Finding money is the biggest hurdle that start-ups face in their quest to open their doors. All the planning, sourcing, and strategizing comes to naught if there’s not enough cash available to get everything done. That means knocking on doors and filling out loan applications to get the cash needed, but that’s not always the easiest way to get funding. Alternative methods of finance can be more reliable even though they’re not mainstream. Here are three unique ways to finance your startup business and get your dream off the ground.
Grants for Entrepreneurs
Image via Flickr by yomanimus
Entrepreneurial grants are available on the state and federal levels as well as the private sector. It’s essentially free money in that it doesn’t have to be repaid and can be a big boost for getting a startup off the ground. You will have to apply and prove that you have a need for the grant, but being awarded the money is advantageous because you don’t have to deal with a loan repayment. The less money you have to repay, the better the odds are for success.
Grants come in a variety of formats that include granting money to women or minority-owned businesses or a business that’s looking to grow but needs more funding to achieve that goal. Search for grants that fit your business makeup or criteria to increase the potential of winning. And, always apply even if your business doesn’t entirely match the description.
This is a form of lending where people lend money to someone else via an intermediary. The interest you pay on the loan largely goes toward the investor who is putting their money out for you to use. Many people prefer to put their money on peer-to-peer sites instead of learning how to trade stocks to get a similar return. The drawback to this method of getting money is mainly the fact that it is a loan and it’s an ongoing liability in your books until you’re able to pay it off. But, underwriting for P2P lending is less stringent than traditional lenders and you are more likely to get funding even if you have less-than-perfect credit.
There’s a lot of buzz about crowdfunding because it gets around all the usual channels for getting a business or product off the ground. You put up a page about your business, what it’s about, and offer investors an in of some kind depending on the amount they want to pay. The people who pay for a certain tier get specific services or products upon delivery creating a kind of escrow. They commit the cash to you so when you deliver, you get the money and use it any way you see fit.
These are some of the ways you can find money for your startup that don’t require going to a traditional lender. You might find that you use a combination of two or all three to get the funding you need, but you can open your doors and start selling your product sooner than later because you used unique ways to finance your business.