Getting a small business loan these days is about as easy as finding a leprechaun, his pot of gold and Bigfoot all in one camping trip. Lenders have kept their purse strings tighter than ever after the credit crunch collapsed the market in 2008.
However, this doesnt mean that you should panic just because your start-up is sputtering for a loan. There are still plenty of ways to finance your small business you just need to start thinking outside of the banking box.
The next time youre hurting for cash, try one of these moneymaking techniques instead of turning towards Wall Street.
Crowdfunding is a new method of raising capital that uses small donations from a large number of people to help a business achieve its goals. In exchange for their contribution, donors expect to receive some sort of non-monetary compensation, which can range from recognition via an in-store plaque to owning a small share of the company. If youve got a business plan that you think the whole country could get behind, then register it with one of the major crowdfunding sites today and let the money start rolling in.
2) Business Credit Cards
If you cant get a bank loan, credit card companies would love to issue you a business credit card to help you put food on the table. Just remember that you need to be careful when youre playing with fire. Business credit cards arent regulated by the CARD Act, so if you fall behind on your payments you could get slammed with late fees and other penalties. On top of that, youll also be subject to random changes to your contract terms. But hey, at least youll get free quarterly summaries.
3) Purchase Order Financing
Another creative way to fund your fledgling business is through purchase order financing. This process works a lot like a short-term loan. First, you submit your purchase order to a lender. The lender cuts you a check to cover your manufacturing costs. Then, once the products are shipped out, you hand over a portion of your profits to the lender. While this isnt a sustainable method of meeting your manufacturing overhead, its useful for getting your products on the market ASAP.
If youre selling something that other businesses could use to improve their own profits, why not scratch each others backs? Sites like BarterQuest have made trading one service or good for another popular again. For a few freebies every month, you can keep your supply closet stocked or your taxes up to date. This is ideal for service businesses like web design firms and copy writing agencies.
Its a financial jungle out there. With thousands of small businesses competing for a handful of bank loans, your best choice might be to start looking somewhere else for the capital your start-up needs to succeed. While we cant guarantee that youll find success with every one of these techniques, we can promise that youll have an easier time financing your business when you think outside the box.