The belief that no funding is available is one of the most common reasons entrepreneurs give for not starting or growing a business, and it is frequently inaccurate, funding does exist, but it is often not in the form or from the source entrepreneurs expect. The more accurate obstacle is usually that a business is not yet in the shape a funder requires, rather than that funding itself is unavailable.
Incubators and funding-focused organisations consistently report that entrepreneurs who believe funding is unavailable have often not yet approached the funders whose criteria they would actually meet, or have approached them without the documentation and business readiness those funders require.
Funding exists in more forms than most entrepreneurs consider
Beyond conventional bank lending, funding sources include development finance institutions, enterprise and supplier development programmes, grant funding, angel investment, revenue-based finance and equipment-specific asset finance, each with genuinely different criteria. An entrepreneur rejected by one type may comfortably meet the requirements of another.
Business readiness matters more than the funding environment
Funders consistently cite incomplete financial records, unclear business models and absent documentation as the reasons applications fail, rather than a shortage of available capital. Getting a business into a fundable state, with proper records and a clear plan, addresses the obstacle more directly than waiting for a better funding environment.
Bootstrapping remains a legitimate and often underrated route
Many businesses start and grow without external funding at all, through careful cash flow management, reinvested revenue and keeping fixed costs low in the early stages. Treating external funding as the only possible path overlooks a route that also leaves the founder with full ownership and control.
Relationships with funders are built before the money is needed
Approaching a funder for the first time during an urgent cash crisis is a considerably weaker position than having built a relationship and track record beforehand, which is why introducing a business to potential funders well before capital is needed materially improves the eventual outcome.
Frequently asked questions
Is it true that there is no funding available for small businesses?
Generally not accurate. Funding does exist across development finance institutions, enterprise development programmes, grants, angel investment and asset finance, though often not in the form or from the source entrepreneurs first expect.
Why do most funding applications actually fail?
Funders consistently cite incomplete financial records, unclear business models and missing documentation rather than a shortage of available capital, meaning business readiness is usually the more direct obstacle.
Should an entrepreneur rejected by a bank assume funding is unavailable to them?
No. Different funding types carry genuinely different criteria, and a business that does not meet a bank’s requirements may comfortably meet those of a development finance institution, grant programme or asset financier.
Is bootstrapping a realistic alternative to seeking external funding?
For many businesses, yes. Careful cash flow management, reinvested revenue and low early fixed costs have built plenty of businesses, with the added benefit of retaining full ownership and control.
When is the best time to approach a potential funder?
Well before capital is urgently needed, since building a relationship and track record in advance puts a business in a considerably stronger position than approaching a funder for the first time during a cash crisis.
Further reading
Originally published in July 2017. Updated September 2026 to focus on the lasting funding-readiness advice, removing details of a specific 2017 event that has long since passed.
