A Guide to Alternative Lending for New Business Startups

Starting a new business can be exciting, but it can also be challenging when it comes to securing funding. Traditional bank loans can be difficult to obtain for startup companies, especially for those with limited credit history and collateral. Fortunately, there are alternative lending options available for startup businesses that can provide the funding they need to get off the ground.

One popular alternative lending option for startup businesses is crowdfunding. Crowdfunding platforms, such as Kickstarter and Indiegogo, allow entrepreneurs to raise money from a large number of people, usually through the internet. This type of funding can be a great option for businesses that have a strong online presence and a clear plan for how they will use the funds they raise. However, it is important to note that not all crowdfunding campaigns are successful and there are no guarantees that a business will be able to raise the funds they need.

Another alternative lending option for startup businesses is peer-to-peer (P2P) lending. P2P lending platforms, such as Lending Club and Prosper, connect borrowers with investors who are willing to lend money. This type of lending can be a great option for businesses that have a strong credit history and a solid business plan. However, it is important to note that the interest rates on P2P loans can be higher than traditional bank loans.

Microfinance is another alternative lending option for startup businesses. Microfinance institutions provide small loans to entrepreneurs who may not qualify for traditional bank loans. These loans can be used for a variety of purposes, such as starting or expanding a business, purchasing inventory, or hiring employees. Microfinance can be a great option for businesses that have a solid business plan and are looking for small amounts of funding.

In addition to these alternative lending options, startup businesses can also consider government-backed loan programs. The Small Business Administration (SBA) offers a variety of loan programs, such as the 7(a) and 504 loan programs, that can provide funding for startup businesses. These loan programs can be a great option for businesses that have a strong credit history and a solid business plan, but may not qualify for traditional bank loans.

It is also worth considering angel investors or venture capital firms. These are private equity firms which can provide the funds and mentorship to your startup company. They are usually looking for startups with a high growth potential and a good team, and they usually invest a higher amount of money than other alternative lending options.

When considering alternative lending options for startup businesses, it is important to do your research and choose the option that is best for your business. It is also important to have a solid business plan and a clear understanding of how you will use the funds you raise. With the right funding, a startup business can have the resources it needs to grow and succeed.

In conclusion, alternative lending options for startup businesses can provide the funding and resources needed to get a new business off the ground. Crowdfunding, P2P lending, microfinance, government-backed loan programs, angel investing and venture capital can all be great options for businesses that may not qualify for traditional bank loans. However, it is important to do your research and choose the option that is best for your business. With the right funding, a startup business can have the resources it needs to grow and succeed.

If you are searching for alternative lending options for your new small business we would love to help you! Check out our partner Fundwise by clicking the button below. This company helps small businesses get the funding they need every single day. Yes ma'am to work