7 Funding Challenges & How to Solve Them

As we close out the year, many business owners are gearing up for growth in 2025. Whether it’s increasing sales, launching new products, or expanding teams, these plans often require growth capital. Yet, many businesses face common obstacles that prevent them from securing the funding they need.

Here are the 7 most common challenges to raising capital—and practical steps to overcome them.

1. Financial Health

Challenge: Poor financial tracking or reporting often signals to lenders that a company isn’t prepared for funding.

Solution:
Work with an experienced accounting firm that:

• Understands businesses like yours.
• Has successfully helped clients secure funding.

A clean financial report increases your credibility and readiness for investors.

2. Revenue Weakness

Challenge: Inconsistent, unpredictable revenue or lack of contracts to validate future cash flow.

Solution:

• Track and report revenue monthly.
• Secure contracts with clear payment terms and delivery timelines.

Consistent revenue and documented agreements build trust with lenders.

3. Excessive Debt

Challenge: High debt obligations, especially those with frequent payments like merchant cash advances, can cripple cash flow.

Solution:

• Prioritize paying down high-frequency debt.
• Explore refinancing options with alternative lenders who offer better terms.

Refinancing helps align payment schedules with revenue cycles.

4. Tax Challenges

Challenge: Unpaid federal, state, or payroll taxes can disqualify businesses from receiving funds.

Solution:

• Validate your tax status with federal or state agencies.
• Address outstanding taxes by:
  1. Paying in full if possible.
  2. Setting up a payment plan.
  3. Outsourcing payroll or escrow to ensure compliance.

Proactive tax management removes a major red flag for lenders.

5. Commingling of Funds

Challenge: Mixing personal and business finances—using business accounts for personal expenses or vice versa—damages financial credibility.

Solution:

• Use separate bank accounts for business and personal finances.
• Establish clear accounting practices to avoid cross-pollination.

This demonstrates financial discipline and makes audits cleaner.

6. Invalid Use of Funds or Lack of a Growth Plan

Challenge: Raising funds without a clear business use case—or worse, for personal expenses—will instantly deter lenders.

Solution:

• Create a solid plan outlining how funds will directly grow your business (e.g., hiring, equipment, marketing).

A clear, actionable plan shows lenders exactly how their money will create value.

7. Failure to Submit Timely Information

Challenge: Delays in providing critical documents or information can stall or cancel funding opportunities.

Solution:

• Prioritize and allocate time to submit all required documents promptly.
• Work with professionals (accountants, legal advisors) to ensure accuracy and timeliness.

Being organized and proactive signals reliability to investors.

Final Thoughts

Most of these challenges are common and solvable. While they may feel overwhelming, recognizing and addressing these issues now can unlock the capital your business needs to grow in 2025.

You’ve worked hard to build your business. Don’t let these challenges hold you back. Take action, and secure the growth capital you deserve.