Starting a business always costs money. Obviously there are some that are far more expensive than others, and those startups usually get a massive amount of cash from venture capitalists. Others will turn to alternative sources such as car title loans that have slogans like, “Texas loans can provide you with the money you need fast for your business.” A good solid business plan will be able to repay most loans quickly; a bad business plan may cause you a lot of financial hurt.
Here are some of the more popular alternatives to just getting a loan from the bank.
Crowdfunding
One method of funding a startup that has soared to popularity lately is through crowdfunding. For those who don’t know, the concept is simple. A lot of people give a little bit of money to raise the capital you need. Usually they are rewarded with a limited edition release of a product. Kickstarter is still the biggest crowd funding option out there, but there are many others that keep popping up.
Peer to Peer Lending
A dozen years ago the only way to do peer to peer lending was to go ask your neighbor for cash. Now there are websites like Prosper that cut down on the legwork. In fact, their site advertises that you can borrow for as low as 5.99% APR (assuming you meet the qualifications). It’s a great way to get a relatively cheap loan while skipping the banks.
Car Title Loans
As mentioned above, some people choose to receive a personal loan. But often a bank, or other lending institution, needs collateral before they will hand over the money that you need. A car title loan allows you to keep your car, as long as you make the payments. If you default, then you run the risk of having the lender take your vehicle. It’s not a risk many would like to take.
Bootstrapping
When you pull yourself up by your bootstraps, you aren’t relying on anyone to help you out. Bootstrapping a business is much the same idea. You use your own funds, or ask friends and family to give you the money. The idea is that you don’t take outside help, but that often means you don’t have quite as much capital to work with.
Grants and Prizes
If you have an outstanding business plan, not necessarily a unique idea, you may be able to win the money that you need to get started. Many companies (like Amazon) are excited to give away money to those who show promise as up and coming entrepreneurs. The US Government offers grants to help businesses get started in an effort to spur the economy.
Find Funding for Your Business
There is a big misconception that most people can’t start a business because it simply costs too much. But there are so many different methods to starting a business that the “I can’t get a loan” excuse really doesn’t fly anymore. If all else fails, you can always freelance on the side until you have the capital to expand.
How did you fund your startup?
