Starting a business is stressful, we all know that, but did you know that small businesses make up around half of all U.S. private-sector workers, and have generated 64% of net new jobs over the past 15 years?
With new businesses popping up more and more, what are these current and new business owners doing to gain the capital backing they need?
The best thing to remember is to get creative.
Banks are not lending like they used to, and businesses still need help from time to time.
It doesn’t matter if you are starting your business, or are currently in business—finding alternative ways to get some cash for your business is something every business owner new and old should know about.
Below are 5 alternative ways to get money for your current or new business.
1. Business cash advance
Similar to a payday advance, these types of loans are much quicker to get than traditional bank loans. It is wise to note that these types of loans are more expensive than traditional loans, but they are becoming more popular.
Business cash advances allow business owners to manage their cash flow easier and is a viable way to get money fast, but your company needs to accept credit cards in order to receive.
Factoring can aid business owners by “selling” unpaid invoices to a factoring company in exchange for cash. Most factoring companies will buy your invoices for anywhere from 70-90 percent of the value of your unpaid invoices. After purchasing the unpaid invoice from you, the factoring company will reach the customer who is responsible for the unpaid invoice and collect the full amount owed.
This is a good possibility, but wise to remember many people are now looking at grants who weren’t able to get bank loans. Many are finding this outlet harder to get, but it is still is an applicable option. Instead of looking at the federal level for grants, look to local authorities—this could be a better option for some. If you are a non-profit, there are grants specifically for you to look for as well.
4. Venture Capital
Before contacting venture capitalists about financially backing your business, you should first draw up, or clean up your business plan.
Have your goals clearly stated, and back everything up with statistical data to prove how you will be able to pay them back. There are groups out there that are willing to invest, it’s your job to find them and convince them you are worth their investment.
5. Private Investors
A private investor is a great way to get financial backing for small businesses. If your business is geared toward a small niche audience, private investors who are also passionate about the same topic are more willing to give you a chance than a bank would.
You can find private investors in many ways. One way is to search online. There are many sites out there to help you get connected with investors who are ready and willing to invest.
Sites like prosper.com and findinvestors.com are just two of many. There are also agencies that can help you find a private investor as well.
It doesn’t matter if you are starting a business or need money for your current business, the main point here is to remember banks are not your only option. Getting a little creative in your search for a business loan can really pay off in the end, and it is wise to look at many different options before committing to the one that is right for your company.