Thursday 20th Aug 2020
The modern funding market boasts an incredible array of choice. Where a small business would once have had to deal with their bank, or another major lender in order to get a loan or overdraft, there are now numerous choices, each tailored to various different needs and circumstances. Let’s take a look at some of the top alternative options here.
Crowdfunding was never seriously possible before the internet, but it’s now a staple for startups and small enterprises with an idea that they think they can sell to the masses. The concept is simple; pitch your idea on a platform, and wait for tens, hundreds or even thousands of people to invest in the idea pre-launch. Kickstarter is perhaps the best known platform, but it’s certainly not the only one.
Crowdfunding is certainly an interesting choice, and it’s not for all businesses. It tends to work best with simple ideas that capture the imagination, particularly where you’re launching a new product or service. There are startups that have benefitted from this from the ground up, but it’s also suitable for existing small businesses that don’t want to go down the usual routes.
The internet has again made connecting with potential investors far easier than before, and there are now plenty of ways that you can get your proposal in front of those with money. Looking to give away some of the equity in your business in exchange for funds? Then an angel investor could be idea. They’re particularly useful if you know you’ve got a great idea for expansion that will seriously deliver in the future.
Invoices are one of the major headaches for businesses of virtually any size, but they can be especially troublesome for smaller enterprises. Cash flow is king, and when customers pay late, it can be severely diminished. Invoice finance products seek to redress this issue by lending against the value of invoices. This means that you get most of the value of an invoice paid to you as soon as you deliver the goods or services. There are even options that allow the finance provider to look after credit control for you too. This can be ideal for startups and other very small businesses.
If you don’t want investment, but are instead looking for a loan or similar, then peer-to-peer could be for you. Rather than going to your bank, you can go to other businesses that might be able to lend you the money. Again, there are websites and services that allow you to seek this kind of input. One of the benefits of peer-to-peer is that you may get the chance to make your pitch to someone who understands your industry a little better than the algorithms of big banks.