In the past decade or so, startup business culture has seen significant growth with more and more people leaving traditional corporate positions in place of working for a new, fresh and small startup company. Typically, these startups are technology or software-related, but many small businesses around the world are providing many different kinds of services and products under the guise of a ‘startup.’
Though many startup businesses have experienced great success with their ideas, one common problem that many startups and small businesses go through is a lack of initial funding or working capital to account for business expansion or other day-to-day business costs. Fortunately, The Commercial Finance Group has worked with countless startups and small businesses by providing the small business lending services that these companies need to break past financial barriers and go on to achieve their desired results.
Our asset-based lending company is proud to help these small businesses achieve their dreams by providing working capital solutions, and we can help your business next! Read below as we talk about ways to get funding for your business beyond traditional bank loans.
Personal Financing
If you’re truly committed to the success of your product or service that you’ve come up with, then you should consider putting your own money aside to help finance future business endeavors if you haven’t already.
This may not seem like a very creative way to finance working capital for your business, but investing your own money in your business shows that you’re legitimately dedicated, passionate and confident about the success of your business. After all, many investors won’t pour money into a company if the owner or creator doesn’t have any “skin in the game,” so to speak.
Crowdfunding
We’ve touched a little bit about this form of business funding in the past, and it’s absolutely worth mentioning again. Crowdfunding has grown in popular over the past decade or so, and with good reason.
Through crowdfunding, you can utilize the power of the internet and online communication to find a group of like-minded people who believe in your product or service, and want to see it come to market. Each person who supports your business has a small amount of money that, when combined, results in a considerable amount of capital to help get your business efforts rolling.
The crowdfunding approach has recently spread beyond the scope of small businesses to include organizations like nonprofits, pre-sales, and memento rewards. In fact, through crowdfunding, it will be possible to make small equity investments in companies. The passing of the JOBS Act, or the Jumpstart Our Business Startups Act, was intended to encourage the funding of small businesses in the United States by easing many of the country’s securities regulations. Now,
Microloans
Microloans are also an alternative to traditional bank loans for small businesses. Indeed, there are a number of private companies and nonprofit organizations that offer small loans of various sizes (up to around $35,000, according to Forbes) to promote entrepreneurship. Microloans are great for small businesses because they’re intended for individuals who would not normally qualify for bank financing, making it possible for more small businesses to realize their potential.
Vendor Financing
Many manufacturers and distributors can actually be convinced to defer your payment until the goods are actually sold by you. This is particularly ideal if your business needs tangible products for your inventory. What vendor financing results in is an extension of the normal 30-day payment terms to a period of months or longer, depending on your credit situation and any extra fees that may apply.
Peer-to-Peer Lending Options
Peer-to-peer lending refers to a group of people coming together to lend money to each other and has been around as we know it for a long time as somewhat of a rudimentary form of funding. In terms of getting your startup financed, you should look for a successful entrepreneur peer that’s willing to fund new ideas that are similar to yours.
IRA Financing
It is widely thought that the most accessible alternative financing sources that are currently available for business startups are Investment Retirement Accounts (IRAs) and 401(k)s. Though you can’t actually use your own self-directed funds for your startup, chances are that there are many others who are more than willing to loan you money from their own IRA or 401(k) if they believe in you and your mission.
Connections: Family and Friends
Not to sound too sappy, but you already know that your family and friends are the kind of people who trust you and believe in your hopes in dreams. As such, you can rely on these people to help fund your ideas with having them wait just to see if your idea works or until you have real customers, revenue, hard assets, and so forth.
When it comes to financing via friends and family, these financial commitments should always be positioned in writing as promissory notes, or bridge loans, which will then convert to equity at a rate that’s determined by later investors.
As Always, Get In Touch With The Commercial Finance Group
While these are all suitable ways to help fund your startup or newly-established small business venture, confide in the fact that The Commercial Finance Group is always here to provide you with the valuable working capital solutions that your business needs to take things to the next level. We think that you’ll find our approach to lending rather refreshing compared to traditional bank loans, so why not get in touch with us today to get your business plans in motion? Learn more about our custom asset-based lending solutions here!
