Obtaining funds for small and new businesses is no mean feat. The path is riddled with uncertainties, disappointments and in a lot of cases, a sense of dejection if one has ended up with more than their fair share of rejections.
That being said, the scenario is not all that gloomy. While one might feel like having exhausted all possible options, there are methods and options that can be explored to raise capital against a tangible business idea or for the growth of one.
This is where small business funding comes in:
If you have been down the traditional bank loan route without any positive results, here are a few more options to explore:
Bootstrapping: This is typically applicable to those businesses that are in the incubation or absolutely nascent stages. For the most part, this means first time entrepreneurs who have no history or credibility to show. Bootstrapping stands for self-funding. Diving into ones’ own savings or leveraging finances from family and friends helps kick start the project. Advantages of this lie in the low interest rate and lack of formalities required. Of course, it’s critical to have savings to invest or to have access to resources of family and friends. All in all a reasonably good options if pulled off.
Lending Platforms: There are a number of lending platforms that are open to providing small business funding to young companies. Most of these platforms make loans easy and accessible to small businesses with minimum number of formalities and roadblocks. With interest rates that are manageable and in some cases no collateral fee, these platforms serve as their very own brand of angel investors for new entrepreneurs who are still trying to get there feet into the ground and firm up.
Crowdfunding: Although a relatively new method of trying to raise funds, this one too is gaining popularity. The method is simple. You have a business idea, you out it up online with your project goals, your business and profit making plan and the amount of money you are looking for. Anybody and everybody who is interested in the idea ends up pitching in either in the form of a direct donation or by pre-buying the goods or services that you have on offer. Rather simplistic, however the idea needs to be compelling enough for a large audience to see the merit in it given that the crowdfunding space is a rather competitive one.
Angel Investors: An angel investor can be an individual or a group who have additional money that he/they are looking o invest in a truly powerful idea that they feel has the potential to grow. In some cases these investors offer more than just money and can also help in mentoring and giving tangible advice for the growth of the business. In most cases however, the amount that angel investors put in is not very big but in the case of a small business looking to kick off, whatever they have on offer may also fit the bill. They are mostly looking for high returns and willing to be a little more flexible with risk-taking, an approach that a new business can definitely benefit by.
Grants or contests: This one though not the top of the list when it comes to small business funding but can still make the cut given that there are a number of grants and schemes by the Govt and in some cases foundations and corporate organizations that are put forward and circulated for small business to win and get some money in their kitty. Being part of contests or any kind of draws where ideas can be presented and funding can be solicited or competed for is a pretty effective method of raising money via alternative methods. Given that the money has been won, there is no interest or very minimal if at all and this goes along way for a new company trying to manage finances in the most optimal manner.