants may require significant effort, but it can provide non-repayable funds to support your business’s growth.

Meeting with Venture Capitalist investors

6. Angel Investors and Venture Capital

Angel investors and venture capital firms are sources of funding for small businesses with high growth potential. Angel investors are individuals who provide capital in exchange for equity or ownership in the company. Venture capital firms, on the other hand, invest larger amounts of capital in exchange for equity stakes.

These funding options often come with expertise and mentorship from experienced investors, but they also involve giving up partial ownership and decision-making control.

7. Business Incubators and Accelerators

Business incubators and accelerators are programs designed to support early-stage startups by providing funding, mentorship, and resources. These programs often require entrepreneurs to go through a competitive application process. In addition to financial support, incubators and accelerators offer guidance, networking opportunities, and access to a supportive community of fellow entrepreneurs.

8. Alternative Financing Options

In addition to traditional funding methods, small businesses can explore alternative financing options. These may include invoice financing, where you sell your outstanding invoices to a third party for immediate cash, or merchant cash advances, where you receive a lump sum in exchange for a portion of future sales.

While these options can provide quick access to capital, it’s important to carefully assess the terms and potential impact on your cash flow.

9. Business Credit Cards

Business credit cards can be a convenient and flexible funding option for small businesses. They allow you to access a revolving line of credit that you can use for various expenses.

It’s important to choose a credit card with favorable terms, such as low interest rates and rewards programs that align with your business needs. However, it’s crucial to use business credit cards responsibly and avoid accumulating excessive debt.

Small business loans


Exploring funding options and developing effective strategies is essential for small businesses to secure the necessary capital for success. Whether through self-funding, seeking support from friends and family, obtaining small business loans, utilizing crowdfunding, accessing grants and government programs, seeking angel investors or venture capital, participating in business incubators and accelerators, or exploring alternative financing options and business credit cards, small business owners have a range of options to consider.

You need to carefully evaluate each option, consider the associated terms and risks, and choose the funding approach that best supports your business’s growth and long-term financial stability.

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Finance & Accounting

Comparing Business Loans



Starting a business can be costly. Whether it is for a start-up business or a new and exciting idea in your business, a loan is an example of a funding option. The choice of funding can determine the structure of the business, and therefore, it is essential to make the right choice.

photo credit: Towfiqu Barbhuiya / Unsplash

Why Use a Comparison Site?

There are different types of funding. Self-funding and investors are two types of funding, the last being loans. If a loan is the right choice, it is important to compare different options to find one that best fits your business.

You can compare loans on with factors like interest rates and repayment options is the way to secure the most stable and suitable loan. Otherwise, you may end up with a loan that can be difficult to repay. The comparison site gathers all the necessary information such as fees, loan terms and even special features like whether or not the loan comes with a discount.

Eligibility for a Business Loan

If you are starting up a business, the bank may not be willing to finance your loan. As such, the eligibility for a loan often depends on the financial situation of your business. This can include your credit history and income. But certain requirements depend on who is providing the loan.

For example, the U.S. government requires a business to be registered, and that the business is located within the country. Generally, taking a loan out depends on the state of your finances. Therefore, it is a good idea to understand your business’s financial situation before applying for a loan.

Loan for Your Business

When considering a loan, one of the first things to discover is what you need the funding for. Is it to start up a business? Is it to hire more people? Or do you need more capital for a big project? The amount of money you can secure in a loan will depend on your loan proposal.

When applying for a loan, you need to state things like personal finances and how long the business has been running. After that, the financial institution will get in contact, and you will be able to see their loan offer.

Unsecured business loan

Types of Loans

When loaning money for a business, there are two types of loans: Secured and unsecured business loans. A secured loan is a loan where you as the borrower give an asset to secure the loan. This can be anything from your car to your home. The lender then has a claim over the asset, the personal possession, until the loan is repaid.

An unsecured business loan does not require an asset and includes loans like quick loans, personal loans and credit cards. However, the interest rates are also higher with unsecured loans.

Regardless of which type of loan you plan on receiving, it is paramount that you research all your options and have a good understanding of your business’s financial situation before applying for funding.

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Finance & Accounting

How much does it cost to start a business in 2023



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Make your dreams a reality

Starting a business in 2023 needn’t be overwhelming. I get it, there’s a lot to think about and as a new entrepreneur, there’s one thing on your mind: money. Can you afford it, will the business sustain you, how will you juggle your side hustle alongside your life commitments – maybe even another full-time job – exactly how much does it cost to start a business in 2023?

No doubt, there’s a lot to think about, but the more you think the more reasons you’ll find not to follow your dreams and that’s the last thing I want for you.

So, instead of overthinking, read through this comprehensive guide including a breakdown of startup costs and tips to manage costs at every step.

Fixed costs to start a business in 2023

The fixed costs of your startup will depend on the type of business. As a freelancer you can start up a business for $0, assuming you already own a PC and have access to Wi-Fi.

Businesses that need more involvement from operations, products or digital assets like websites may need to spend more.

The cost of your business will be unique, but you can use the guides below to determine how much it costs to start your dream business in 2023.

Domain, website or online store

The majority of startups need a website either to trade and receive enquiries online or for a presence in Google search and Google maps for local search.

That said, if you’re starting a service-based business you may be able to drum up business without a website by using social media platforms like LinkedIn. This is what I did for two years, keeping my start-up cost at $0.

To save the cost of a website, ecommerce stores can create shops on Etsy and pay minimal fees to upload products. Then, it’s just a commission on sales. Alternatively, you can start affiliate marketing on TikTok which costs nothing to set up.

While free alternatives are great, at some point your business will likely grow to a point where you want a more robust online presence. And ecommerce merchants should be prepared to source a point-of-sale (POS) system or technology allowing them to accept online payments.

For entrepreneurs who need a website, start by sourcing your domain and hosting.

In general, non-premium domains cost between $1 to $20, depending on the deal you are getting and the number of years you decide to register the domain for. To explore prices buy a domain and search for your desired website URL.

Tips for managing the cost of domains: you can cut costs by exploring cheaper domain suffixes. Generally, but not always, .com or will be more expensive than .co, .io, .site, .shop. There are a lot of domain options so spend some time exploring suffixes and pricing.

Your website host is required to get your site on the internet and in front of customers. You’ll need to web hosting.

Tips for managing the cost of hosting: pay annually or for many years in advance to save money.

Website design and development

For those who need to create a website you can use drag-and-drop editors. This is perfect if you really want to cut costs. You can build brochure websites or use the online store builder if you’re starting with ecommerce.

If you’re not willing to create the website yourself, then don’t fret because there are affordable website design services to guarantee a website you (and your customers) will love. I’ve known entrepreneurs who started with websites that are quite affordable.

Tips for managing the cost of website design and build: if the thought of designing and developing a website is overwhelming, but you want to save costs, commit a couple of hours to creating a website with GoDaddy. I promise it’s easy and you might surprise yourself.

While you’re creating a website, consider creating a logo to display on your web pages and other brand collateral. Services like GoDaddy Logo Maker are free and let you quickly snag this key piece of branding.

Legal costs vary hugely between types of business and the required legal cover. If you’ve figured out how to create an LLC and you’re ready for the costs associated you can expect to pay anything from $485 to more than $1,000. Of course, this depends on what you can do yourself. More savvy start-ups may be able to tackle some of the legal requirements, thus saving money.

Tips for managing legal costs: consider the essentials. As a new business owner, it can be tempting to cover your business from every angle, but this may not be required at the very beginning. Consider what’s a must-have to start up, then take note of what you can purchase later and when it’s needed.


Marketing is one of the most flexible costs when starting a business. The options are endless.

At the cheapest, GoDaddy can support your business from $85/month, but a more multi-channelled approach will cost $500/month*.

The good thing about marketing is that you can do a lot alone. If you’re happy to manage social media platforms to drum up business, you can do well without spending a penny. It is time-consuming so that time investment must be considered.

If you’re thinking about marketing your business with ads then you need to consider the cost of ads versus the benefit. Generally, it’s not useful to start with a budget that’s too small simply because you won’t get the data you need to decipher a good ads campaign from a bad one. Don’t start an ads campaign until you’re ready to commit.

Tips for managing marketing costs: choose your marketing channels carefully, and do your research to find out which one is likely to have the biggest impact. It’s better to cover fewer channels well than many channels poorly. After all, you can always scale once you’ve nailed one platform.

Variable costs to start a business in 2023

Some prices are incredibly variable depending on location and the needs of the business. These items are listed below.

Physical location

The beauty of starting a business in 2023 is that many businesses won’t need a physical location, but if you’re opening a brick-and-mortar store or plan to work in an office you’ll need to think about rent or mortgages.

Products or inventory

If you need to buy and hold stock you’ll need to outlay an initial investment upfront. The cost will vary on the units required. You can manage these costs by thinking carefully about what you’re likely to sell. Another consideration is what you can sell if you buy stock in bulk.

Tips for managing product and inventory costs: ask suppliers about their minimum order quantity (MOQ) and how costs vary on quantity. Also, consider drop shipping so you don’t have to outlay any costs at all.


Staff costs depend on seniority and location. You’ll need to consider the minimum wage of your state, but the federal minimum wage is $7.25.

Tips for managing staffing costs: businesses trading online can outsource work to talented new freelancers or over-pay freelancers in different parts of the world. You can also take on more work yourself or turn to software and AI to support your business.


Beyond the initial registration, startups need to consider tax. The rules surrounding tax vary so you must check the rules within the country in which your business is registered.

Paying your taxes usually means putting a percentage of your income aside to cover the costs, monitoring and recording your expenses to account correctly for tax write-offs or hiring an accountant to manage taxes for you.

Tips for managing tax costs:  the more self-efficient you are, the less you need to pay an accountant. Many small businesses can manage the early tax returns alone, but a growing business will likely need an accountant eventually. Manage the costs by putting money aside regularly.

On-going expenses

As a small business you’re likely to have ongoing expenses. You may not start with them but over time you’ll likely invest in subscriptions or software. Or, you might have shipping to consider for e-commerce. Costs will vary based on your requirements.

Tips for managing ongoing expenses: on-going expenses can creep up on business owners so be mindful of monthly subscriptions and the well-intentioned software you purchased. If you’re not using it, you’re throwing away money.

Unexpected costs

No matter what, any business is likely to be hit with an unexpected cost, eventually. Prepare for the unexpected by holding a budget to get you out of an emergency situation. Unexpected costs could include your sickness, the need to hire a consultant to solve a problem fast or if you’re in a brick-and-mortar store something could go wrong within the building.

How to fund your startup or small business

Getting funding for your new business is likely on your mind. Here are some common ways to earn funding for your start up.

Personal investment

Funding your business on your own can be a safe option. It removes the stress of meeting investor expectations and it can feel really good to know you build your new business with your own means.

Personal investment may require you to save for a few years before you get started, but freedom from other stakeholders can be highly desirable in the early stages.

Borrowing money through contacts

You can opt to borrow money from your personal contacts, friends and family, for example. If you choose to go down this route it’s really important to treat it as you would as a formal investment: draw up contracts, separate personal and businesses conversations. Be very clear on what the contract is.


Securing loans from banks is an option for funding. Generally, banks provide calculators on their websites so you can gage what you might be able to borrow. Be aware that it isn’t easy to get accepted for a bank loan, 80 – 90% of startups fail so banks are naturally careful who they lend money to.

Create a budget for your first year

Let’s take a look at various cost summaries for businesses with varying needs.

Freelance business

Your freelance service-based business cost summary is one of the cheapest businesses to start, it might look a bit like this:

Expense Cost Notes
Laptop $0 freelancers can start with any laptop that they have access to.
Internet $0 work from home and freelancers don’t need to worry about additional costs for wi-fi.
Social media $0 Organic posts don’t cost anything and can generate leads and clients.
Total: $0

Service-based business

For those starting a service-based business and desire a more professional appeal can kick off a new business venture with a functioning site.

Here’s what the cost summary can look like:

Expense Cost Notes
Domain $1.67* Use suffixes like .site to reach that $1.67 cost
Create a website $0 Get creative and build your own site with GoDaddy.
Website design services $350 and up Optionally: chose website design services.
Web hosting From $215.64/3 years* Host your website for 3 years to pay less per annum.

Marketing costs for the first year

If you choose to work with a service provider like GoDaddy your digital marketing services can be covered for as low as $85.00/month.

SEO and website updates From $85.00/month
SEO, website updates and social media From $185.00/month (+$50 ad spend)
SEO, website updates and social media, content, emails reputation management, brand guides and a professional photo shoot From $500.00/month (+$50 ad spend)
Minimal total: $85.00/month*

Businesses you can start with a small budget

The digital world has opened a world of opportunity when it comes to starting a business for free or with a small budget.

Assuming you’ve got a PC, wi-fi and a desire to work or use social media to generate leads, you can start any of the following small business ideas, for free:

  • Freelancing in digital services like writing, SEO, PPC, social media management or email marketing.
  • Freelancing on platforms like Upwork or Fiverr.
  • Affiliate marketing through social media platforms like TikTok. You will need to gain 1,000 followers before you can start this one.
  • Consulting in a skill you already have (or can learn for free online).

Local services you can start with little to no start-up costs:

  • Dog walking
  • Babysitting
  • Homesitting
  • Handyman
  • Tutoring

Some businesses require a small budget to start, for example:

  • Selling digital downloads on Etsy. You’ll pay a small fee to upload products, but then nothing until you make your first sale where you pay a percentage to Etsy.
  • Dropshipping
  • Selling on eBay.
  • Print (assuming you’re doing the printing)

Closing thoughts on starting a business in 2023

Today, there is a lot of technology out there that can boost the success of your business. While there might be expenses associated with it, don’t forget the financial rewards that come with a successful venture. Keep that momentum going and make 2023 the year you founded a business to be proud of.

*Pricing data valid on March 2023. All prices listed are subject to change.

Get Hosting for $1.00*/mo with GoDaddy!

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