Sometimes expanding your business requires additional funding. If you don’t quite qualify for a loan through a bank or credit union, or you just want to see what other options are available, there are a few alternatives to consider.
Crowdfunding
If you have a great idea that you think people would support, you can set up a listing for it on a crowdfunding site, such as Kickstarter or Indiegogo. In your listing, you include all the pertinent information about your idea. For example, if it’s a product, you can include a prototype for it or, if you’ve already made one, a video demonstrating how it works.
One big benefit of crowdfunding is that people are making donations to support your listing, so you don’t need to pay back what you receive, as long as you follow through with your plan for the money. If you request money to create a new product, you need to put funds towards creating that product, not decide to use it for rent instead. Although you don’t need to reimburse people, you can increase your likelihood of getting funding by providing rewards for donating a certain amount. Rewards could range from a personal thank you note to the product itself, or anything else you can think of.
Peer-to-Peer Lending
If you want to get a loan, a peer-to-peer (P2P) lending marketplace allows you to submit a loan request, which investors can then fund. The P2P marketplace that facilitates the loan screens you, so you still need to meet certain minimum borrower requirements. They also assign you a risk score that investors can see, and which also determines the interest rate on your loan.
You pay a fee to the P2P marketplace, and the interest on the loan goes to the investors. Interest rates vary depending on your financial background, but this type of loan can be a convenient option that’s easier and faster to obtain than a bank loan.
Title Loans
If you have a car in your name with enough value, you can get money today through an auto title loan. While this type of loan is very convenient, there’s a catch – interest rates are often extremely high, sometimes with more than a 300-percent annual percentage yield (APR), and terms tend to be short, with the most common term length being 30 days.
Because of the short terms and high interest rates, title loans are something that you should only use as a last resort when you just need a quick financial boost. Most importantly, you need to be sure that you can pay your title loan back by the due date to avoid getting stuck in a cycle of debt.
Title loan laws can be significantly different from state to state, and while most states don’t rein in title loan interest rates at all, a few of them do. Arkansas and Florida, in particular, have much lower title loan interest rate caps than other states. If you live in either of those states or another one with favorable title loan regulations, then you can get a better deal.
There are more ways to fund your business than the traditional methods. The key is finding the method that is the best fit for your specific needs.
