Not long ago, funding options for new businesses were few and far between. But now, there are tons of alternative ways to get a business up and running. You just need to know where to look.
We talked with real business leaders about their favorite alternative funding ideas for new businesses, so stay tuned if you’ve got that million-dollar plan in the works.
Leverage Your Network
“To get new business funding, you can ask friends and family members to contribute what they can. However, keep in mind that if they’re funding the business they may want a say in your day-to-day operations. Reaching out to your network for donations can be an effective way to gain support for your business.” – Vincent Bradley, CEO and Co-Founder of Proper Wild
“An angel investor is a good funding option for startups who can’t show enough potential growth to attract venture capital. These investors can provide knowledge and advise startups on business decisions.” – Haim Medine, Creative Director and Co-Founder of Mark Henry Jewelry
“Startups who lack physical collateral but can establish a competitive edge and high growth potential should consider finding venture capitalists to fund their businesses. Venture capitalists can also open up the door to industry connections who are valuable to business growth.” – Rym Selmi, Founder of MiiRO
“Find angel investors. Angel investors can help you fund your business, often in exchange for a say in the direction of your business. Still, they can provide valuable resources that your business will benefit from.” – Jenn O’Hara, CEO of Soba Recovery
“An alternative source of funding for startups is convertible debt where investors loan money under the agreement that it will convert into equity in the future. Investors receive a fixed interest rate until conversion occurs and the debt is replaced with shares. Businesses should go this route if they believe their shares will increase in value so they can avoid relinquishing too much ownership.” – Michael Scanlon, CMO and Co-Founder of Roo Skincare
“Use micro-loan businesses to borrow relatively small amounts of money. If you’re starting an online business, a large injection of startup capital usually isn’t necessary. You can start out with amounts as small as $100.” – Tim Mitchum, Founder of WINPRO
“A new business can be funded through bank loans for small businesses. An initial loan can help your business grow from the ground up. If taking out a loan, however, it’s important that you’ll be able to pay it back as quickly as possible in order to avoid high interest rates.” – Fred Gerantabee, CEO of Foster Grant
Love from the Crowd
“One alternative source of funding is through a crowdfunding platform, like Kickstarter or GoFundMe, where you can receive small investments from multiple investors. Make sure you read the guidelines for these different platforms before starting your crowdfunding. Some companies require you to meet your financial goals before you can access the money, while others have payment-processing fees.” – Chris Vaughn, CEO of Emjay
“One of the top alternative funding techniques is to use crowdfunding for capital. Specifically, this technique works best if companies have a dedicated and loyal community. Not only that, but crowdfunding is also an excellent first indication of your brand’s product/market fit.” – Jameson Rodgers Co-Founder of CBDfx
“Crowdfunding through sites like GoFundMe and Kickstarter can help businesses get off the ground. You can advertise your campaign through social media and have your followers contribute. This way you can avoid taking out loans with high interest rates and fund your business with cash on hand.” – Jordan Smyth, CEO of Gleamin
“Business grants are ideal for when you need a specific amount of money to complete a project or meet a financial goal. They don’t require repayment or a portion of equity in exchange for the money. Grants are generally given by government agencies, nonprofit organizations, and for-profit organizations. However, keep in mind that the application process is long and complicated.” – Dr. Robert Applebaum, Owner of Applebaum MD
“Check out your local business development center. They’ll often have resources for new businesses. They can also provide support by allowing you to network with other entrepreneurs in your area. Local businesses often rely on their community for support so it’s important to get to know your customers and fellow business owners.” – Randi Shinder, Founder and CEO of SBLA
“If you’re looking to start a new business, and you aren’t building technology that can attract professional investors, I’d recommend contacting the Small Business Administration. They have offices all over the country and their staff are very knowledgeable when it comes to creating a plan for a successful business, and also alternative financing options (e.g., grants, loans, and bidding on government contracts).” – Joaquín Roca, Co-Founder and CEO of Minerva
“The SBA offers small business loans that can help companies get through challenging times. They can also provide funding for new businesses. Small business loans are often an important part of running a business.” – Dr. Anthony Puopolo, Chief Medical Officer at REX MD
“One way you might be able to raise funds for your business is through contests. There are organizations that offer prize money for winning contests designed for entrepreneurs. The requirements for eligibility, fees for entering, and criteria you’ll be judged on will vary for each contest, but if you’re confident in your company and ability to pitch it, it’s worth exploring!” – Eymel Daniel, Co-Founder of ForChics
“Relationships are leverage. That is true for starting businesses or doing anything of value in life. If you give value to someone else first, that grants you leverage that can prove valuable later down the line.” – Richard Blankenship, Co-Founder of ESP Gaming
“The reality about finding investors is that most people simply don’t know where to look. Consider this: people with lots of money – even millionaires – are around you every day, whether you realize it or not. Learn to communicate with everyone and think creatively.” – Life Coach and Lawyer Monroe Mann
Your dream business and life are closer than you think with these alternative funding ideas. Put them to work and see what you can achieve.