Seven Non-Traditional Ways To Finance Your Small Business

Availing financial aid for an unestablished business is not a simple undertaking. Due to the poor creditworthiness; small businesses often struggle to be liable for a loan, which eventually can limit their access to seller financing and traditional funding mechanisms.

Finances are a great determinant of the success of your business. With sufficient funds, you can develop your business and generate the profits you expect. 

Obtaining finances from traditional financing options which include commercial lenders like banks and credit lines is a tough row to hoe. However, this should not hinder you from commencing and owning your small business and compel you to give up on your dreams. You can always opt for alternative non-traditional financing strategies and secure small amounts of capital. 

Take the help of investor relations who render to you comprehensive advisory services, leveraging their expertise and instruments to help you reach the most relevant stakeholders. 

Today, you as a business owner have more options than ever to finance your business without having to wait till eternity or dealing with unending paperwork. Let’s learn about the seven unconventional ways to derive funds for your small business

1. Microfinancing

For the business owners who have been excluded from traditional credit and lending options, microfinancing is the rescue. It is a method that is specifically targeted at individuals who have no access to traditional loans. All you need to qualify for microfinancing is a business plan, adequate credit, and a personal guarantee or collateral. 

Microfinances are a smaller version of a conventional loan from a bank, designed to assist aspiring small business owners to generate income, build assets, manage risks, and meet their needs. Additionally, they have no location restrictions and can be availed of from any part of the world.

Microloans can range between $5,000 and $50,000, differing according to the bank or lenders. Banks or lenders also determine the interest rates charged, which might be higher than traditional loans due to the higher risk involved. 

2. Crowdfunding

Crowdfunding involves entrepreneurs collating small amounts of funds contributed by a large number of individuals to finance a new business venture. It is often utilised by start-up companies or growing businesses as a way of accessing alternative funds. Crowdfunding also incorporates selling a small stake to raise money for your business. The inherent marketing advantages associated with the online process of soliciting investors and the affordability makes crowdfunding a very good option for you. 

3. Working Capital Loans

Working capital business funding allows businesses to deal with their day to day or short-term operations. The business world is full of fluctuations and ups and downs, which calls for aid to cover operating expenses such as salaries, production material, rent and so on during lean periods. 

A fast business working capital can help you through times of difficulties where your expenditure exceeds your income and existing funds.

4. Peer-to-Peer Lending (P2P Lending)

P2P lending is an online practice carried through platforms where needy borrowers can find the appropriate willing lenders thereby serving as a good way to finance your business. It is swifter than traditional lending methods and less volatile, making it a great investment channel. 

After a basic application process, you can connect with a relevant lender and have your loan in hand within a span of 3 days. It eliminates the bank fees and additional costs associated with traditional methods of availing of a loan. 

5. Merchant Cash Services

If you are a small business that needs urgent capital and needs to manage cash-flow shortages as well as cover a variety of short-term expenses, the merchant cash advance is what you need. One thing you need to know is MCA functions on credit cards. If you accept credit card payments as income; you will be pre-approved by a private lender and receive a payment based on the number of credit card transactions you make during a short duration. 

6. Bootstrapping

Bootstrapping technically isn’t a form of funding but it renders to the financial needs of your company. It involves launching and running a company with personal finances or the operating revenues of the new company. It is a situation wherein a company directly gets funds from the owner.

7. Grants From The Government

Usually, start-ups are considered unaccountable for grants from the government. However, there are numerous government grants available at the federal, state, and local levels that can help you finance your business. There are special grants for female entrepreneurs and business owners from ethnically diverse backgrounds. With thorough research, you can come across the most suitable option for you.

Funding hardships are specifically profound for business owners in the constantly evolving world. Most business owners think of non-traditional financing options as the last resort. However, it doesn’t have to be so. If your loan applications are denied, your business credit score is low, and you are creative and willing to take risks, you should consider alternative financing for your business. It usually has a higher approval rate, is dispersed and received faster. Constraining yourself to traditional loans will often take you nowhere. So, leverage the non-traditional financing options and achieve your dream.

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