Traditional bank loans are one of the most obvious method of financing the endeavour; but before the businessman finally gets his heart set on getting one, he must consider this fact that : more than 82% of the small business loan applications are thus denied by big banks. This is due to the saturation of the SMBs and the high risks involved in small ventures. Big banks however have a set of strict requirements that can thus make it as challenging as climbing Mt. Everest for the small businesses in order to qualify for the traditional bank loans.
P2P funding has thus become increasingly popular over the years and it is just one of the many options to get the business funded if the businessman isn’t able to get a traditional bank loan.
The small businesses are thus financed through a variety of methods, including the owner’s own personal savings, the loans from the family members, friends and banks, bonds, stocks and more. With the regulations which are getting tighter and stricter when it comes to the small business lending, small business owners may, however, need to explore other methods of financing.
This article tells us about five ways to bootstrap your venture if you can’t get a business loan.
- Purchase only what is necessary
If getting a loan is thus not an option, then the borrower should be ready to spend minimally when they are starting out. Since 50 percent of the businesses fail within the first five years, according to the SBA, it thus makes financial sense to start out with the bare necessities and then build your business slowly as it starts gaining momentum.
- Raise money through crowdfunding
Crowdfunding is however a great way to help the new companies to raise money in order to fund a project or the business venture. There are many Popular sites which allow the entrepreneurs to raise capital in order to get their businesses up and running. The money which is got through crowdfunding comes in the form of donations or the investments and if you have the right message (or the pitch) in place, then it can be a great way to fund your business.
- Seek help from family or friends
It can be thus difficult to ask to borrow money from the family or the friends, but it thus may be necessary for the businessman to get his business started. The more detailed your business plan is and the better laid-out your goals are, then the greater chance you’ll have at getting them to lend you the money. The businessman can show them the estimated yearly projections and then give them an exact time frame on when he can pay them back.
- Get a business partner or investor
An actual business partner thus may be ideal if the borrower is looking to eventually grow and then want to bring new, fresh ideas to the table. A business partner can however help with more than just the finances – they can help to advertise, help with creating the product or either providing the service, handling the accounting plus also give the borrower someone to bounce the ideas back and forth with. An investor will thus fund the business, which is however ideal for those who wish to remain a sole proprietor.
Acquiring funding is thus one of the toughest parts of starting a business, and then definitely the most stressful also. But you’re however not alone—there is a vast abundance of the entrepreneurs that are struggling with the same problem. Luckily, there are thus also plenty of different ways in order to get the business funded which act as an alternative to a business loan.