If your business needs to secure funding in order to grow, you may want to consider steering clear of traditional methods. While traditional finance is great for those who have a flawless credit rating, it’s become much more difficult to secure, particularly in these uncertain economic times.
The good news is, there are plenty of alternatives available to traditional finance. Here, you’ll discover some of the best alternative methods you have and the benefits of each one.
One of the best alternatives to traditional finance for business is crowdfunding. This is typically used by businesses within their early start-up stages. You can use crowdfunding websites to market your products to a large number of potential investors. Those who like your idea, will invest.
This option is best suited to those looking to fund a single project. That could be the start-up of the company, or the introduction of a new product line.
Peer to peer lending
A similar option to crowdfunding is peer to peer lending. It is estimated that by the year 2020, peer to peer lending will be worth a staggering £15.9 billion.
This form of finance brings in a range of investors, pooling the capital raised into a single fund. One particular benefit of this method is that the borrower generally stays anonymous. So, your investors won’t necessarily know who you are. They will be able to view a risk profile, but the reason for borrowing isn’t typically provided. So, if you want to keep a little privacy and you need a potentially larger sum of money, peer to peer lending may be a better alternative over crowdsourcing.
Merchant cash advance
If you don’t want to rely on other investors, you could look into getting a Merchant Cash Advance. This is one of the newer forms of funding businesses can benefit from. It basically provides access to finance based upon your current sales.
One of the largest benefits of this type of funding is that there aren’t any fixed monthly repayments. This makes it a great option for businesses which have a fluctuating income. You won’t need a business plan and it’s typically quite a fast process to get accepted too. How much you can borrow will depend upon your sales revenue.
Finally, angel investors are another option open to you. These are high earning individuals who have a significantly high net worth. They provide the funding needed to businesses in return for a share in the company. If you need a large amount, you can also look out for angel investor groups who pool together to fund larger projects.
These are some of the best alternatives to traditional finance businesses have. Even if you’ve been turned down for a business loan, you could still secure funding using one of the above alternative methods.