Wave Bye Bye To The Bank
Loans, mortgages and store cards are traditional forms of debt that we all know and either love or hate. These are all accessible to consumers, but what happens when a consumer wants to become a business owner, but has no capital or borrowing power to get the business idea off the ground? Unsurprisingly, there are options for people who have great ideas and the drive to make things happen. Crowd funding has become a huge part of the ‘new business’ industry where people can borrow from investors who sometimes require a share of the new venture or a fixed return on their amount invested.
Good Borrowing for Once
In essence, crowd funding is probably the best form of funding for people who have adverse credit histories because there are no requirements for a previous good payment record. All investors want to see is that you have a great idea with drive to move the idea forward. The cost of borrowing can be very good too and some even require no repayment if the funding is for a good cause or as long as the venture is successful in helping people. One of the best things about crowd funding is if everything goes wrong, you don’t have a massive debt to repay. The world changes and industry might move on, you might suffer other setbacks or the idea that you and your funders thought was great turned out to be not so great after all.
Is Crowd Funding for Small Loans?
You could be forgiven for thinking that crowd funding is only available for large ideas that takes a large crowd to contribute a decent amount each, but that is not the case. Crowd funding can be for anything and it doesn’t always need to be a business idea. CrowdCube is the largest in the UK and investors raise hundreds of thousands for a single business venture, but GoFundMe helps people raise money for anything. Some people have medical bills to pay or even a dog that needs a new home. GoFundMe even raised money to send one person to clown school – seriously! There are no restrictions on reasons funding because there are people willing to help.
Alternatives to Crowd Funding
A big part of crowd funding is about getting the idea out there and making people notice your project. This often involves creating a buzz about what you are doing and bringing in friends and family who are willing to help you promote the idea. When you realise that this takes a lot of hard work, you may agree that asking your friends and family for a small loan is a lot easier. Of course, there are limits to what you can expect friends and family to provide and they will expect to see a return on their money.
If you are starting a business, then there may be government grants available to help you in the initial stages and these rarely require any form of repayment. Every local authority in the UK has some sort of business development unit that encourages new business to start and locate in the area because this improves the local economy. If you have a good idea and can back it up with a business plan, you could be eligible for a grant.
High Street or Sub-Prime Lenders
You could always check out your bank to see what they have to offer, but if your credit is not great, you might need to approach a sub-prime lender where the interest is generally a lot higher. If you are certain of success, this route can often be the quickest way to receive funding, but they will definitely need repayment and the loans will usually be against your name and not the company you form.