Starting a business is hard enough, but seeking capital can open another group of challenges even for the most seasoned entrepreneur. If you have utilized your personal funds and at their maximum personal credit cards, most. We hear that from the large amount of the small business people we work with. However, there are a large number of creative fundraising sources which we'll explore in this blog.
Crowdfunding For A Small Business
First, Family and friends would be the most tried and tested sources of capital – although not in the manner you might expect. Think creatively about utilizing crowdfunding in an effort to leverage your existing networks while expanding them to the broader internet community. This advice is particularly relevant for brand new and smaller companies that are not yet profitable.
- Kiva Zip is really a unique crowdlending platform that allows you to take a loan amongst your family and friends first, before being featured online. They provide loans as much as $10,000, and loans are 0% interest with a repayment as high as 36 months.
- Other crowdfunding sites for example Indiegogo or Kickstarter allow you to host a fundraising campaign either as a donation or pre-purchased products. Keep in mind that when your project is funded, follow-up is essential, whether or not this involves fulfilling pre-orders for the product or just informing your funders of progress toward your ultimate goal.
Small Loans From CDFIs
It's unfortunate that Community Development Banking institutions (CDFIs) are such a little-known resource to smaller businesses! CDFIs specified for to work with clients who aren't traditionally served by banks and offer loans to small businesses. Although this category includes banks and credit unions, many community development institutions are nonprofits that have requirements and terms that are a lot more flexible. Below are a few local examples from the San fran, but when you're located in another region, check out Opportunity Finance Network's list of CDFIs by region:
- Working Solutions is among the only CDFIs that provides loans to startup businesses, which make their loan product highly sought after. Additionally, they offer loans to existing businesses as much as $50,000.
- Opportunity Fund lends within the San fran and La with loans of up to $100,000. Additionally, they provide a unique EasyPay loan for businesses in need of capital.
- Lastly, a shameless plug for Pacific Community Ventures once we lend throughout California for businesses seeking up to $200,000. We also match you with an industry advisor to aid the company throughout the term from the loan.
A Note About Online Lenders
Online Lenders are another territory for small business owners, and if you are concern about utilizing online lenders for a financial loan with a quick turnaround, you're not alone. Conduct due diligence on your potential lender, and make sure you understand the terms of the agreement. Find out the details – is the rate of interest is compounded daily or monthly, are there are any balloon payments or prepayment penalties, etc.
At some point, your organization must get up on its own two feet and begin to construct business credit. If your bank is happy to manage your money but less than excited about extending additional capital in the form of a term loan or line of credit, know that there are many creative possibilities.
