In recent years, crowdfunding has been touted as a great alternative to a business loan. In some cases, this might be a cheaper way to go- and as an added bonus, it increases the public’s awareness of you and your products. However, if you need funding fast and you don’t have the resources to get the most from a crowdfunding campaign, business loans might be the better option.
Business Loans: How do They Work?
A business loan is where your business borrows money with the agreement of paying it back with interest and fees within a specific period of time. They are great for one-time expenses such as expansions or equipment purchases.
To get started, you will need to submit your application and other requested documents such as tax returns and bank statements. Once you have approval, the lender will send the loan documents for you to sign before funds are dispensed. This process can be as little as one day if you go with an online lender and as long as three months if you apply with a bank. Typically, a smaller loan will be processed quicker than a large one.
Crowdfunding: How Does it Work?
Crowdfunding has emerged as a way to raise one-time funds that you will not be required to pay back. There are several methods of crowdfunding, the most common are equity and rewards-based. Usually, a crowdfunding campaign will take about a month to raise the necessary funds.
Rewards-based crowdfunding campaigns involve your business offering prizes/rewards for donations. This is usually best for creative projects with significant interest that you can show in a short video.
Equity crowdfunding involves you giving shares of your company to investors in exchange for investing in your business. This is best for a business that is expanding or planning to launch a potentially profitable project. Additionally, it’s a great option for start-ups.
If you feel like you’re interested in learning more about business loans for your small business, contact Fortis Funding to get started.