Crowdfunding or Alternative Business Loan: Which is the right option for you?
If you’ve been denied for a traditional business loan, your options often turn to crowdfunding or alternative business loans. While both are viable means to receive the funds you need, only one of the two options may be appropriate for your business. Business Loans Direct is here to explain the differences between the two to help you determine which is right for your business.
Crowdfunding for Small Businesses
Crowdfunding involves raising small amounts of money from various sources to receive the funds you need. In order to succeed with crowdfunding, you need to have a strong and intriguing project or product that’s supported by a large number of backers who believe in the potential. Not only do they provide the funds, but essentially work as your promoters.
Often, this requires a lot of work and there’s a high risk factor involved. It’s basically an “all or nothing” move and there’s little room for error. You can spend weeks trying to raise money, only to find you don’t meet your minimum threshold. Crowdfunding can be successful, but you have to be prepared for the high level of uncertainty and the hard work involved.
Alternative Loans for Small Businesses
Alternative loans work with a diversity of businesses, no matter their size or years in operation. Alternative loans are much easier to get than traditional loans with a quicker approval process and will often work with businesses who have poor credit.
You’re able to receive a variety of loan amounts that are repaid using your incoming sales, so there is a certain level of flexibility. You’ll have the funds you need immediately, unlike crowdfunding, where you’ll have to wait until you’ve raised the funds you need. You’re also often able to receive larger amounts of funds with alternative loans than with crowdfunding.
Depending on the nature of the business and the reason behind needing additional funds, either option may be right for you. However, if you’re truly in a bind and need funds right away, alternative loans are the best option. Business Loans Direct will explain all of your options to help you choose the best loan for your business.