Imagine funding your business without paying it back in the form of debt for the next 10 years (or more). How would that feel?
Or try this image: What if you didn’t have to change your business plans to please investors or get rejected (again) by a loan officer?
Innovative funding opportunities are out there for small-business owners. You just need to know where to find them. Here are some options.
Crowdfunding. When you seek funding from the very people who want to buy your ideas or products, you benefit twice: You’re creating the resources you need to launch. And you’re building a loyal fan base that can help spread the word about your business.
Crowdfunding sites such as Kickstarter, Cofolio, and Start Some Good provide great options for entrepreneurs seeking to fund everything from creative projects to locally funded business to social change.
Gye. More than a quarter of all startups get financed by loans from family and friends. Here’s another way to look at the same idea: A long-standing tradition in Korea, the gye is a private fund that members contribute to over many years. The members then take turns getting lump sums of money distributed by the fund.
This tradition continues today in the United States in various forms. For instance, families create pools of cash from which their members can borrow interest-free to pay for education or start and grow businesses.
Grants. Winning a business grant is a great way to give your business an infusion of cash that doesn’t hurt your bottom line. Consider these avenues:
Business plan competitions offer contestants cash prizes for promising business plans. Prizes range in size from small to big enough to help you launch your business. Entering these contests also can get your business idea in front of your industry’s thought leaders, who typically serve as judges. Do a search for contests online, and you'll find a variety of organizations offering them from business schools to the New York Public Library.
Some 26 different federal agencies give out grants to small businesses. The rules are stringent, but if your company falls within the parameters of a particular grant, it’s a good idea to apply. Not only do you get the cash, you get a powerful reason to communicate with your customers and partners about your win. Find out if your small business qualifies at www.grants.gov.
Some corporations have developed grant programs that benefit small businesses. FedEx is one example. On Nov. 24, 2012, the shipping provider is giving six small businesses cash grants totaling up to $50,000. Describe what you would do with the $25,000 grand prize and you could win it or one of five first-place $5,000 cash grants. Entries are due Nov. 17, 2012. Go to fedex.com/grantcontest to learn more.
Microloans. Nonprofits with a mission of helping small businesses often provide microloans to qualifying companies. These loans tend to be smaller than your average bank loan, but they can really help a business get off the ground or go to the next level.
If you’re not interested in going with the traditional model of raising venture capital and can’t or don’t want to get a loan from a bank, there’s a whole world of funding out there. You just have to explore a little. And let the funds roll in.
Jacquelyn B. Fletcher is a Minneapolis-based writer.
Note: The opinions expressed in this article are those of the author and do not necessarily reflect the views of FedEx.
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