Where to Seek Financial Assistance
The gatekeepers to the world of finance are dying - or they’re at least losing their job as gatekeepers. The rise of fintech has led to a market where there are countless alternative lending options. That means that young entrepreneurs have more room for negotiation on financial aid than ever before - and a bounty of options to choose from.
But that plethora of options has created a climate where being educated on small business financial aid means having to earn a degree in finance. It doesn’t, and it’s worth understanding the unique advantages alternative finance offers. Here are the most prominent financing options, along with the main advantages of each.
Angel Investors For When You Need Substantial Capital
Angel investors really can feel like an answer from heaven, but they aren’t always a good fit for more independently-minded entrepreneurs. But they offer some huge advantages. Since they’re usually experienced in your chosen field, they can serve as valuable mentors to younger business owners. And the right angel investor can offer you a whole lot of startup aid compared to other options.
The trick is finding an angel investor that’s right for your business. A greater level of hands-on control is implied when an angel invests in a company, and that means that personality and vision need to be a much higher priority when on the hunt for an angel investor.
Crowdfunding for Transparency and Flexibility
Crowdfunding has seen explosive growth in the past decade - and it continues to be a popular form of financial aid for small businesses, even though it’s sometimes associated with relatively low success rates for the investor. Crowdfunding normally takes place on an open marketplace where you can make your pitch directly to your investors.
In most instances, these pitches are a direct appeal to the customer. An investor is investing in the delivery of a product that otherwise might not get made, and there are usually associated perks for different levels of investment. Crowdfunding platforms that promise equity or interest are out there, but they’re rarer.
The direct level of interaction between customer and business owner in a crowdfunding model is phenomenal. If you can manage to crowdfund your entire project, you can scale your financials to fit the need as precisely as possible - providing the most competitive rates to the customer and the best return for you.
Crowdfunding a project does have its own challenges. The first is that you need to have visible to your audience - and that can mean an exhaustive fundraising campaign, a strong elevator pitch, or generally both. That’s doubly challenging because you have to be able to make actionable promises about what you can deliver to your customers from the start of your investment process. Transparency is great, but crowdfunding also requires accountability.
Small Business Loans
The most traditional method of finding financing for a new company is the small business loan. The great thing about small business loans is that there are so many of them. With loans specialized for many different fields and so many potential lenders out there, there’s a good chance that you can find a loan that fits your business’ demands and dynamics well.
One of the most promising options for small business owners is the SBA startup loan. While the prerequisites for approval are very strict, it’s a huge benefit for those who do pass the grade. It requires generally impeccable credit and usually requires the ability to match the capital as an investment at 20 to 30%.
That said, SBAs are only one in a large pool of different loan options. Finding the option that’s right for you means finding a resource that can provide you with the up-to-date information you need. For financial assistance, let Seek Capital be your guide.
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