5 Creative Financing Options
Unfortunately, traditional lending options don’t always pan out for entrepreneurs. Because of the uncertain economy, banks and other lenders are stricter with their requirements when handing out a loan. No longer is having a good idea enough merit for capital. If you’re a small business owner looking for more funding, here are a few alternative financing options to utilize.
One financial trend sweeping the industry is crowdfunding. By using certain websites, you can effectively raise money for your business from individual donations. Crowdfunding is much easier than trying to hunt down a major sponsor. Instead, all you have to do is spread awareness of your online campaign and inspire people to donate a few dollars. Individually, it’s not much, but when you total all of the contributions, it can be enough to get your business moving forward.
Similar to crowdfunding, peer-to-peer lending is an individual contribution, but it only involves one sponsor. Rather than traditional investment methods that bring in banks and other loan corporations, peer-to-peer lending is when a sponsor simply hands over the money. That way, you’ll get it immediately and be free to do with it what you want. Naturally, this will require finding a sponsor and committing to pay them back eventually.
If you are running a high-risk niche business, you may qualify for venture capital, a form of lending that helps business owners get the cash they need to get their business off the ground. The best part about this kind of loan is that you usually don’t have to pay it back. Instead, the venture capitalist will receive a share of ownership in your company, meaning that they have as much motivation for the company to succeed as you do.
Business Credit Cards
If you need cash immediately and don’t have time to crowdfund or seek out a venture capitalist, then a business credit card might be your solution. Obviously, these should only be used when you know you’ll have the funds to pay the bill at the end of the month. If you don’t think you’ll have the income to pay the bill, wait to find another revenue source, as you don’t want to get stuck with late fees.
Avoid Borrowing Altogether
While there are situations where you do need cash, these times can be minimized by changing a few of your business habits. For example, if you were considering taking out a loan to buy expensive construction equipment, there’s an easier and cheaper way. Renting equipment, like backhoes, boom lifts, dozers, and more, is much less expensive than buying it outright. Instead of shelling out a few hundred thousand dollars, all you have to do is pay for the number of days you use the machine. This concept also applies to office equipment, warehouse spaces, company cars, and much more.
By being creative with your financing, you can help your business get the money it needs to expand. With more financial support, you’ll be able to grow into a thriving company that leads your field.