Financial challenges persist for longer than expected periods for startups. Many ambitious entrepreneurs are often discouraged from progressing faster because of financial glitches in their ventures. Although, finance experts would always recommend bank loans as quick aids but there could be better and less stressful options for startups to manage their financial needs.
With so many start-ups establishing monthly, there are more convenient ways offered by various finance companies that can prove great alternative to bank loans or even credit line. Here are different options other than bank loans for financing a startup:
External Investment by Potential Investment Companies
Although finding an investor is not easy but, external investment by an investment company is better than taking small business bank loans. In many debates between small business loans vs credit line, neither could win although credit line appeared less financially stressing for entrepreneur.
However, the idea of finding potential investors who could make initial investments in startups has been beneficial. Angel Investors, with their willingness to invest with 20-25 percent ROI, can be a useful support for an ambitious entrepreneur.
Investment firms have a good history of supporting then-startup Costco and Google to unicorn status. Therefore, it might have several flexible options for any startup that’s seeking help.
Many people are resorting to the support they receive from online lending as it proves a fair alternative for those who want to borrow at much lower rates. The former Treasury Secretary, Larry Summers, has recommended it for small business owners. He believes that online lenders are offering much better rates for struggling startups that help them to focus on their business development more than worrying over bank loans.
Online lending is secure and the lenders have different packages to offer those who need help. Unlike banks, they do not have tight credit terms.
Factoring to Manage Invoices
Factoring is a useful method for maintaining financial issues. An entrepreneur can receive upfront on invoices that have been billed to the clients. Once the clients of the business pay, they can settle the factored amount to the lender.
This is a smart way of keep the business going while the clients are sluggish in paying out.
Unexpected debts are a nuisance for every startup owner. They not only demotivate entrepreneurs but also create additions stress in longer run. msnbc news has a lot to present on the benefits of equity crowd funding as it published an inspiring and insightful interview with Vincent Bradley, the CEO of Flash Funders, to introduce the gains for small business entrepreneurs. The interview reveals how crowd funding equity could help the struggling startup owners in managing incurring debts and financial hiccups.
Crowd funding allows entrepreneurs to collect small investments from multiple investors rather than having one larger investment from a single investor. Different websites offer various types of funding options, some useful sites are Indiegogo and Kick starter.
Seeking help from investment companies, factoring in invoices, and crowd funding are great escape from ever tightening bank credit terms that are evolving day by day. Start up owners will find more convenient solutions by checking out these options before they decide for small business loan or a credit line.