Every business gets into a financial dilemma at some point. Payroll is around the corner; you want to add equipment that can’t wait for next time or meet any other urgent costs. So, you have to strap on your seat belt and get on the bumpy ride to seeking business funding.
With multiple lenders each coming with a unique, catchy story of how they can support your businesses financially, it can be challenging to decide where to borrow from.
This blog intends to shed light on the alternative sources of commercial capital.
To start with, you want to be unique and diversify your fundraising approach by considering more modern borrowing options. New age lending has brought into the market several fundraising avenues for business owners.
Tech and finance are merging to offer innovative solutions to help business owners rise above monthly bills hassle-free. You also want to look beyond banks because these creative financial providers are more willing to help without ruining your bottom line.
Again, unlike with banks that could lead you to a debt cycle, diversifying financing in your startup encourages financial independence.
So, on top of the funding you’ll get from pals and siblings rounds, an angel investor or attracting venture capitalists, here are some sources you can count on:
Turn to the crowd!
Have you heard of Crowdfunding? It typically involves gathering finances by seeking support from short-term philanthropic supporters.This practice isn’t new to the microbusiness market, and many savvy retailers are already tapping into it. But an advanced style of Crowdfunding is making its way into the small business loan jargon.
The crowd can now choose where to invest in a list or vetted the organizations or business thanks to online platforms like Accion and KivaZip.
And you don’t even have to be funded by a crowd; these modern lenders match investors with businesses. This fosters a symbiotic relationship where both parties benefit.
Though these sources of commercial funding may not hold the fort for firms with large financial needs, their rates are lower than traditional loans, and price tags are more moderate than conventional venture capitalists.
Cryptocurrency collateral
Businesses that finance in cryptocurrencies like Bitcoin, ETH, or EOS, are suffering an unbearable financing situation. An investor lends you money, say $50,000 US Dollars, and the currency is down, so you have to choose between settling your debt or meeting payroll.
But thanks to this new platform where clients can come up with their stablecoins- crypto that is tied to a legacy asset, e.g., dollar. Stablecoins are a now a widespread new practice in crypto that makes crypto usable with the financial stability of other existing assets.
The platform known as Equilibrium allows businesses to come up with their stablecoin–the EOSDT without using up their collateralized crypto. That means businesses can leverage their cryptocurrency holdings for a microbusiness loan without putting into liquidation their underlying collateral.
This offers a business working capital without ruining its financial stability.
What’s more, because the EOSDT stablecoin is secured 170 percent at a minimum, the coin will be pinned to $1 US Dollar. As a result, this kind of loan’s safe and stable making them a win-win for both investors and startups.
Closing up
Fintechs and modern alternative lenders are transforming the small business lending world by the day. Be smart, and up to date, businesses now have many places to look when searching for capital and additional funding.
Author bio: As the FAM account executive, Michael Hollis has funded millions by using merchant cash advance broker solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.
