Jerry Brown needed money to buy inventory for his sporting goods store, but his local banks wouldn't give the Florida, entrepreneur the time of day. So Brown, who sells firearms and accessories online as well as through The Gun Store retail outlet in St. Cloud, took his quest for capital online, seeking a loan through a service called that connects borrowers with individuals with money to lend rather than banks.

After signing up for a no-charge membership, Brown posted a request for the amount he wanted and the interest rate he was willing to pay. A bidder agreed to his terms and he soon received the money, bought his inventory and started making payments. "I've got nothing but good to say about Prosper," says Cloud, who employs four people. "We were able to get what we needed relatively easily. It was perfect for our business needs."

Online tools for raising capital are mushrooming. In addition to unconventional sources such as, a San Francisco company that started last year and has loaned more than $70 million, the Web offers countless investor directories, loan applications, borrowing how-tos and other aids for entrepreneurs with an Internet connection and a need for capital. "All this stuff is just sitting out there," says Carl Vaicek, a La Jolla, California, business finance counselor with the Service Corps of Retired Executives (SCORE).

Joining Prosper in the lending alternative camp are, a 5-year-old Waltham, Mass., company that facilitates person-to-person loans among family and friends by, among other things, using formal loan arrangements and setting up regular repayment schedules. A slightly different tack is taken by Lending Club of Sunnyvale, Calif., which also helps people find loans online but, instead of family and friends like CircleLending or complete strangers like Prosper, hooks borrowers up with investors who are members of affinity groups on FaceBook, the popular social networking site.

The person-to-person online lending services offer small businesses another route to capital, and one that can be tapped from their desktop computer, but they typically require applications, credit checks, interest rates and repayment terms that are similar to commercial banks. Banks also are dipping their toes slightly into the online borrowing world. Citibank, through its website, and some other large banks, now offer online applications for loans and lines of credit secured by the equity in the borrower's home. That's different from person-to-person lenders, who typically rely on forces like honesty and peer pressure to encourage repayment, but as Vaicek points out, the majority of small business borrowers will be required to put up their homes as collateral any time they borrow from a bank.

Even government is getting into online capital. SCORE, which is affiliated with the U.S. Small Business Administration (SBA), has a wealth of how-to information on its website at, along with links to online lenders such as CircleLending. The SBA's website  includes voluminous guides to the many federal loan guarantee programs, although you still have to apply for the loan through a bank that will then seek federal repayment guarantees. One exception is Business Loan Express, an SBA preferred lender that allows you to apply online for loans of up to $500,000. Access information and applications through or through the SBA website.

The wealthy individuals known as angels aren't likely to provide loans or equity investment to any business on the basis of information submitted online, according to Marianne Hudson, executive director of the Angel Capital Association in Lenexa, Kan. You can, however, tap into a directory of angels groups through the website at Hudson recommends you carefully study the types of investments each makes, including industries, stages of growth and other details, then directly contact those that fit your needs. She also suggests asking a banker, accountant, attorney or other entrepreneur you know to provide an introduction to the group. "Sending in a business plan or e-mail over the transom doesn't often lead to funding," she says.

Online offers a wealth of tools and sources for entrepreneurs interested in capital, ranging from how-to guides to opportunities to request copies of your credit report and credit score from the credit bureaus -- something Vaicek recommends as a first step before seeking capital from almost any source. "The worst thing you can do is walk in and not know what your credit score is," he says.

But don't get carried away with the diversity of resources on the Internet for capital-seeking businesses. Even when done through a keyboard and screen, raising capital is still about convincing another human you are worth an investment. "Ultimately, no matter what," Vaicek reminds, "a person makes the decision about whether they're going to lend you money or not."

Mark Henricks is a freelance writer based in Austin, Texas.