Acquiring capital is a challenge that virtually every small business faces at some point or another. Financing a startup is not always easy, but, traditionally, entrepreneurs have relied upon small business loans to get their new companies up and running. Today, however, securing such capital is not an easy task. In fact, it has become so difficult to get financing through traditional avenues that many entrepreneurs are turning to an unconventional source: crowdfunding. Lendio, a company that assists small business owners in securing the loans they need to thrive, asserts that this form of funding is a good alternative for some, but not all, endeavors.
A recent article explains that crowdfunding is “essentially the process of raising small investments from a large number of investors. The JOBS Act of 2012 made it possible for small businesses to crowdfund up to $1 million in capital and with the provisions of the act slated to go into effect in early 2013, small business owners are preparing to rake in dollars for expansion or other initiatives.” Commonly, crowdfunding calls upon the general public, rather than seasoned investors, to finance an endeavor.
While crowdfunding is an exciting new avenue toward the financing that entrepreneurs need, it is important for business owners to remember that securing capital is not necessarily easier through this technique. Lendio agrees that entrepreneurs need to keep in mind the fact that crowdsourcing requires a great deal of preparation and promotion. According to the article, entrepreneurs should expect to compete heavily for the support of investors. Additionally, they will need to ensure that potential investors understand their pitch and that it’s promoted in every way possible. Online marketing efforts are often effective, but the article encourages entrepreneurs to remember the value of offline promotional tactics, as well.
The professionals at Lendio believe that the surge in popularity that crowdfunding has experienced is a positive sign that innovation is strong in today’s American landscape; however, they urge entrepreneurs to remember that this is not the only option they have available to them. If a traditional loan is not secured, small business owners may also be able to access alternative financing products.
“Small business owners have a number of options to finance growth and expansion,” comments Lendio CEO Brock Blake. “The local bank or credit union is only one of their options today. Crowdfunding is another option for some businesses, but there are several lenders that offer alternative financing products that help small business owners finance their business needs.”
ABOUT:
Lendio was founded on the understanding that financing is critical for startup businesses — and that the entrepreneurial spirit that drives these businesses is an integral aspect of America’s culture and economy. To assist entrepreneurs in establishing their companies, Lendio connects them with financing sources. Through a unique four-step process, Lendio encourages communi