As many small business owners have learned, it is becoming increasingly difficult to secure funding for small to mid-sized businesses. Banks are now worried about lending, and are only issuing loans to established companies that have a proven track record. Luckily, there are still some alternative financing options that many businesses today can take advantage of to secure the funding they need to grow and develop.
Crowdsourcing is the newest trend that has managed to fund millions of dollars into some businesses. With crowdsourcing, a company presents a product or idea that they are wishing to sell. Individual backers will pledge money for the product or service before it is even in production. The product does not need to be delivered until the project and company is fully funded. There are separate options to adjust the funding campaign as necessary. Crowdsourcing is becoming more popular by the day as a method to go directly to the consumer for money as well as to gauge consumer interest before production.
For small business owners that only need a small cash injection, it can be more ideal to take out a loan against their assets, such as their home or their 401k. While taking a step like this is inadvisable if it is for personal reasons, businesses reasons are slightly different because growing the business is an investment in the business owner’s future. Securing personal loans may, at times, be easier and more convenient than a business loan if the business is new and unproven and the business owner has good credit and tangible assets. These options can be explored with a loan officer.
While many businesses don’t realize it, there are government loans and grants available. Certain organizations such as the Centre for Small Business Financing specialize in finding Canadian citizens ways to fund their small business projects through the government. There are many programs that can help for specific markets that the government is hoping to promote. It’s important to note that taking on a government loan or grant means that your business will usually need a higher level of accountancy standards and rules.
The last option for those who just can’t get funding any other way is to look towards investors. There are many online websites to match ideas with investors, or you can look among your circle of colleagues or simply those who are already associated with the industry your business is in. While managing investors can be difficult, it can be made more manageable by having clear and legally binding terms of agreement. Investor websites can help automate this process and make it faster and easier.
Funding is more difficult today, but there are still options out there for a dedicated entrepreneur. The most important things are to always be on the look out for new opportunities and possibilities, to never rely on one strategy, and to never extend yourself beyond what you need. Growing a business is never easy, but once funding is secured the largest and most difficult hurdle has already been passed.