Are you an entrepreneur who could use a few creative ideas about how to raise some much-needed capital? You’re not alone. Many owners of small enterprises, or even solo businesses, are always on the lookout for additional funds. When traditional methods don’t work, or if you’ve already used them all up, consider the following strategies. Note that not all work equally well, but most people can figure out a way to make one or two methods work for them.
Small Business Administration Loans
Small Business Administration loans used to be quite easy to get, but that’s not the case anymore. The challenge for many applicants is that SBA loans are essentially routed through banks, many of which don’t want to take on the common financial risks that come with startups or very small companies. Additionally, SBA applicants often face the double-whammy of having to show personal and business credit scores that are acceptable before they can even apply for and SBA package. Even so, if you have excellent credit all around and want to give it a go, this avenue is at least worth a shot.
Cashing-Out a Life Insurance Policy
The beauty of cashing out a life insurance policy is two-fold. First, most everyone has coverage of one kind or another, and nearly every policy is open to the possibility of cashing-out. Second, if you are able to leverage the financial power of your life insurance coverage, you’ll typically receive the money quickly. This is a good method for discovering money where you might not have previously suspected. Proceeds can be used for whatever you want, daily operations, starting a new business, or literally any need at all. In most cases, the amount you receive will be more than the cash value of the coverage but less than the death benefit. When you use value as collateral, you can essentially list your life insurance policy as an asset.
Borrow Against Accounts Receivable
Taking out a loan against your built-up accounts receivable is a fast, common way of obtaining funds for business purposes. Note, the approach won’t work unless you have accounts receivable on your books and can verify their existence and validity. Lenders are rather strict about making certain that applicants don’t inflate the amount of accounts receivable they have.
Leverage the Power of Crowdfunding
If you’ve ever crowdfunded before, you already know that the process is iffy at best. However, many entrepreneurs work the system for all its worth, spending long nights building contact lists, writing proposals, and updating potential and current donors about the state of the project. For owners, crowdfunding can be tough, because a large number of your potential donors are more apt to give to personal fundraising efforts. They often view business-related campaigns as a last-ditch attempt to acquire funds that the owner could not obtain via bank loans or other traditional avenues. The exception is startups. For some reason, you stand a much better chance of using social media and crowdsourced methods to raise cash to back a fresh idea, or company that has a unique take on a consumer need.