If you’re a business owner, knowing where your funding is coming from is always part of your main hustle! You’ve got so many things to plan, from product supplies, to making sure that your advertising is ready. Sometimes standard forms of financing don’t have the speed for the things you need to do. What other alternative forms of financing are available to business owners who need funding for their businesses?
Crowdfunding takes a lot of time and effort, but if you have the right product and charisma, it can be worth it. Basically, in crowdfunding you have an idea, and are searching for investors. They invest a certain portion of money in your idea and product, and in return you contract to pay back their investment with interest. In short, individuals become the bank, which means a large board of directors doesn’t need to make it difficult to get permission to borrow from a lender.
Borrowing From a Retirement Plan
It is possible to borrow from your own retirement plan to fund your small business as well. According to Franchise Gator, you can take out up to $50,000 from a 401(k) for your business. Both a traditional IRA and a 401K are eligible. You might need to use a R.O.B.S.—Rollover for Business Startup. This gives you the chance to fund your business without being in debt to others.
Get a Small Business Loan
The government offers small business loans, which have specifically lower interest rates and good options for paying back over time. You might have good luck with small business innovation programs, and even Technology Transfer programs. According to the U.S.S.B.A, you will need your completed business plan, and expense sheets and financial projections for the next five to ten years. This doesn’t mean you have to know everything, but allowing the credit union or bank to know that you have a plan does help immensely. A credit union can be a lot easier to get funding from than a traditional large banking institution.
It’s not an impossible goal to secure financing! Plan ahead so your investors will know that you mean business. You want to be able to show what a good job you’re going to do in the future, by showing what kind of things you’re already working on now, and what you’ve done in the past already. This gives your investors confidence in their investment!
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