Instead of borrowing money from financial institutions, you can give a slice of your company to investors in exchange for capital.
Entrepreneurs raise funds by creating an online campaign and reaching out to the “crowd.”
Building a successful business is no easy feat and many owners learn what works by trial and error. That’s why we’ve rounded up some of the best financing lessons learned from the small business owners we talked to this year.
When borrowing from family and friends is the only way to start or fund a business, the following steps can greatly reduce that risk. First, you must inform the person you’re borrowing from how much money you need, what you’ll use it for and how you’ll pay it back. Next, draw up the legal papers -- an agreement stating that the person will indeed put money into the business.
Online alternative lenders offer a variety of advantages from their use of automation, big data and crowdfunding to reach small businesses. They offer quick loan decisions with a stripped-down application process. These firms assess risk immediately with efficient use of algorithms and technology. Money can be distributed in days, not months.
But for too many small businesses, getting financing from one of these lenders is like the Wild West.
Small-business owners in central Ohio now have access to a new lending platform to help fund their business. And it won’t cost them a dime in interest or fees.
As I wrote last week, Yemani Mason is the founder and CEO of a new real estate crowdfunding platform called VestMunity. He is an innovator offering a hub for regular folks to access investment opportunities previously out of reach, in this case, the rehabilitation and sale of distressed Florida properties. He is also a black entrepreneur that has experienced first-hand the challenges of minority access to venture capital to support and scale his venture.