Alternative Business Funding Methods

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.
accepting funding

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.

home equity loans

Home equity loans entail offering your home as collateral in exchange for a loan. These loans are often used to finance home repairs, medical bills, school tuition and businesses. They can be an appealing option but require a good to excellent credit history as well as combined loan-to-value ratios and reasonable loan-to-value, which are calculations used by professionals to determine the total percentage of your property encumbered by liens.

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.

government grants

The Small Business Administration (SBA) offers grants through the Small Business Technology Transfer (STTR) and Small Business Innovation Research (SBIR) programs among others. Government grants are not limited to a single agency. The SBA can be a primary source of funding, but most Cabinet-level agencies maintain their own grant programs.

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

freelancing business

A business dedicated to funding another business? Hardly unheard of. “Double-dipping” as they say, can be quite useful for new business owners who are looking for another means to fund their startup. Engaging in another venture, while stressful and time-consuming, can mean not having to look for potential investors.

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.

vision of a promise

When all else fails, who do you turn to if not your family and friends? Alternatively, they can be your original benefactors. Your longtime acquaintance with these people can be extremely advantageous as they should know whether you can be entrusted with funding. Of course, you still need to convince them that an investment will yield a return.

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.

Business Writer
Not weird enough for the freaks. Not obsessive enough for the geeks. Thoroughly laconic but will communicate for food/existential expression. Graduated with a Degree in Marketing Management but chose to write for a living instead.

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