There are more financing options available for new businesses than have ever been before. With so many options available, some new businesses don’t have time to explore every avenue of financing. Others don’t even know about what’s out there! It’s well worth the time and effort to become aware of different ways to get money. If you’re starting a small business and can’t figure out a funding strategy that feels right, consider some of the other options.
- Community Funding. Community funding is actually a very diverse umbrella term that includes a number of distinct methods. Community funding can be as simple as a bake sale, or as complicated as an Initial Coin Offering (ICO, in the world of cryptocurrencies). Community funding can also include crowdfunding options like IndieGoGo or Kickstarter. Community funding can represent private funds given or invested by people you know, even from your family. Online P2P lending is another strong option. One or more of these options may work for your business, depending on its size and the nature of the work it does. Try something new. It may pay big dividends.
- Online Competitors. One of the best things about the internet is that it brings formerly regional actors into a common marketplace and makes them compete for business. This is one of the factors that makes loans more affordable than they were a couple of decades ago. Become aware of different online firms providing small business loans. Do your homework and/or negotiate your way to a loan with excellent terms, exploiting the hot competition that exists in this space.
- Regional Funding. Regional lenders may not be well known to you, but this doesn’t mean they won’t have competitive, or even superior, terms than the mainstream players. Local lenders offer many benefits. You’re able to get on the phone with a lender much more easily, and will likely deal with the same person throughout the process. Regional lenders will be familiar with your market and will be able to offer a loan that is appropriately designed and competitive. You’ll also likely benefit from better service, as these lenders rely on word of mouth and positive customer experiences in order to sustain and build their business.
- Institutional Lending. There are many institutions which offer loans to small businesses. In fact, this is an industry of many billions of dollars. A local or online branch of a large bank or other institutional lender will almost always be able to give you a loan, given you have the right qualifications. Sometimes institutional lenders can give you options others can’t, simply because they are so large. Sometimes this size works against you, however, because the institution doesn’t really need your business and won’t necessarily fight to get it.
There are many ways to fund your small business. If you’ve considered only one or two of these options, do your homework and check out the rest. An unconsidered option may offer you the best potential, and get your business off the ground even sooner than you hoped!