Start with the cash calendar
Before choosing any funding source, draw the timeline: factory deposit, sample costs, balance payment before shipment, freight and duty, then — finally — customer payments coming in. For most first collections, the gap between first payment out and first payment in runs months, not weeks. That gap is your funding requirement. Map it with the import cash flow planner or the first production order guide — a number you can see on a calendar is a number you can fund deliberately instead of desperately.
The funding sources, honestly
Bootstrapping
Your own savings, revenue from a first small run, or another job. No interest, no approvals, no ownership given away — and every decision is yours. The tradeoff is scale: growth happens only as fast as profit funds it, which makes conservative first runs a feature, not a compromise.
Pre-orders
Customers pay before production. The best-aligned money in fashion — it validates demand and funds the run — but it creates a delivery obligation, not free working capital. Only take pre-order money you can deliver on; late deliveries and refunds cost more than the cash was worth.
Reward crowdfunding
A pre-order campaign at scale, usually on a platform with backer rewards. Works best with products that photograph and explain well — and it carries the same delivery obligation, now multiplied across hundreds of strangers. Note the distinction: this is not investment money; equity crowdfunding, where backers buy shares, is a different process with different rules and regulators.
SBA microloans
The US Small Business Administration's Microloan program lends through approved nonprofit intermediary lenders — up to $50,000, with an average loan of about $13,000, for working capital, inventory, supplies, and equipment, with repayment terms up to seven years and rates generally in the 8–13% range. The intermediaries make the credit decisions, and terms vary by lender (SBA microloans). A microloan fits the deposit-and-inventory gap well; it is a loan, so it requires a repayment plan, not just a dream.
Investors & equity
Angel or venture money buys speed and scale — in exchange for ownership and a say in decisions. Most fashion brands are not venture-shaped businesses, and equity is the most expensive money you will ever accept if the brand grows slowly. Take it only when the plan genuinely needs the acceleration it pays for.
Matching money to the moment
- Sampling and development — small, repeated costs. Bootstrapping and revenue from a previous run fit; don't borrow for this phase if you can avoid it.
- The production run — the big lumpy payments. Pre-orders, a microloan, or a disciplined amount of savings cover it. Confirm the full landed cost before you size the loan — freight and duty are part of the bill.
- Inventory for reorders — the moment sell-through data, not hope, justifies the spend. Our sell-through guide tells you when that moment arrives.
- Scaling — the only phase where outside equity earns its keep, and only if the numbers support it.
"The gap between first payment out and first payment in runs months — that gap is your funding requirement."
Three rules to keep
- Price for the money before you spend it. Every funding source has a cost — interest, ownership, or obligation. Know the full cost before signing, and review the margin math in Fashion Business Basics.
- Never fund hope with borrowed money. Loans repay from proven sell-through. If the data isn't there yet, the run is too big.
- Keep a cash cushion. First productions run over. A start-up with 10% of the run set aside survives the delay that kills the one funded to the last dollar.