Where to get money when you want to start a business? Here are some tips

JUDr. Ondřej Preuss, Ph.D.
10. April 2025
7 minutes of reading
7 minutes of reading
Other legal issues

In this article, we will show you step by step what funding options you have if you are a start-up entrepreneur and you are short of money. Learn what a loan for a start-up business can look like in practice and what conditions you should meet if you want to get funding in this way.

When you have a good business idea, it’s just the beginning. It’s much harder to turn it into reality. And the most common obstacle on the way is money. Statistics show that the lack of finance is one of the main reasons why many people never even start their business, or quit in the first few months of starting their business. They don’t know how they can get a loan for their business even if they are just starting out.

A great start without interest? Only with funding from your own savings

If you are one of the lucky ones who have built up some financial reserves before starting your business, then you undoubtedly have a big advantage. In any case, your own savings are the safest way to finance your business. You don’t have to repay anyone, you don’t pay anything extra in interest and you remain 100% in charge of your business.

Maybe the way to go would be to stay a full-time employee for a few more years and put something aside. Maybe you could even save up 250,000 crowns in five years. That’s a sum that can already help you open your own flower shop, for example, buy basic equipment and supplies, or cover the first months of renting commercial space. Thanks to this, you won’t have to deal with a start-up loan or find an investor. What’s more, you’ll be able to set everything up the way you want it.

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Family and friends will lend you money, but there is a potential risk

If you don’t have enough savings of your own, you often need help from family or friends. It’s easy to get money from loved ones quite quickly and without unnecessary formalities. But that informality can be a potential problem. If you don’t draw up a good contract with whoever can lend you money that protects both parties, misunderstandings can easily arise.

At our law firm, we have handled more than one dispute over finances and a poorly drafted contract. If you want to get your business off to a smooth start and don’t want to take out a business loan from an institution, we definitely recommend drafting a quality loan agreement. We will be happy to help you with its preparation.

You can get a loan for start-ups from (non)banking institutions

A bank loan is the more complicated way to go, but it gives you more favourable terms. Most banks offer a business loan for start-ups, but it is not so easy to get one. Of course, banks protect themselves and want to minimize risks, which is not the only reason why they require, for example, a thoroughly prepared business plan when lending to start-ups. In some cases, you also have to have your own deposit, arrange collateral for the loan and sometimes have a guarantor.

We know of cases where a budding entrepreneur has had her loan application rejected by a bank when she wanted to open a health food bistro. She had no business history on which the bank could rely. However, when she modified her business plan, added references from a previous employer and offered her parents’ property as collateral, the bank took a different view and eventually granted her a start-up loan of CZK half a million.

Non-bank loans are a quicker route. There are plenty of non-bank entities on our market that often do not require you to prove the exact purpose for which you want to use the money and will even give you a loan for start-ups without you having to prove anything. On the other hand, you will pay a higher interest rate.

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Tip: Borrowing for a car, furnishing your home, going on holiday or fixing your washing machine – in all these cases, you can get the money you need with a consumer loan. But there can be a catch. What is it? Find out in our article.

The state also offers support and discounted loans

The Czech state supports small and medium-sized entrepreneurs through various programmes implemented through the National Development Bank (NDB). The basic aim of this state support is to give people the chance to obtain financing for their projects, which, although promising, are too risky from the point of view of commercial banks. Start-ups have no creditworthiness, no history and often no collateral.

If a start-up cannot get a loan from a bank because it does not have sufficient collateral, then it is the NRB that can guarantee the loan. The guarantee can cover up to 80 % of the loan principal up to a maximum of several million crowns.

Sometimes NRB also provides direct loans at low interest rates or with more favourable terms than those offered by banks. With these loans, an entrepreneur can purchase machinery, technology, renovate premises or use them for digitisation.

Crowdfunding also allows the general public to contribute

Crowdfunding works on the principle of public collection. You will have heard of Hithit or Donio. You can use them to present your project to the general public. You set a financial target, i.e. how much money you want to raise, and offer a reward for a certain amount of money that people send you. That way, you don’t have to take out a business loan and you have a chance of raising the money you need anyway. The downside is that if you don’t collect the entire amount you set as a financial goal, you have to pay back the portion that people have already given you.

P2P lending will get you smaller amounts

Sometimes it happens that a budding entrepreneur only needs a smaller injection of money, perhaps only in the tens or hundreds of thousands. If banks are unwilling to lend because of a poor track record or lack of collateral, they may turn to alternative forms of finance such as peer-to-peer lending. In P2P, you do not borrow from a bank, but from various small investors who offer their money to other people who need it through an online platform. Some of the most well-known P2P platforms are Zonky or Bankerat. All you have to do is register, enter your business plan, the amount you need and how you want to use it, as well as a repayment plan. The platform will perform a verification and then show the request to investors. They will decide for themselves whether to give the person a loan to start a business.

As you can see, getting a business loan can be a challenge, but it is not impossible. Good preparation is the foundation that leads to success. Always write down a realistic business plan, think about the amount of investment and also your options regarding repayment. And above all, don’t give up after the first setback. There are plenty of ways you can achieve your goal, whether you start with a bank loan for start-ups or try crowdfunding.

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Tip: Thinking about a mortgage? Then you should know that there is such a thing as a one-spouse mortgage. Find out if it’s worth it and what conditions you need to meet to qualify for a one-spouse mortgage.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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