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Five Alternative Sources to Fund Business Startups

Many people dream of starting their own businesses, which could be a café, an accounting firm, or a tourist boat charter. However, it requires a lot of money to start some businesses and this often puts a damper on people’s enthusiasm. Getting financing can be difficult to do, which is why there are alternative ways of getting money to start a business.

Angel Investors

An entrepreneur may be willing to finance a startup business for a share of the company’s equity. These investors are often within the same industry as the startup company and they can see its potential.

Since they are mainly private individuals, they use their own capital to help finance startups and they can also help give advice to new companies so they can become successful. Angel investors can be found by networking with other business owners or by going online and searching for them.

Startup Incubators

Organisations known as startup incubators or accelerators often offer resources to help businesses get started for a share of their equity. Along with providing money, they also provide mentoring and help for people new to the business world.

Accelerators provide new businesses with the opportunity to grow as fast as possible without needing to worry about where they will get the money they need to buy equipment, pay their staff, and keep their doors open.

Alternative Lenders

It can be difficult to borrow money from traditional lenders, i.e. banks, to start a business, especially if you don’t have experience running one. Fortunately, there are alternative lenders that provide business start-up loans.

Even though the interest rates may be high, most people can borrow money to fund their business ideas, even if they have spotty credit histories. The application process can be done online and, in some cases, you can get the funding you need in about 24 hours.

Government Programs

There are many government programs that provide funds for people who are starting new businesses. Although the process of getting a grant can take a long time, the funds do not need to be paid back. Along with federal programs, each state and territory also provides its own programs to encourage people to start businesses that will provide employment opportunities for their local citizens.

Crowdfunding

There are several websites that provide people with ways to raise money for their projects, to get help paying medical bills, or for starting a business. The entrepreneurs using these sites to raise money can offer their supporters shares of their businesses, they can pay back the money, or they may ask for donations that they are not obligated to pay back. Crowdfunding sites have raised millions of dollars for all types of needs, including capital for startup businesses.

If you’ve been rejected by a traditional lender for a startup loan, you still may be able to borrow or get the capital that you need from one of these alternative sources. Consider each one carefully and decide which will best suit your needs before asking people to fund your business idea.