If it’s a start-up you are planning, it’s smart. If the business nature is a need of the market.
While the most important aspect to concern after the business idea is its investment. Where will you get the money for your business? Borrowing money can be tricky if you don’t have a proper amount on your own.
Commercial banks are a go-to for borrowing money but if you don’t meet their underwriting standards, it’s a no.
So, why don’t we dig out some other ways to borrow money for the business?
1. Crowdfunding:
In this era, the easily approachable way is to get funds through crowdfunding.
The website offering small start-ups a stage to pitch the investors and get the funding for their business purposes. The investors are numerous on such websites offering to crowdfund. Even a small investor or entrepreneur is welcomed.
Just pitch your idea, if they liked it. There is your funding!
2. Peer-To-Peer Lending:
Not getting a middle-man in between and directly accessing a peer.
It’s a process of having a professional that act as third-party to get the borrowed money for you from banks or individuals. Peer-to-peer lending is when you directly interact with an individual and convince them to lend you money.
3. Asset-Based Funding:
Financing your main assets.
This what asset-based funding is all about!What can be included?
- Inventory
- Accounts Receivables
- Equipment
Lines of credit will include your inventory and accounts receivable while your equipment will be the line for loan terms. It’s like an intermediate solution for several outgrown companies with factoring without conventional banking.
4. Factoring:
Quick cash!
The way to get cash quickly is by factoring. Companies use factor to manage slow-paying customers or the cash-flows. The factor adds the value to 75%-85% to your accounts receivables invoice. It’s like the higher the quality of your account, the more money you can borrow.
It depends on the quality of your accounts receivable and worth. But, remember there can be a long lag time on collecting those receivables.
Final Verdict:
When you don’t want to go for traditional business loans, these are the aspects you should jump on. Get money for your business. Borrow from reliable sources as mentioned and keep your business out of trouble.
Just make sure what you are getting yourself into and then sign the contract.