Alternative Funding Sources For Business
Posted by Richard on June 3, 2021
While PPP loans and emergency funds helped many businesses stay afloat last year, long-term funding via conventional financing could be trickier. Enter alternative funding sources as an increasingly viable and enticing option.
Businesses seeking capital can get creative in a number of ways. These include, but are not limited to:
* Grants. Businesses focused on science and research in particular can apply for government grants that provide the boost they need.
* Fintech. Short for financial technology, fintech companies use technology to provide financial services. These are as commonplace as PayPal or Venmo, to the more complex and even esoteric uses like cryptocurrency. For businesses, fintech can take the form of crowdfunding (think Kickstarter).
* Venture capital. Venture capitalists exist to invest in startups and small businesses, typically in exchange for an equity stake.
* Peer-to-peer lending. In peer-to-peer lending, individuals contribute a variety of small amounts that are packaged into a loan.
* Crowdfunding. Crowdfunding now encompasses everything from charity fundraisers to Kickstarter campaigns, and have become a common go-to for businesses seeking an infusion of cash. The types of crowdfunding include debt crowdfunding, which is paid back like a traditional loan; equity crowdfunding, in which investors seek equity in the business; reward-based crowdfunding, which offers incentives for funding; and donor crowdfunding, like GoFundMe, which are often associated with charities and personal fundraising.