December 22

How to Find Creative Business Financing for Your Small Business

As a small business owner, you know all about the traditional forms of business financing. However, you may not be as familiar with some of the more creative business financing options that are out there.


Creative financial solutions can be a great alternative for small businesses, especially for those struggling to find the right business funding solutions like small business loans.


We will take a closer look at the different creative financing ideas that you can try that will get you the funding that your small business needs.


Crowdfunding


Crowdfunding is definitely not a new concept for business financing, but this financing option can be a great one to consider for your business especially to get working capital.


The first thing that you should do is to consider what your business needs to get started or to grow your products and services. Then determine if you can achieve this financing through a crowdfunding campaign.


You need to have a strong message and marketing strategy when you are doing crowdfunding if you are going to be successful using this approach. If your campaign stands out, you can attract enough attention to meet your funding goals.


Angel Investor


An angel investor can be a great option for you to consider. These investors take a risk on small businesses that have savvy or interesting business owners, unique plans for their business, and has great potential for their future.

angel investor

They will invest capital into a business, exchanging for equity stake in their company. They will also often also have a seat on the board of directors, giving them a say in how the company is managed. 


It’s important for small business owners to understand that they are giving up some level of control of their business when they get financing from an angel investor.


Credit Cards


Credit cards may not be the ideal choice for small businesses, but they can offer a way for the small business to cover any short-term cash shortfalls that they may be experiencing.


While these are decent options for short-term creative financing ideas, they aren’t great options for long-term cash flow problems.


Peer-to-Peer Lending


Also referred to as P2P or marketplace lending, peer-to-peer lending helps small business owners connect with borrowers by using various websites.


Prosper and Lending Club are among the largest of this kind of creative financial option in the United States. This can be a great option for those who may have had business fails in the more difficult economic times we’ve had recently or ones with a credit score that doesn’t qualify for lending with traditional loan companies.


Micro Loans


Micro loans are creative business financing options that provide short-term financing solutions that have low interest rates. This can be an ideal option for those small businesses who have low capital requirements.


These loans typically offer funding of between $500 and $50,000. Don’t have a good credit history? Lenders of these types of loans generally are more likely to offer loans to people without a business credit history than many other options.


Capital from Family and Friends


If you don’t have the right amount of capital to finance your business on your own, you can turn to your friends and family to see if they can help you out.


Whether they want to loan you the money or own a stake in your company, you can work with them to determine the best solution for you and your business.

cash advance

Whichever way you go, you should treat any money received by a friend or family member for your company as you would if they were an unknown investor. 


Be sure to draw up contracts that are signed by both parties, which contain the details of your arrangement.


Owner’s Capital


If you have the means, you can just invest in your company yourself. The great thing about this option is that you retain completely control over your business, without having to give up any stakes to other investors.


The problem here is that you may need to take time or sell a lot of your personal assets to come up with the right capital for your business.


Grants


Is your business focused on research and/or science? If so, then you have the chance of getting money from the government.


Grants are offered by the SBA (U.S Small Business Association) through programs like the Small Business Technology Transfer or Small Business Innovation Research programs.


In order to receive these grants, you need to meet the federal research and development goals. You also need to have a strong potential for commercialization. What’s great about grants is that this is essentially free money that you don’t need to pay back.


However, these can be a long and complicated process to get this money. This money should essentially be used just as bonus money rather than as necessary capital for your business.


Merchant Cash Advances


Another option is getting a merchant cash advance. This is a very quick way for you to get the capital that you need, but this can be an expensive option to sign up for.


With this option, you get a lump sum of money from the provider, then you pay them back using a portion of your credit card sales. Every time that you process a sale using the credit card machine, the lender gets a small percentage of the sale until the money is paid back in full.


This may be a convenient option for a lot of people, but the problem is that this can be expensive and can significantly impact your business’ cash flow. For some people, this may be a last resort option to consider.


Finding The Best Creative Finance Solutions


Becoming creative when searching for financing solutions for your business can be the best thing to do, especially when you have difficulties obtaining funding from traditional sources. There are so many alternative funding options that you can consider instead to help you start or grow your business. 

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