Locating sources for funding is one of the biggest challenges that entrepreneurs face. Most entrepreneurial loan applications will be denied, and wealthy investors do not grow on trees. Many entrepreneurs must seek out alternative sources of funding.
In our last blog post, we discussed three possible alternative lending sources. Today’s entry will conclude our two-part series. Let’s examine three more potential loan alternatives for entrepreneurs who are seeking funds.
4. Small business administration loans
Some local banks participate in small business administration loan guaranty programs. Many business loan applications would be too risky for small banks to back on their own, so the federal government offers guarantys in the form of SBA loans. These types of loans were established by the government so that banks could make loans that they otherwise would not be able to afford. The federal guaranty provides small banks with the financial reassurance and incentive needed to grant SBA loans.
Just a few years ago, crowdfunding was a new-fangled, little-understood option for funding business endeavors. It has quickly become a popular funding method for up-and-coming entrepreneurs. By paying a small fee to a crowdfunding platform like Kickstarter, GoFundMe or Indiegogo, entrepreneurs can seek investors from all around the world to contribute small or large amounts to a project. This option may be particularly appealing for millennial entrepreneurs who are starting a small business or trying to develop a product.
6. Friends, family and business contacts
You may not realize it, but you already know several potential investors: The people around you. Your family, friends and business contacts can be excellent sources for investments or loans. When you do business with family other people with whom you have a close personal relationship, it may be wise to work with an attorney. Going into business with your loved ones can be wonderful–as long as you are able to keep private and professional matters separate.