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2 non-traditional financing options that can work for start-ups

On Behalf of | Sep 27, 2022 | Business Formation & Planning

Finding funding for a business can be a difficult process. The bigger your idea, the more money you will likely need to make it a reality. The traditional method for financing a company involves pitching a concept to a bank and possibly having some kind of collateral property for the loan you need to start the business. 

However, even those with good ideas and demonstrable professional success may not be able to get a loan from a banking institution. Some people who want to start a business will need to explore alternative means of generating the money they need. 

What are two alternative funding options that entrepreneurs could utilize? 

They can secure microloans from people they know

Unless you know someone who is very wealthy or successful, the chances are good that no one in your inner circle has the liquid capital necessary to wholly fund your business concept. However, you might be able to borrow a small amount from multiple people. Some entrepreneurs will find that pitching their idea to family members and arranging for multiple small loans could be an ideal solution for gathering funds. 

They can pursue crowdfunding

Especially if you have a product that you can deliver to early investors once you get your company off the ground, crowdfunding is a popular and effective way to connect with the resources you need to start your business or hire a manufacturer to produce the product you designed. Having appropriate intellectual property protections in place and a viable prototype will increase your chances of success during crowdfunding while minimizing the risk involved. 

Being creative about how you pursue financing for your business concept could help you more quickly start a new business.