Do you have a great product or service for a startup? Now, are you wondering about alternative ways to finance this new business? What are 3 of the best alternative business financing ideas?
It used to be that every entrepreneur needed to go to a bank for financing. Not so anymore. Modern alternative lending sources offer a number of creative ways for you to get the funding, you need.
You might not have any business history. You might not have a good credit score. There are alternative lenders who are still willing to provide you with the money to improve your life. Here are 3 of the best alternative business funding methods:
- Personal Credit Cards
Nowadays, even consumers have access to high limits for revolving credit. You might be surprised by how many credit card issuing companies will give you high limits. Some entrepreneurs fund their startups using credit cards.
Credit card business financing allows you to buy your supplies without any questions asked. The primary disadvantage of credit cards is their high interest rate. Therefore, you should develop a prudent business plan where you use credit cards to purchase your initial supplies before the profits start rolling in.
Once your business has cash flow, you should look to other financing alternatives to pay off your credit cards. With this initial credit card money, you can develop a solid proof of concept. Show that your business product or service is viable, marketable and profitable.
- Family & Friends
Do you have a wealthy uncle who wants you to put your college education to good use? Some entrepreneurs will turn to their friends and family for financing. How many small companies are named Bob & Sons?
Family businesses have a long storied tradition of success. They provide a great income source and the high-quality craftsmanship or tasty recipes can be handed down to the younger generation. There is a certain pride in family-run businesses.
Do you want to know how to finance swimming pools? You might want to try the same idea with the entire neighborhood. What mother wants to deal with screaming children on a hot summer day?
By pooling your resources, you can purchase a swimming pool that all the neighborhood children can use. This makes your home an important center of the community. You can offer free snacks and day care in exchange for financing.
Another option is your Home Equity Line of Credit (HELOC). A swimming pool will increase your resale value, so it might be acceptable. You will definitely appreciate the added comfort of owning a pool.
Financing has become more democratic with crowdfunding. Individuals, organizations and communities can cut out the middleman banks and finance businesses, projects or interests directly with crowdfunding. There are actually a number of different types of crowdfunding, including charitable, debt and equity.
Find which is right for you. Sometimes, entrepreneurs really don’t know if their idea will work or not. They might think it is amazing; but for some reason, the public might not get on board.
Crowdfunding options can be used to test out markets. If your product is more of a niche invention, then it might be better for the charitable designation. These can be used for art, film and educational projects.
And, there are groups that are willing to crowdfund the next hot home or electronics invention. They have crowdfunding platforms, where you can pitch your idea to the masses. Interested investors will add money to your account, if they think it will work or simply want to support your cause. Usually, you must raise a certain designated amount during a certain time frame or return all the donations.
Alternative finance is available from many sources. Be creative and have some fun. The sky is the limit for a successful product or service.
by: Mark Palmer