If you are a small business owner looking to expand your established business, finding financing solutions is the biggest challenge. While small business owners should always be on the lookout for alternative sources of finance, opportunities may be far and few.
Most business owners have heard of “alternative” financing solutions like seeking investors who are willing to put their money in a young company in exchange for profit shares, the Shark Tank style. However, the fact remains that it is extremely difficult for small businesses to approach these sources. As a result, seeking traditional loans from banks is still seen as the only viable option by many. Unfortunately, the banks are not really a viable solution as they are always skeptical toward your business, especially when your business is an established one, but doesn’t have sufficient operating years under its belt – e.g. a twelve months, even a two years old company.
If you are someone looking out for a small business financing alternative and want to get a gist of the options available, you have reached the right place. We have compiled a list of most popular, viable, and easily accessible financing alternatives. You can read and decide for yourself which one is most relevant for you.
Government Grants
You can expand your business using government grants. Federal, state, regional and even city governments set aside funds to give away as grants to support certain private businesses. The best part is that there are chances that they won’t even ask for equity. The offers might vary from one geographical location to another, but governments everywhere are looking to invest in startups. It seems to have become the new model for governments to enact economic development. The basic rationale behind this move of the various government is that by investing in small and potentially successful businesses, they will attract new talent and potential investors in the area.
There are a few important things to keep mind. Since grants are funds awarded rather than simply lent, it is much more competitive to receive grants. They can be a little tricky to acquire and needs a business owner to fulfil various requirements. You might need to plan well in advance if you are looking to apply for a grant. Also, make sure to keep another alternative ready in case you miss the opportunity and it is awarded to someone else.
Crowdfunding
If you are an entrepreneur you must have heard about various platforms that help you crowdfund your idea. While it may sound like a far-fetched idea relevant for artists, it can turn around your fortune. Some of those platforms have seen billions of dollars raised. If you need funds for a small business idea or just enough money to begin with something substantive, crowdsourcing could be the answer.
What’s interesting is the fact that an established company can also benefit from such arrangement, namely enterprise crowdfunding if you’re in need of developing trend-driven new products or services, or equity crowdfunding if you need to secure funds by selling securities.
You might have to strike a deal by offering your products or services, but you can avoid giving up equity and even paying hefty interest. The other crucial benefit is a community of potential customers you can develop while crowdsourcing.
If you research closely and decide to invest your time looking for crowdsourcing platforms you might even find one specifically relevant to your business. Some platforms only raise funds for startups, while others fund business ideas associated to a particular domain.
Universities
Many universities offer grants to students, faculty, and alumni. Some of these universities even invite applications for startup ideas and offer incubation for extended periods. Just the right amount of research, a little diligence, and a bit of luck and you can receive an offer that you could have only dreamt of. Having a connection in any such university is always helpful as they prefer their alumni and faculty members over other candidates. But applying otherwise is also worth a shot.
The other obvious benefit is the expert advice that you will be entitled to. You might get a chance to interact with industry experts and get their valuable insights. You might even find a big investor and work up a fortune for yourself. The best part is that these grants mostly work on a no-string-attached model. You don’t have to worry too much about increasing profits too early or someone stealing your work. You can work on improving the quality of your business while the finances are taken care of.
Takeaway
These alternative financing methods are, by all means, just some of many methods you can get your hands on – e.g. cash advances, line of credit, and so on. But one thing for sure, banks aren’t the only options. You can access various financing options, depending on the amount of funding you need, as well as how established your business is.