If you’re a small business owner, you know the importance of tracking revenue and expenses. There may be a time when you need a bit of extra financing. However, you might be hesitant to take out a loan. Your business is still new. You don’t want to have too much debt early on.
If you’re thinking about opening a new office, need funding for research and development, or any other reason, there are a variety of alternative financing options. Keep reading to learn the best options for your business.
Crowdfunding is a great option to raise capital with the help of many people. You’ve probably heard of Kickstarter or Indiegogo – two popular sites that help entrepreneurial ideas become a reality. You don’t have to worry about loan applications, however you do have to put in some effort to ensure your campaign is a success.
Know your pitch – what your company and product is all about. Summarize it in a way customers can understand.
Be realistic in your campaign target. Take some time to plan out what you need and how much it costs. A campaign target that is too high most likely won’t be reached. A campaign target that is too low won’t cover what you need. Once you set all of that up, market the campaign. Tell your personal network, friends, family, post it to social media – get the word out as much as possible so you can raise as much as possible.
We’ve all heard of alternative lending, but not everyone knows what it means. It’s like the name suggests – an alternate source from traditional bank loans. Alternative lenders are an option if your bank application for a loan was denied.
- Fast and convenient funding
- Higher chance of application approval
- Greater flexibility
- Less required paperwork
One example of an alternative lender is Able. Able provides fast funding to small business owners through a unique agreement: small business owners ask their friends or family to contribute 25% of their loan request, Able takes care of the other 75%. The 75% is broken down into a low interest rate monthly loan, which is typically more manageable for small companies.
Last (but certainly not least), is angel investors. Another popular choice for many small business owners. Angel investors are investors that provide funding in exchange for equity (along the lines of Shark Tank).
The downside to angel investors: they’re difficult to discover. When you do find one, it is important to have your business plan and pitch fine-tuned as angels need to know what’s in it for them in order to invest.
Regardless of your need for financing, it’s always wise to consider all the options. In some cases, a loan from the bank may be the best way to go. The important thing is to choose the option that benefits your business the most.