An entrepreneur is a person who creates their own job instead of sitting around waiting for a job opportunity to pop-up in an organization. For starting one’s own small business,one certainlyrequires funding but which option for funding should be taken depends on your company type and its current situation. Almost every small business requires some capital to expand their business or run the operational expenses uninterruptedly at some point in their business lifecycle.
Here are five alternative small business funding options you need to know to start or run your business efficiently.
1. Peer-to-Peer Lending Networks:
If there comes a stage when you are unable to go to the bank to apply for a small business loan, there are still many alternatives to go for. One of those alternatives is to ask for a loan from your peer’s networks. The main benefit of peer-to-peer lending is it eliminates the tradition lending institutions; you can lend directly from an individual.
You can also go to certain websites to apply for a loan which usually lends the loan up to $25000 at a specific interest rate, where the website neither only return all the loan funds to the lenders but also a certain portion of interest to the lender over certain defined time. The other benefit of using this website is that these networks merely depend on the credit ratings of the borrowers, which means if you have a good credit rating history you are more likely to qualify for a loan.
2. Friends and Family:
People can always go to your friends and family for borrowing money but people hesitate to ask for funding because of it might result in future conflicts in their relationships with each other. But still, it is one of the best alternatives among all the others to fund your small business as you don’t have to worry about paying an interest rate on the money borrowed from your friends and family unlike borrowing from a bank or any other financial institution. In order to keep your personal relationships away from any conflict do take borrowing money from friends and family as seriously as taking it from a bank etc. Make the borrowing deal documented on legit papers and write down all the terms and conditions from the both sides of the parties and make sure to mention the durations and amount of interest rate need to be paid if any.
3. Seller Financing:
So many small business owners are finding it difficult to get access to funds through applying for a loan using traditional institutions. In order to run your business properly, you can rely on sellers financing method according to which the seller will take the price of purchase in cash and the rest of money you have to pay to the lender at a certain interest rate over a period of 3-5 years which is one of the forms of promissory note. It is one of the best alternative methods to fund your small business.
4. Angel Investors:
You can always look for an angel investor to invest in your business, the benefit of going to an angel investors is that they are not just interested in money; they are more than interested in the business opportunities and higher rate of return.
Crowdfunding is all about getting small amount of money from a bunch of people to fund your business. There are so many websites through which you can run your crowdfunding campaigns and bring in some strong investors to help your raise fund for your business.
David Simmons is a financial analyst and accounting expert. He has in-depth knowledge about setting up small businesses as well as creating profitable investments. He regularly contributes articles related to business and loans at https://www.ebroker.com.au/.