Crowd Financing VS Small Business Loan

First Financial Crowd Financing, Crowd Funding, Franchise Purchase, SBA Loan, Working Capital 0 Comments

Crowd Financing or Small Business Loan?

When it comes to your small business, do you want to go with the traditional small business loan, such as an SBA Loan or Bank Loan, or do you want to consider the increasingly popular option known as crowd financing?

Crowd Financing vs Small Business Loans

It certainly isn’t news that small businesses need money to get started, expand operations or utilize working capital. The first year is so absolutely crucial for a business that is just starting out, and it goes without saying that money is needed to keep things afloat.

The amount of money can vary from one small business to the next, but the fact remains that without that initial capital, your small business isn’t going to travel very far in the world.

To that end, you’re naturally going to be curious about the traditional small business loan. This is the lending concept that businesses have utilized for generations. It is a legally-binding financial agreement between yourself and a lending institution. The basic definition of this type of loan is that the small business gets the money, and then uses the loan to cover expenses associated with their rising enterprise. However, this money is not a gift. It must be repaid by a certain date, usually with some form of interest on the amount loaned. The loan is usually repaid in installments.  There may be a lot of paperwork involved in applying, strict credit requirements and personal guarantees that put your assets at risk.  For some an SBA loan is a great way to get working capital or finance your franchise purchase, learn more about SBA Lending here.

That is essentially what the small business loan will entail. It’s a reliable concept, so why are small business owners just like you turning to crowd financing in ever-increasing numbers?

It’s not complicated. Although crowdfunding, as it is also known, carries with it a certain measure of uncertainty (when compared to a guaranteed loan), the benefits far outweigh the potential negatives. With a trusted crowd financing site to back you up, you’re going to exercise a good deal more control over the experience of people giving you money to start up or maintain your small business. You determine exactly how much you need, and you decide who you take money from, at what interest rate and what terms.

Loans can range from $20,000 to $200,000, over 1 to 5 years, with interest rates ranging from 7% to 19%. The actual interest rate is determined by open bidding in the marketplace which is highly influenced by your past operating history and creditworthiness. Crowd financing is a win win for investors and borrowers.  There are close to 30 million small businesses with under 500 employees in the U.S. and they are critical to the health of our economy.  Small businesses account for 99% of all business and crowd financing is here to help them succeed.

Crowd Financing a Franchise

If you need financing for the purchase of a franchise concept, you may not need any operating history to qualify.  Our crowd financing investors are looking for qualified operators with the experience to succeed in the right franchise concept.  If the franchisor meets our crowd financing guidelines, you may more easily qualify for funding.

Purchasing Equipment with your Loan

Now that you have acquired adiquate funding for your business through either a traditional SBA Loan or Crowd Financing you may be considering purchasing the equipment you need to operate.  Before you do, consider that there may be a better option for managing your cash.  Equipment Leasing can allow you to retain your working capital, but still get all the equipment you need to operate.  There are many advantages of equipment leasing vs buying, financing or renting.  Learn more about equipment leasing here.

 

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Small Business Administration

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