Top Business Loan Alternatives For New Entrepreneurs Getting Started

When starting a business, every entrepreneur is faced with financial decisions. In addition to thinking about the product or service offered, the new owner must choose how to finance operations. Many times, entrepreneurs will go directly into the venture capital or angel investing route. Others, will go for bank loans.

The decision to fund a company through bank loans or investors can be the major reason for failure. When financing is provided, entrepreneurs have to answer to deadlines, payments and interests. Unfortunately, these pressures can cause the company to grow at uncomfortable rates, causing stress on the company. If the stress becomes to great, the company can buckle and be forced into bankruptcy.

But, we do not open businesses to fail flat out. We start businesses to take advantage of market opportunities that we can invest in and earn from. So, to give ourselves a better chance to be successful, it is a good idea to consider business loan alternatives.

By using alternative funding sources to business loans, you can save yourself a ton of money and risks of failure down the line. Instead of paying interest, you can enjoy increased profitability. Or, instead of growing to meet investor’s interests, you can grow at a speed that works for your company. Here are the top business loan alternatives:

Bootstrap. Before you skip over this one because of lack of capital, read on. Without a large amount of capital, consider the actual costs to start earning revenues. Odds are, most entrepreneurs do not need an office space in New York to impress clients. They just need materials and inputs to provide their products or services while working from home. Many of the hundred-million dollar and billion dollar companies were founded in the parent’s house of a saavy entreprenuer (living at home).

Crowdsource funding. With online businesses making profits all over the web, we can only expect business loans to get more digital too. Crowd funding sites allow you to post you business plan or project and get funded by many investors for smaller commitments than straight interest or equity. For example, you can promise prototypes for the early investors.

Friends and Family. Again, these resources are highly underestimated and untapped potential. These are the people who know you best. If you are having trouble showing them why your business is a success, then it is not likely that anyone else will believe you too. On the flip side, friends and family can offer flexible terms and support. Just make sure that you are not borrow from close ones who are not in a position to lend comfortably.

When it comes to a bank loan alternative, these are among the top sources for funding a new business. Even if you are eligible for a bank loan, you probably want to consider these sources first. When you really put your mind to it, you will most likely realize that you actually already have everything you need. It is just a matter of focusing on pleasing your customers and scaling your business growth.

Do you plan on using any of the funding sources mentioned above? Can you think of another business loan funding alternative? Do you have more questions about funding your business?