Is Alternative Funding a Good Idea for Your Small Business?
Owning a small business can be an exciting yet daunting endeavor. You might have an innovative idea and business proposition that is destined for success, but it won’t be sustainable without the proper funding. Traditional funding sources, such as bank loans, can help get a business off the ground, but might not be enough to keep it running smoothly in the long-term. Additionally, they can be difficult to secure, as small businesses don’t often have the time or documentation to go through the strict and lengthy application process that bank loans require. Therefore, it is important to identify alternative sources of financing, which are on the rise as they have gained popularity among small businesses. With so many options available, look for a company, like ExpoCredit (https://www.expocredit.com), that makes it easy to get the funding you need to stay in business and reach your potential.
What Are Some Examples of Alternative Funding?
- What it is – Crowdfunding is a strategy that entrepreneurs can use to get large numbers of people to contribute small amounts of money to help finance their business ventures.
- The pros – Crowdfunding companies connect small businesses to their vast network of investors. This is attractive because it provides the business with exposure they might not otherwise get and allows for word-of-mouth to be generated, which is essentially free advertising.
- The cons – There are restrictions in place that prevent investors from over-contributing, so getting enough funding to move the needle can be difficult. To acquire a critical mass of people and appeal to investors, a campaign usually needs to be developed outlining the business plan. Investors are often offered incentives for investing, such as first-run products, donations or equity in the company and companies must deliver on any promises that are made to investors regardless of business outcome.
- What it is – Venture capital is assistance that is provided by high net worth investors (sometimes called angel investors) and financial institutions to small businesses. Help can come in the form of funding or professional expertise. Venture capital is a good option for new companies that might not have enough history to secure a bank loan.
- The pros – Venture capitalists tend to commit larger amounts of money to new and entrepreneurial business ventures that are seeking funds for the first time. Their expectations are high, so a professional business plan showing substantiated growth and research to back it up is essential.
- The cons – Most venture capital investors request equity or ownership in the company or significant monetary incentives. They are more difficult to attract because they usually require quantifiable assurances that the business has long-term potential for success. Therefore, the burden is on the business to convince investors they deserve funding, which is time-consuming. Unlike crowdfunding investors, venture capitalists usually commit large sums of money to a small number of companies. They also tend to invest in industries they are familiar with.
- What it is – An SBA loan is a loan guaranteed by the Small Business Administration to help businesses that can’t otherwise obtain funding.
- The pros – SBA loans are good for small companies that aren’t able to secure commercial bank loans and they can offer price breaks on fees.
- The cons – These loans require a lot of qualifications, as businesses need to apply to a financial institution that processes SBA loans in order to be considered for one. The loan is not guaranteed if the small business is able to get funding on its own, so the business needs to show it’s been turned down for a loan first.
- What it is – A microloan is a small loan ranging from $500-$35,000 that is provided by a microlender.
- The pros – Microlenders are more flexible than banks and don’t require as much documentation. This is good for businesses that don’t have a credit history or collateral.
- The cons – The amounts offered tend to be smaller and the interest rates higher.
Why ExpoCredit is the Best Choice for Alternative Funding
With all of the funding options available to small businesses, deciding which route to take is a complicated, but essential next step. ExpoCredit is the funding partner that focuses on your business interests by providing an easy, low-risk, hassle-free and fully-customized plan to meet all of your small business financial needs.
- Easy application process
- Flexible financing requirements
- Faster process than traditional banks and credit unions
- Flexible, customized approach to providing immediate working capital to all types and sizes of businesses
- Access to a variety of financial products and services, including accounts receivable and supply chain financing
ExpoCredit is the best option for flexible, tailored funding. There are no prepayment penalties and no incentive requirements. And ExpoCredit delivers on its promises.
For more information and to apply online, visit ExpoCredit at https://www.expocredit.com