Having a small business can be one of the most rewarding and frustrating experiences anyone can have. The thought of being you’re own boss and having the final say over how you’d like to run things may sound like the dream but running a business has it’s ups and downs. One of the biggest issues that exist when it comes to running a business is acquiring the funding needed to support the development and growth of your business which some small businesses have difficulties getting approved for. There is a number of reasons why some small businesses don’t get approved for funding one of them includes lacking a strong business plan. Business plans are the blueprints to your business which is why having a solid one matters when it comes to applying for a business loan. Not all businesses have strong business plans which could hurt their chances of receiving loans fortunately enough, however, business loans are not your only options when it comes to getting financing for your business. For those having trouble finding financial support for their business, here are other alternatives you can turn to when lending isn’t an option.
Crowdfunding – This type of funding allows individuals to seek financial assistance from people online through crowdfunding websites. Usually when a individual need help funding a project, idea or business venture they can receive donations from small investors while the lenders themselves may or may not receive compensation from it. Because there are various platforms that crowdfunding users can choose from it’s important that you carefully research the right crowdfunding website for your business.
Family& Friends– Most people would turn to those they know if they’re in need of capital for their business. This could be one of the more safer options for business owners or start-up founders to take considering that they’re not seeking the approval of a stranger. The drawback to this option, however, is that it is likely that the people closest to you are limited to what they can actually provide you with and of course mixing money issues with your family and friends can threaten the close ties you have with them. It’s best then that you borrow just enough to cover a significant portion of the cost of starting or running your business. Sometimes when things don’t fall into place you may lose more than just money.
Angel Investors– These type of investors are in the business of funding new business ventures and ideas. It should be noted that many of them have funded some of the largest tech companies in the world like Google. Angel investors are huge risk takers which is why many of them form investment groups to spread the risk. You can reach out to them by either contacting local angel investment groups or your local chamber of commerce. All transactions concerning angel investments are registered with the Securities and Exchange Commission
Merchant Cash Advance– Definitely one of the most underrated alternative financing option on this list merchant cash advances has most of the benefits of a business loan minus the need for collateral and good credit. It is the purchase of future receivables and it works when a business makes credit sales in which a portion of the revenue generated from that transaction goes to the lender. This means that the payment adjusts to the number of sales and not on a fixed rate. MCA’s are relatively easy to get as well one of the biggest drawbacks to it is the fact that it is not regulated like business loans are so anyone planning to get them must head with caution.
These are some of the best alternatives to loans that business owners could take advantage of but it should be noted that not all of them may be viable options for your business. If you’re still looking for more funding options for your business you can find some that were not covered above by clicking on this article. Also if you’re in need of funding for your small business and you’ve been in business for at least 3 months you can contact us at Smart Business Funding and visit our website listed here.