Alternative of Financing Small Business other than bank loans
Wondering what a small business would do if not offered bank loans? It might not even get started, isn’t it? Well, that is not the case anymore in today’s world as the options for investment has poured in like a boon for many people with huge amount of money riding on their back. Small businesses are the one that has gained gears and established themselves as one of the fastest growing business models that are present right now. People in the world have great ideas but not a great financial structure to start all by themselves. New ideas often face a roadblock due to the less availability of finance options. Let’s take a look at some alternatives other than banks which are required for small business financing –
Angel Investors – These are people blessed with “money” and as said they need to capitalize that amount and turn it into a whole lot. Every investor comes in by looking at the prospective returns on the investments that he can have. Varies according to the investors demand as the returns can be expected as high as 30% or as low as 20%.
Venture Capitalists – These may be companies or individuals possessing a high amount of wealth which can help a business rise to its zenith. The capital is the amount of money given to a business which is recognized to have a high growth and a high-risk potential.
Invoice Financing – Invoice financing or factorial financing is a type of financial transaction and a type of debtor finance in which a business sells its accounts or invoice to a third party known as a factor at a discount. This is what is known as invoice financing.
Crowdfunding – It is the method of pulling small investments from a lot of people by different means and ways. Numerous websites have come up which gives the facility of crowdfunding for a number of investors.
Small Business Associations – These act like the thinktank of small business financing. They have various programs like Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. The chosen ones for investment have to submit their ideas and should show that they have a high potential for commercialization.
If you want to have a startup of your own and are looking for a loan then don’t head to the banks. Other than banks there are numerous methods of sanctioning your loans and the one’s that are mentioned above clearly indicates the ones that you should be banking upon when in need of loans.