Acquiring capital is a challenge that virtually every small business faces at some point or another. Financing a startup is not always easy, but, traditionally, entrepreneurs have relied upon small business loans to get their new companies up and running. Today, however, securing such capital is not an easy task. Ask any small business owner how they would obtain capital for operations or growth – chances are they would reply through a bank loan, or debt. Unfortunately this traditional avenue of capital has been, and continues to be largely unavailable for small businesses. A glance at the numbers from a recent study shows that:
· 78% of small businesses call it “difficult” to raise debt financing
· 56% of small businesses are denied bank loans; and
· 45% of small businesses were forced to transfer personal assets to their business
Obtaining financing for a small business even in a healthy economy can be challenging, since many business owners lack operating experience and solid credit history. Today’s tight lending environment is making it even tougher for entrepreneurs to raise money to operate and grow their businesses.
Both entrepreneurs and funding providers realize that the lack of available credit is hampering their ability to make this happen. Solutions exist, but they often require some out-of-the-box thinking and aggressive efforts on everyone’s part.
If a traditional loan is not secured, small business owners may also be able to access alternative sources of capital with some aggressive efforts and out-of-the-box thinking. Listed are a few to get started on:
One of the most widely overlooked sources for small business capital is the local community. In recent years, there has been a unified push for consumers to support local small businesses and to ‘buy local’. There’s no reason why people shouldn’t be able to easily ‘invest local’ as well. Statistics show that 7 in 10 small businesses that raise money from their community are successful.
City & State Resources:
There are lots of government agencies and non-profit organizations that financially support small businesses. You can check with the respective city and state economic development agency to see if there are specific programs or grants associated with your particular industry cluster.
The landscape of small business capital is quickly expanding. This has spawned a new breed of companies focused entirely on helping you get matched with the best type of funding for your business. Companies like FundWell, Lendio and Multifunding are dedicated to advising you on all of the options on the spectrum.
Although bank lending to small businesses is on the wane, new and innovative alternatives have surfaced to the mainstream. They are readily available to those open to doing things a little differently.