Startup Finance – 5 Fantastic Alternatives to Bank Loans

Have you considered these options for financing your business?

For the majority of aspiring entrepreneurs, bank loans do not qualify as a feasible finance option simply because they do not offer enough to secure the borrowed amounts. With lack of initial capital to start a business, how are new entrepreneurs supposed to incubate their ideas and grow thriving businesses?

Here are 5 financing alternatives to bank loans that new entrepreneurs can look into.

1. Venture Capital

Venture capitalists usually invest in a particular industry. They put their money to help kick-start and boost new businesses that exhibit high-risk and high-growth potential. This channel of business finance is ideal for businesses that have a solid exit strategy with a fast-growth plan – these startups can obtain substantial amounts through venture capital to grow and network the business.

2. Invoice Factoring

Funding is not just required to start a business. One needs finance to keep the business running. Invoice factoring makes sure small businesses have the working capital they need to keep the business operations running smoothly. An invoice factoring service usually pays an upfront amount on billed out invoices. This amount can then be returned when the business actually receives payments for the same invoices from their customers. So even with the outstanding invoices, the business does not come to a halt.

3. Crowdfunding

Another interesting way to raise finance for your newly established business is through crowdfunding. Sites like Indiegogo and Kickstarter pool small amounts contributed by various investors into an investment pool that can provide a boost to small businesses seeking finance. This ultimately eliminates the need for businesses to look for one single investor willing to invest a big amount of money in the venture.

When picking a crowdfunding site, make sure you thoroughly read their fine print and know the terms and conditions applicable to the arrangement.

4. Government Grants

Startup businesses can also explore the variety of government grants available for promoting small businesses. These are usually unsecured, cheap loans that don’t require payback. This makes them a great medium of raising finance for startup ventures. The only catch with these loans is that the qualification criteria are quite stringent. Since these grants are far and few in number, one needs a robust business plan to be eligible for one.

5. The Incubators

Incubators act like nurturers for small, newly established businesses. They provide businesses with necessary facilities and office space on a shared basis. Incubators are usually funded by a private equity fund. In addition to the office space, facilities, and monetary finance, incubators offer seasoned mentors (industry experts and entrepreneurs) to promote group communication and learning.

Normally, incubators continue to support small businesses for as long as they wish to stay in it. However, once a business grows enough to sustain and prosper on its own, they can move out and set a pace for a solo flight. Incubators can be great financing options for businesses looking to build networks, obtain finance, and jumpstart their enterprise.

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Setting up a startup business can be challenging. However, once you have the finances sorted out, you could opt for professional help to make things easier for you.

For professional help, get in touch. If you found this information useful, let us know! Feel free to share it so others can benefit too.

We can offer you more guidance when you call Les’ Hotline:  07732090847, les@akbook-keeping.co.uk.