In the not-so-distant past, if you needed money for your business, you went to friends and family for a loan or you waded through a traditional bank loan program.
Today, many new businesses still get startup funds from friends and family, but often turn to existing and new online resources to get the financing they need.
Is it Shark Tank or bust?
Most people have heard of the popular television program "Shark Tank", but it's likely not a common path for funding. No matter what your generation, don't let your finances stand in the way of starting a business, urges startup advisor and business funding expert, Lea Strickland, MBA, who runs F.O.C.U.S. Resources, a management firm specializing in small business funding, product development, and business growth. There are other ways to finance your business venture
Let's start with a new and popular method of fundraising: Crowdfunding. Many tech-savvy consumers have heard of or participated in a crowd-based campaign on sites such as Kickstarter. Customers are committed to pre-ordering your product, book, or item on these platforms. You set a funding goal and receive the funds after hitting that milestone (and lots of other conditions and details/hoops based on the platform's rules; read carefully). It is not free to do this, but can be worth the fees.
There are a wide range of Crowdfunding platforms; the best known: Kickstarter, GoFundMe, and IndieGoGo are worth studying. But you can also look for other niche-oriented services on Wikipedia or Crowd101.
Some of these Crowdfunding campaigns or services can allow you to offer equity in your business; (e.g., Fundable). If you're considering selling equity in this way, search crowdfunding and Title III of the JOBS Act. And, of course, speak with an attorney or financial professional.
Strickland also offers great advice on funding, and this post on crowdfunding is a really useful one: Crowdfunding: The Taxman Cometh.
The next big opportunity for SMB funding is through a variety of online marketplaces. Sometimes these platforms offer lines of credit, receivables financing (or factoring), or loans that come through matching qualified smaller investors who meet your business needs. One of my favorite sites is NerdWallet, which has an online tool that provides a range of comparable options based on your data. When filling out the form, I changed the data a few times to see the varied results. When you look at the annual percentage rates, you will see why small and midsize businesses balk at financing.
The biggest names that I have checked out are Funding Circle, Lending Club, and SmartBiz Loans (SBA loans made easy is their tagline and they have built technology to make the U.S. Small Business Administration funding process easier). The first two involve peer-to-peer lending. Jim Bruene, founder of Finovate and the popular financial industry tech blog, NetBanker, recommended that I look at alternative lenders, such as, Kabbage and OnDeck.
The Millennial Economy, a September 2016 study by EY and the Economic Innovation Group found that 42 percent of the Millennial generation say they won't start a business because of money problems, but every generation also has new business funding challenges. There are always obstacles, but using some of today's new platforms and services, you can find a path to profits.