8 Innovative Ways to Finance Your New Business

Most of the people get inspired by founding a new business until they realize they need to find some ways to finance their business.

Indeed, there are some traditional ways you can think of, such as getting a loan from the bank, your own savings, asking for some money from your closest person and some others.

However, if those aren’t options for you, then you’ll need to find more innovative ways to finance your new business.

Here are the 8 most innovative methods entrepreneurs can use to finance their new business.

1. Barter & Trade

One of the most untraditional ways to finance your business is by trading your skills for another without exchanging any amount of money.

To get a perk from this method, you should first understand what goods and services you need financial assistance for.

The core meaning of this barter and trade is to exchange your goods and services with other companies’ goods and services.

For instance, if your new business is a web design agency, you can offer your services in return for a free, custom-made website. It’s a win-win situation, and you’re able to “finance” your new business without any money.

2. Crowdfunding

There are some people who are ready to finance your business. Such platforms are Kickstarter and Indiegogo. Which one of the most popular crowdfunding finance options available for any new business.

Crowdfunding is a method by which you ask the public for financial assistance for your business idea. There, each person contributes some amount of money they choose and in return, they get a reward – the product you’re working on. In that way, it’s like pre-ordering a product.

When you need to refund your money and want the people surrounding you to provide some money, you can use this option. In this case, you don’t need to approach them with a request for big sums of money.

3. Your Own Blood, Sweat & Tears

When you don’t have enough money to finance all the processes of your business, try to do as much as you can by yourself. Indeed, your own energy can be one of the best investments in your new business.

Many entrepreneurs use this finance method even having enough money to finance all the points of it.

For instance, if you’re not good aware of marketing strategies, instead of using the money to hire a marketing agency, you can do it all yourself.

Undoubtedly, it will take you much longer to develop and implement the marketing effective strategies to enter and capture a market than it would a professional.

However, it’s much cheaper or even free of charge to do it yourself, providing you also rich “experience” in the business sphere.

 

Related Article: Most Successful Business Ideas for 2019

 

4. Invoice Factoring

Invoice factoring is the process by which companies can get money for their invoices that haven’t been paid yet.

Particularly, if you have sent out invoices that your customers haven’t paid yet (for any other reason), you can use invoice factoring companies to go after those invoices.

Factoring differs from borrowing in that the accounts receivables are actually sold rather than merely offered as collateral.

The net result is that your company can convert its receivables into immediate operating cash. Here, you will not have to wait duration of 30, 60, 90 days or more for your customers to pay.

5. P2P (Peer-to-Peer) Lending

In the case of this financing option, there’s no need to go to a bank to get a loan for your new small business.

Peer-to-peer (also known as P2P) lending is a method of debt financing from business-angels that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.

In this case, you can get loans from other individuals without any intermediary organization.

Of course, there is a huge risk for the lenders, as they’re not having much guarantee. However, the return on their investment is much better than in the case of traditional financing ways.

6. Purchase Order Financing

One of the biggest problems for startups that sell products is the difficulty for scaling up. They simply cannot accept a large new order because they don’t yet have the required cash to build the product and deliver it.

That’s where purchase order (PO) financing companies come in handy.

Purchase order financing (or PO Financing) involves one company paying another company supplier for goods that have been ordered to fulfill a job for a customer.

 

Related Article: 7 Hottest Startups in the USA

 

7. Merchant Cash Advances

Originally, a Merchant Cash Advance (MCA) was structured as a lump sum payment to a business in exchange for an agreed-upon percentage of future credit card and/or debit card sales.

You can get merchant cash advances for nearly 50-250% of your monthly credit card limit. Your small business will repay loans by giving the lender a certain, fixed percentage of all the future credit card receipts until you pay off the loan.

8. Kickfurther

Websites such as Kickfurther (like crowdfunding) are made specifically for businesses, mainly for the smallest ones.

Instead of investors getting a reward for the money they’ve put up, they get part ownership of the inventory. When the inventory is finally sold, the investors get their money back plus any profit.

Hopefully, these innovative methods will help you to finance your new business so you can keep going and develop it. Good luck!