During the lifetime of almost any business, entrepreneurs will likely need to secure some kind of funding to help their company get off the ground and gain an edge over the competition. Traditionally, business owners would usually turn to the bank when it comes to getting funding, however, today there are several alternative methods that have emerged, making it easier for entrepreneurs who struggle to get funding from the bank to go forward with their business venture. Whether you’re in need of funding to turn your business idea into a reality or have been in business for a while and need extra funds to help your existing business develop and grow, here are the main options that you can choose from.
#1. Bank Loan:
Many entrepreneurs today still go down the traditional route of taking out a business loan from the bank when it comes to gaining the necessary funding for their business. However, if you are considering applying for a bank loan to fund your company, then there are a few things that you’ll need to be aware of beforehand. First, you’ll need to make sure that your own credit score is intact – entrepreneurs with a poor credit score, even if this is due to historic issues with credit, often find themselves viewed as high risk by lenders and struggle to be accepted. Second, you will also need to put a lot of thought and effort into a solid business plan before you submit your application for a bank loan. Most banks and traditional lenders want to see a well thought out plan for future funding and investment before they make the important decision whether to part with their money.
#2. Crowdfunding:
If you are unable to get a loan from your bank or don’t want to go down that route for any given reason, then crowdfunding is an ideal alternative option that is growing in popularity today. Crowdfunding for business involves taking donations or investments from the public; usually this is done with a pledge for a return on their investment to be paid to them once your company starts to turn over a high enough profit. The great thing about crowdfunding is that you don’t have to ask any one person to invest a lot of money; smaller investments from a larger number of people can quickly add up to ensure that you are provided with the funds that you need to get your company off the ground.
#3. Self-Funding:
For many business owners, the idea of borrowing money or relying on the generosity of others for funding their company isn’t ideal. If you are financially stable enough, then you may want to consider trying to cover as many of the necessary expenses that you need by yourself. For example, there are options that you could consider such as a refinance home loan agreement, where you can refinance your mortgage to give you more financial flexibility in terms of your business by reducing your monthly payment. If you are able to get a lower refinance rate on your mortgage, this could lead to substantial savings over the long-term which can then be invested into your company without the need to borrow extra money from the bank.
#4. Angel Investors:
If you have a great business idea that you expect to go far in the future, then you might want to pitch to some angel investors, who could be interested in investing money into your business in return for a cut of the profits later down the line. In many cases, gaining funding from an angel investor is a better option than applying for a bank loan, as even though there’s a chance that it may cost your company more in terms of repayments or paying out a return on their investment, many angel investors are also experienced businesspeople who can act as a strong mentor to help your company achieve success.
#5. Business Partners:
Lastly, taking on one or more business partners can be a viable method of funding your company. Strategic business partners, for example, can make your business stronger by joining together resources, which will work in the best interest for both companies. For example, if you run an SEO company, then partnering up with another entrepreneur who provides similar services will provide funding as well as expanding your target audience. In other cases, partners can be an equal investor in the company, who then becomes a co-owner and takes an equal amount of the profits home.
Which type of funding would you prefer for your business? Let us know in the comments.
