Alternative Methods of Funding Your Business
Acquiring funding can be one of the more challenging aspects of starting a company. The complexity of business dictates that numerous expenses need to be accounted for. This can be challenging if your company is underfunded.
Fortunately, entrepreneurs can acquire funding through a number of channels. Some of the best-known methods include crowdfunding and taking out loans. Beyond that, there are many alternatives that anyone can freely explore. Should your primary or preferred method fail, the following suggestions may help you meet your financial obligations.
There are two types of home equity loans: open end and closed end. Both are referred to as second mortgages. In order to apply for these, you’ll need to pay a number of fees, including appraisal fees, origination fees, title fees, stamp duties, closing fees, arrangement fees, inactivity fees, an early payoff fee and an annual fee.
While a seemingly convenient source of cash, prospective borrowers must understand the consequences of default. Should your business fail and you cannot pay back the loan, you risk certain foreclosure.
However, government agencies favor projects that may yield exceptional benefits for society. Grants are therefore particularly useful for businesses with a research or science-oriented focus. They are subsequently limited in their application and may not be practical for many businesses.
A list of all available grants can be found at grants.gov.
Ecommerce represents a potent source of extra income. Sites such as eBay, Etsy and Shopify are all great places to set up an online store. From there, you can sell just about anything, from your old comic books to old outfits to handcrafted jewelry. These sites are always useful for those with creative and profitable hobbies.
Consulting and freelancing can also generate extra revenue. Those with specific skills can market their services on sites like Upwork or through a personal website.
You can also raise money through more passive means. Renting out property, for example, requires minimal work on your part other than occasional interactions with tenants. This can work on a full time or temporary basis, like renting out your home if you are away on business or holiday.
Solicitations from acquaintances may seem relatively straightforward but should nonetheless be handled with care. A wrong move could damage your relationship with family members and friends. Be sure to treat potential lenders respectfully and professionally and to maintain strong lines of communication. Arranging a loan agreement in advance can also minimize potential fallout should your business encounter trouble.