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Capital is the lifeblood of any business venture. If you are planning to expand your business, you will need capital and one of the most common options is a bank business loan. However, there are alternatives that you can explore, such as:

Friends and Family

They are easily the first people that you can turn to if you need additional funding. Inviting them to invest in your company is a practical option to traditional forms of financing. It has its advantages including minimal (or none at all) interest payments and avoiding the hassle of bank contracts.

Approach them with a solid business plan and maintain constant communication with them regarding the progress of the business. This maintains the trust and relationship you have.  With the understanding that their money may not be returned because, in most cases, they are investing in YOU, not your business. Commonly, this kind of capital acquisition does not have any strings attached, but when your business succeeds, a reward to your “investors” would be a good gesture.


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Crowd Funding

This involves raising funds from a large number of people. These days, it is commonly done online. Depending on the terms you’ll set, funds can either be considered as donations, loans, or investments. Your “backers” contribute a fixed amount to the business for which they will receive a reward. Crowd funding has fewer restrictions compared to bank loans and is ideal for a business that is in its early stages or if you don’t qualify for a bank loan.

Angel Investors

Usually, angel investors include affluent individuals or groups. Unlike pooling funds from family or friends without any strings attached, angel funders (as angel investors are commonly called) provide capital in exchange for convertible debt or ownership equity. Tapping the right investor has got to do with proper timing and leveraging the right contacts. They do their due diligence on your business and if it meets their requirements, they will schedule a meeting to get to know you and your business more.

Micro Loans

These are small loans given to entrepreneurs who have little to almost no collateral. Often, it has restrictions on what you can spend your money on—either working capital, equipment, or operation costs. Interest rates vary depending on the size and duration of the loan. Most micro-lenders require their borrowers to undergo business training and planning seminars before releasing the loan.

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Business Loans from Lending Companies

Businesses that do not qualify for a bank loan can try a lending company that specializes in small business loans. Oftentimes, these companies have fewer requirements and release funds faster compared to banks. Moreover, lending companies may have shorter payment terms.

In Summary:

Aside from a bank loan, there are other ways to acquire business capital. You just need to figure out which alternative will work best for your business. Consider the pros and cons of each option carefully so that you can optimize your choice.

THIS IS AN ORIGINAL ARTICLE PUBLISHED BY ESQUIRE FINANCING, INC.

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EDITOR-IN-CHIEF

1Edwardo Miguel Guevarra Roldan

  • Managing Partner at Princeton Business Initiative
  • Lead Convenor of Isang Samahan, Isang Pilipinas (ISIP) and Think Philippines!
  • Agency Manager at Fortune CARE Health Maintenance Organization (HMO)
  • Financial Investment Advisor at Rampver Strategic Advisors

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edwardomiguelroldan@gmail.com

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