Traditionally, new small to medium business owners would approach a high street bank in order to obtain financing for their new venture.
And financing through high street banks is difficult to acquire. Usually your credit record will have to be excellent, and you’ll need several years of proven business experience behind you.
That’s not great if you are just getting started out or if this is your fist venture.
First Things First
Before you can approach any institution or individual for money, regardless of your credit or experience, you are going to need a well written and thought out business plan.
Writing a business plan is something you can do yourself, but you’ll get a lot further a lot more quickly if you get some expert help.
There are excellent resources online. Read Bargain Business Plan customer opinions here to get an idea of the kind of offers that are available.
They are just one of the many routes you could follow to get your business idea and enthusiasm onto paper.
Then, however you move forward after that, you will always thrive better if you take on-board some management help so that you can focus on what needs to get done.
According to Gene Marks writing for the Washington post, only 25% of small business loans are approved by banks.
That means a whopping 75% are left out in the cold looking for alternative routes of funding.
Some of that 75% is covered by small, regional banks, but the rest is beginning to be covered by online lenders.
This is where alternative funding comes in.
This funding comes in a variety of forms, most usually crowd sourcing or matching lenders with borrowers.
Crowd sourcing, as the name implies involves leveraging the power of many.
Forbes magazine describes crowd sourcing as being related to the new ‘gig economy’.
There are a multitude of crowd sourcing sites available now, each suited to particular businesses.
They all have one thing in common, and that is they allow many people access to fund a business. Thus, a small to medium enterprise can get off the ground with small amounts of capital lent from many different lenders.
You may want to shop around depending on the type of business you have. Each platform will attract a specific kind of lender who is happy to expose themselves to a varying level of risk.
Some platforms are specifically for entrepreneurs with high risk enterprises, and others are more mainstream business ventures.
Going online is for your lending needs is another alternative.
There are now many institutions that don’t have traditional brick and mortar premises that can, as a result, offer much lower rates of finance to new businesses.
Even some larger, well-known names like PayPal are beginning to offer loans online, so there’s lots to choose from should you go down this route.
You’ll need to choose carefully, and it’s always best to ensure your provider is well financed and reputable.
Still, online financing can be hard to get. That’s why you should also consider how much financing you really need.
There are micro loans available from a variety of sources specifically suited to small businesses.
Micro loans are a kind of Peer-to-peer financing that works well for small businesses and across the Third World.