Author: Sherry Gray / Source: Entrepreneur Securing funding for a startup business is undeniably tricky, but alternative methods give tod
Securing funding for a startup business is undeniably tricky, but alternative methods give today’s entrepreneurs more options than ever before. Most businesses haven’t really kept pace with the new options. Let’s bust some of those antiquated roadblocks and look at the reality of new options.
1. Startups are too risky.
This statement’s truth depends on when you read it. The recession burned many investors. In the aftermath, lenders who previously had thrown money at every business opportunity grew understandably cautious. Getting a loan for a startup with no track record was difficult in the years that followed. But it’s been nearly a decade since the bottom dropped out. Lending is at an all-time high, with $9.2 trillion in outstanding bank loans. More important, alternative lenders offer different options and often are more willing than traditional banks when it comes to taking risks.
2. Your credit must be spotless.
Not really (thankfully). There’s a bit of wiggle room here. While lower credit scores could hurt your chances with some lenders, there are so many to choose from that you should be able to find funding as long as you present the framework for a business plan. Venture capitalists and crowdfunding lenders often are more interested in your idea than your financial history. Many alternative lenders will make a decision based on recent business history, even if your credit is less than stellar. Good credit certainly makes things easier, but big things can happen if you possess the ability to articulate your idea and get buy-in from others who believe in your vision.
3. All online lenders are scams.
Financial technology has come a long way. Today’s online lenders have lower overhead and sophisticated software. Fintech offers advantages such as online applications and the freedom to submit information to many lenders at once. This accessibility makes it easier to shop among several online lenders. In general, it’s a less discouraging process than visiting brick-and-mortar banks. A fair share of small-business owners may find they have better odds of approval with an online lender.
That isn’t to say you shouldn’t bring your critical-thinking skills. It’s important to know exactly what…
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