Getting creative with funding your small business

Over the past few weeks, we’ve come across several articles talking about some less common but potentially useful ways which small businesses can obtain funding. In an environment where traditional small business loans are getting harder to come by, small business owners should know that there are a lot more options than visiting your local bank branch.

First, online lending is slowly but surely gaining favor for small loans. Among the factors cited in its growth are banks’ hesitancy to loan to small businesses and small business owners showing distaste for the often drawn out loan application process. Advantages of online lending include a faster application process and increased willingness to lend to small borrowers. Both articles note that the lack of regulation among these types of lenders can be both good and bad, as it lowers costs but also means there’s little oversight. It’s also important to note that, while some of these lenders offer products similar to traditional loans, there are a wide variety of business models, such as Kabbage, which allows businesses to borrow against their outstanding invoices. Read more at New York Times and Fortune.

Next up is Kickstarter. A lot of us already know about the virtues of crowdfunding (here’s a good primer in case you’re unfamiliar), but sites like Kickstarter are generally thought to be tools for very early stage companies trying to get their first product off the ground. However, the Wall Street Journal reports that companies who have had successful Kickstarter or Indiegogo campaigns are even more likely to be successful with each subsequent round. In addition to gaining the necessary funds, one entrepreneur argues that an even more powerful aspect of repeat crowdfunding is it allows companies to build a fan base in increasingly crowded retail markets.

Finally, Adam Aronson writes for Entrepreneur that more businesses should consider family offices for their funding needs. Family offices operate as private companies that manage investments for high net worth families. As Mr. Aronson notes, there are over 3,000 family offices in the United States and they generally have at least $100 million to invest. He also notes some of the advantages of obtaining financing from family offices, including great networking connections, increased patience, and a higher willingness to serve as mentors.

No matter which route you choose, always know we’re here to help with tax planning, financial statement preparation, and any other needs you have along the way!

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