In many cases, not having the right funding can break a small business. From being unable to keep up with the demand in inventory to barely affording payroll expenses, falling short in the financial department will seriously harm, or completely eliminate, your company’s future.
Unfortunately, banks are not as generous as they used to be with approving businesses for loans; and pitching investors can take a lot of time — which you may not have. If you need money for your business fast, consider the following five methods.
Crowdfunding campaign
Since 2007, crowdfunding has become an effective way for businesses to raise money from groups of people in a short amount of time, typically via the internet. To get started, choose a crowdfunding platform, such as Kickstarter or Indiegogo for product-based projects, or LendingClub or Prosper to apply for a loan. After you write a description of your project, upload an image (a video is even better) and set your goal and deadline, backers can pledge a certain amount in support of your project.
Kickstarter pays out funds within 14 days of the project’s deadline. Indiegogo typically takes 15 days, but because a batch is sent in once a week, getting funds in a shorter time period is possible. For a LendingClub loan, you can expect funds in as little as four days, whereas Prosper may take between one and three business days depending on your bank.
Alternative lender
Seek out a card processing company or a cash advance company for a merchant cash advance. Unlike banks, these types of companies specialize in merchant cash advances and look at business assets when considering lending money. Typically, one of the only requirements to get a cash advance is that the business has some type of history. This is due to the fact that the cash advance supplier gives out funds based on the strength of the business and the risks associated with it. There are plenty of companies available that lend as much as $1 million and release funds within 48 hours.
[Read: Smart Strategies for Presenting Your Business Plan]
Line of credit
Banks and credit unions offer lines of credit that are subject to a credit review and an annual review. Like a credit card limit, lines of credit are revolving; after you use your funds and pay down your balance, the amount you pay (minus interest) is available right away. Also like with a credit card, funds are limited and can be available within one to two business days, depending on the lender.
Falling short in the financial department will seriously harm, or completely eliminate, your company’s future.
Bootstrapping
Bootstrapping in business is defined as a situation in which an entrepreneur starts a company with little capital, relying on their own personal money rather than seeking outside investments from lenders or investors.
Essentially, when you bootstrap, you pay as you go with your earned revenue and make financially conscious decisions, such as sharing office services, relying on only the essential equipment and delaying capital purchases.
Bootstrapping is a great way to get capital for your business if it does not require a lot of startup money; you can bootstrap or fund your own business with the money you already have.
[Read: 10 Businesses You Can Start for Less Than a Thousand Dollars]
Friends and family
Finally, if you’re not ready to pursue a lender of investor and you’re not in a position to start a bootstrap business, ask your personal network for help.
Although you may feel uncomfortable asking your friends or family for money to support your business, it’s a solid option. Let your friends and family know how their investment can benefit your business and offer financial investments for them to help you get off the ground.
Often, it’s best to write up a contract to hold yourself accountable and reassure your friends and family members that you’re serious. If you do write a contract, make a note of repayment terms. Depending on the relationship, a loan or donation from friends are family can take as little as a few hours to acquire.
Interested in learning more tips and options for funding your business? Check out our small business funding guide.
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