Seeking funds to run your small business is not an easy task in the economic slowdown time when the banks have strictly narrowed down their money lending criteria. In such a scenario, entrepreneurs must think differently and find unorthodox ways for exploring the non-traditional and creative ways of business funding. Here are some of the creative ways you might obtain funds for your small scale business.
1. DIY and Borrowing from Friends and Family
Self-funding is the recent trend these days and people like to fund their own concerns. It is popularly called bootstrapping, and until certain milestones are achieved in their business they do not like to involve third party funding sources. Keeping an eye on profitability, it is but logical to first exhaust one’s own resources- like taking a loan from credit card at 0% interest or use funds from the savings account.
When the DIY funding is exhausted, many small scale entrepreneurs rely on the family support system for funding. Family offers them the initial investment and helps them run the concern for some time, until a particular margin of profitability is earned. Similarly borrowing from wealthy friends is also very cogent because it saves from the sword of the loaning company hanging on the entrepreneur.
2. Getting a Microloan/Advance
Microloans are small sized loans sanctioned from banks not exceeding $50,000. The average loan is $13,000, good enough to set the ball rolling. If you have a proper business model and a good credit score, Microloan can suffice with money, to buy equipment, supplies and machinery.
You can borrow advance from Kabbage that is an online financer which offers funding to online companies as well as brick and mortar concerns in a matter of minutes. However, you will have to pay the Kabbage advance amount additionally with the amount of money you have borrowed.
3. Start-up Accelerators/ Angel Financers
Start-up accelerators and loaning sites offer not just funding but also mentoring. They are specifically made for small scale businesses, and they save you from running around for loans. Whereas banks will look into your financial ability and credit score keenly, these start-up accelerators will consume less time.
Again Angel Financers are wealthy people who might be interested in your company and give you capital. If you have a promising product that would go ahead, you might approach Angel Investors in lieu of a particular stake in your company. However just keep in mind, offering a stake will cut the profits going into your coffers as well as a set amount of freedom in decision making.
4. B2B and Franchises Financing
Many businesses get connected to several other companies selling similar products and catering to similar customers to expand their networking. Wondering who is doing so? Well, your very own Amazon and PayPal are doing it to broaden their horizon. If you could get such financing, not only would you get your name adhered to a more conspicuous company, but reap the benefits of already set networking.
Franchise financing is akin to the above Business to business financing idea, but in this case you will have to be under the umbrella of a larger group and may have to function according to the dictum of the name. Nevertheless the benefits of an established name will still be reaped by you.
5. Competing for Funds in the Contests
Have you ever thought of participating in competitions, to get your money! It is a novel idea, and several sites offer price money in thousands along with mentoring for a year. For example, you can even win $25,000 after winning up the program. However, the catch is that you should be a local resident in a particular area, and you are 18-40 years old.
A convincing business plan is the beginning of your search for investor confidence. Follow that up with a great knowledge of the industry and the perseverance and passion to turn your idea into a great business that can withstand the test of time, and you should be on your way to uncovering a source that fits your new business’s cash needs.