Right now, it can be difficult to find the financing you need for your business. Many banks are reluctant to help a small business with a loan. It represents a chance that the business is taking. What if your business tanks and you default?
Even if you have a good idea, it might be hard to find financing. One way you can improve your chances is try P2P lending, or some sort of crowdsourcing. You can usually get reasonable interest rates, plus you might be able to find someone willing to take a chance on you.
What is P2P Lending?
P2P lending is when you get money from someone else — “regular” folks like yourself. You can use a site like Prosper or Lending Club to look for loans. People can lend you money, in increments as little as $25. This allows you to get the funding you need, with lots of small loans adding up.
However, most people on P2P lending sites aren’t going to just lend you money. You have to convince them that your business is worth it. Some of the ways that you can increase the chances that you will find lenders include:
- Share a business plan: Lay out your business plan, and you will have more luck. Lenders want to see that you have thought things though.
- Share your story: You don’t need to go into great detail, but sharing your story, at least a little of it, can be helpful to your cause. Add a little humanity, and share what you hope will happen with your business.
- Let them know what you’ve already done: If you have skin in the game, let potential lenders know. Share information about what you have already done in terms of your own investment, as well as other information about how far along you are.
You want to show that you are a risk that is likely to pay off. Then you will be more likely to get the financing you need for your business.
Another option is to consider a crowdsourcing site. Kickstarter is a great option, since it allows you to raise money for your business idea. Most of the ventures on Kickstarter are more creative, so keep that in mind. Crowdsourcing provides you a way to earn money, and you provide something for those who provide funding. You can offer free products, ownership in the company, or some other perk. You don’t usually have to pay back the money, since it’s not a loan, but you do need to provide something to encourage people to fund your business. There are other crowdsourcing sites that you can visit, depending on the type of business you are starting.
You can also fall back on credit card financing. There are business credit cards aimed at helping small businesses pay for what they need. You have to be prepared to pay higher interest rates, though. A business credit card can help you bridge the gap while you wait for other funding, and you can also use it to build business credit.
Carefully consider your financing options when trying to start or expand your business. Chances are that you will need to combine a number of options in order to ensure that you get the money you need.