10 Creative Ways to Finance a Startup Business

Funding your start-up can take some time and some foresight however, these 10 creative ways to finance a startup business will give you the boost you need – take a look.

Personal Finance

While most people will think that personal finance is not the most creative of financing option, there are actually a lot of entrepreneurs who have not thought about this.  They will not consider saving up or using their personal savings for their start up.  Most investors will not look at putting money in your venture if they do not see that you have some investment as well.

Unsecured Business Loans

Unsecured business loans can be a fantastic way to get credit and can provide a fast turnaround, so your start-up gets the money quickly. Application processes are typically fast and you can learn more about the whole process from a reputable finance company like https://www.unsecuredfinanceaustralia.com.au.

Family And Friends

Your family and friends are the people who believe in you and will want to see you succeed.  They are also more likely to provide finance without you having real customers or hard assets.  Of course, you should always get this financing in writing or in promissory notes where you convert the loan into equity at a future date.

Peer-To-Peer Lending

Peer-to-peer lending is a newer finance option and works by finding a group of people who lend money to each other.  While this has been around for years, startup businesses are still new to this.  It is best that you look for a lending group that is willing to fund new ideas because not all lending groups will.

Use Crowdfunding

The power of the internet is great for finding people who share your ideas and are willing to provide a small about to back your startup.  Crowdfunding has spread from being for non-profit organizations and you can offer pre-sales or other rewards for people investing in your venture.  The JOBS act which was passed last year will also allow people to make small equity investments this way.

Microloans

There are a number of non-profit and for-profit organizations that offer small loans of up to $35000 in an effort to promote entrepreneurship.  These loans are generally given to people who are unable to secure a loan through the bank.  Some examples of these loans will include the Patriot Express loans.

Vendor Financing

If you require tangible stock for your venture than most manufacturers could be convinced to defer payment on the goods until they have been sold by you.  This will mean an extension of the normal 30-day payment terms that the business uses.  The extension will generally depend on your credit worthiness and the extra fees that you are able to cover. Here is a good piece from Investopedia.

Purchase Order Financing

One of the most common problems that start-ups face is their inability to accept large new orders as they do not have the capital to build and deliver the product.  PO financing will be able to help as the companies offering this will generally advance you the funds to pay the supplier.  This allows the transaction to be completed and for the profit to flow to your business. 

Factoring Accounts Receivable

This is a similar option to PO financing but looks at the unpaid amounts that you are due.  If you have a high volume startup then this will help you scale up.  You can provide cash on your sales immediately instead of waiting for the 30-day payment period to pass.

IRA Financing

Investment retirement account funds and 401(k)s are perhaps the most accessible of the alternate funding sources.  You will not be able to use your own funds for your startup, but other people will be able to loan you money from their self-directed funds.

The 10 Creative Ways To Finance A Startup