Does anyone know of any LEGAL ways to raise start up capital for a new business?

My father is starting a woodworking business and needs to raise money to get started. Government grants are a long shot and he doesn't have credit to get a loan. Any ideas?

We are in Muskegon MI USA

There are all kinds of grants out there, so it may not be as long a shot as you might think. Really. There is probably someone out there who will give at least a small grant on the basis of your favorite color. If your father can demonstrate
1) any kind of minority status (or partner with anyone who can)
2) benefit to some segment of society (by providing goods, services, employment, training, etc.)
3) hook into some group that has some kind of interest in what he is producing (like the society for the advancement of faithful Victorian era woodwork reproductions--I made that up)
4) eligibility for any kind of local small business development incentives
5) There may be grants or loans out there based on former activities or employment (military, labor unions, school, etc.)

He has a shot there. And not all grants are government based, so don't limit yourself.

Hook into a local high school, youth program, work reentry program, or tech college for cheap or subsidized supplies and labor (internship/apprenticeship)

Go out there and look for investors. You can limit icky friend and family 'unwanted obligation' pressure by making sure you are laying out a formal business contract, with clear repayment / return on investment terms, preferbly administered by a neutral agent such as a bank or lawyer. You may have to ask 200 people to get five investors, but so what?

Good luck, Muskegon.