It has recently been shown that around 50% of small businesses struggle to finance through the regular channels (bank loans). This is especially the case ever since the big market crash of 2008. Banks cannot always rely on a small business being able to pay off their debts and therefore, small business owners have to look for some other ways to finance their startups. Luckily, since the market crash, more and more alternative ways for financing small businesses started to appear. Here are 4 of them that might just be perfect for your small business.
Use Peer-to-Peer Lending Websites
Today, there are methods to fund your small business which are similar to bank loans. One of these methods is the use of peer-to-peer lending websites. There are many websites that can help you find an online platform that is going to assume the role of a bank and loan you money to fund your small business. A great thing about these is that interest rates are usually lower than the ones offered by banks. Not only this but the waiting process is much shorter and there is less paperwork that has to be taken care of.
Find Angel Investors
This is the most common way small business owners in the tech industry fund their startups. In this case, the investment usually comes as a single cash injection soon after the business is started. Still, it’s quite common for angel investors to continue to provide financial support to small businesses. Angel investors are usually more interested in the long-term success of your business, rather than gaining an immediate profit. It’s also important to mention that it’s up to angel investors to choose whether they will be more or less engaged running your startup.
Opt for Crowdfunding
Crowdfunding is another great alternative way for funding small businesses. This is especially the case with business owners who have great ideas but are short of money to fund these ideas. Today, you can post your idea online and anyone who likes it can contribute to funding it. The pledges people can make usually go as low as 1$ per person. Crowdfunders who help you finance your startup can be rewarded in two ways. They can either get a share of your business or a gift once you start making profit.
Use Invoice Funding
Invoice funding has turned out to be one of the most popular ways small business owners use to finance their startups. It’s a process where you can use the unpaid invoices of your business in order to get a loan that will help you finance your startup. You can either sell your invoices for a lower price or for a standard price but later get charged by the buyers according to the due date and credit score. A great thing about opting for invoice funding is that there is not going to be any debt you will have to take care of and you can solely focus on making profit.
When starting a small business, its funding is always going to give you hard time. If you give a go to some of the above mentioned alternative ways to fund your business, chances are cash is not going to be a problem for you anymore. Once there is enough money, you can focus on making money and helping your business grow.
Dan Radak is a marketing professional with ten years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.