Categories Business

Four Ways to Finance Your Business Without Going Broke

In today’s market, entrepreneurs are finding it harder than ever to start and maintain their businesses. Economic uncertainty and buyer sentiment are always rocky, and the global pandemic has kept things just below an uncertain simmer.

But this doesn’t necessarily mean that your business idea is dead on arrival, as long as you stay creative and open-minded about financing options. Here are five routes to consider:

  1. Bootstrap Your Business Ideas

Bootstrapping means that your company keeps costs low at first by building a business model around the initial investment of money, equipment, and other resources from the founders. This allows them to avoid drawing outside investors and borrowing money from banks, and it also makes the company less dependent on costly external business factors such as interest rates.

  1. Explore Ways to Borrow Funds

Your bank may be out of the question, but other methods exist to support your company’s growth. For example, peer-to-peer websites such as Prosper and Lending Club are online marketplaces where lenders can invest in small business loans.

You can use these sites to search for people who are willing to help fund your business idea. You might even be surprised to find lenders on these websites who have more interest in entrepreneurship than they do in making a high return on their investments.

  1. Consider Crowd-Sourcing as a Source of Funding

Using an online platform, entrepreneurs can seek donations from the general public through methods such as crowdfunding. Sites such as Kickstarter and IndieGoGo feature opportunities to raise funds and receive creative and financial help for a wide variety of projects. If you think that your business idea would appeal to the masses, these sites offer a simple way to test your market while building momentum for your launch.

  1. Explore Alternative Lending Options

There are several new funding options on the market that provide financial aid to small businesses. One of these is marketplace lending, which includes liquidity by aggregating assets from individual investors and deploying the funds through a fund manager.

You can also consider unsecured business loans as a less expensive alternative to bank loans requiring collateral. This financing approach is often available through peer-to-peer lending services as well as other online business lenders.

No matter what option(s) you choose for funding your business, make sure to keep up to date with market conditions so that you can understand how external factors impact your income. Only then can you be sure that your business idea has the best chance of success