Five Business Funding Options That Don’t Require a Loan
Running a successful business relies on having enough funding to invest in it. When an entrepreneur is unable to invest significant funds back into their business, growth and development becomes very difficult, if not impossible. Because of this, it’s no surprise that many business owners look to getting extra business funding, either at the beginning to launch their business venture, or further down the line to help their company succeed.
However, as a business owner, you may not want to apply for a business loan, for a number of reasons. Or, you may be unable to get one – for example, if you have a less than glowing credit score, which can leave banks and other traditional lenders viewing you as high risk. Luckily, the good news is that there are several alternatives available which will allow you to gain funding for your company without having to borrow a penny. We’ve listed some of the best options here.
Option #1. Mortgage Refinancing – Five Business Funding Options
If you are a business owner and own your home, then you may want to consider a home refinance in order to raise extra funds for your business. Refinancing your home can leave you with more free money each month by cutting your repayment amount, allowing you to invest the difference into your business. Over time, gaining a lower interest rate on your mortgage through refinancing can also help you to increase your net worth, by saving more money over time which can be used as vital funding for your company, without the need to borrow.
Option #2. Angel Investors – Five Business Funding Options
Angel investors are often experienced businesspeople, who have money to invest in businesses that they believe will earn them a good return. If your business idea is set for success and your product could really win the public over with the right funding for marketing and promotion, then you should have no problems convincing an angel investor to give you a chance. However, bear in mind that most angel investors will be considering a number of businesses and weighing up their options carefully before they make a firm decision. Because of this, you will need to carefully prepare a pitch and invest some time and effort into a strong business plan that will build trust and credibility.
Option #3. Crowdfunding – Five Business Funding Options
Today, the option of raising money from generous members of the public is popular for both personal and business reasons. You may have already seen or even donated to personal crowdfunding campaigns, for example, raising money for a person who is unable to afford vital medical bills, donating money for a student to be able to afford college, or fundraising for a sick child to have a dream come true such as visiting Disney World. However, crowdfunding doesn’t just work for individuals – it can also be a viable option when it comes to raising funds for your business. Remember, though, it does often come at a price – when crowdfunding for business, donors are usually seen as investors, and you will be expected to provide them with a return in the future.
Option #4. Selling Business Shares – Five Business Funding Options
Another credible option of raising extra funds for your business without borrowing money is selling business shares to investors. For example, if you hire a lot of employees, then a share scheme for them can be a great way to get some of your money back after paying them, whilst also improving employee satisfaction as shareholders will be able to get a return on their investment, depending on how well your company does. Another option is to sell shares to the general public; using this method, you can usually expect several smaller investments in your company, and unlike in the case of an angel investor, the investors don’t tend to have the authority to give any kind of input as to how your business is run.
Option #5. Business Partnership – Five Business Funding Options
If you’re currently running your business all by yourself, then you might want to think about the benefits of sharing that with another. Whilst it is not for everybody, finding a business partner involves handing over some of your responsibilities – and a part of your business – to somebody else. Along with the financial benefits of this move, it can also be great for your personal life – many entrepreneurs find themselves working so hard that they no longer have any free time to spend with their family and friends, so a business partner can take over when needed. In addition, a partner can also bring their own business ideas or clients to your company, to bring in an extra profit.
Would you like to add to this list? Let us know in the comments.
Founder Dinis Guarda
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