So you have an excellent idea for your brand new B2B business and are sure of its success. You are enthusiastic about entering the market with your new product or service. However, one thing holding you back from taking the market by storm, and that is lack of financing. Sometimes, you do possess the capital to start your B2B business. However, you are not sure how you can finance your business in the long run.
The following image shows the reason for the failure of B2B companies. Note that the shortage of funds is the second most significant reason for the failure of the B2B business. Worry not! As this article brings you ten creative ways to seek financing for your B2B marketing nowadays.
Peer-to-Peer Lending
Peer-to-peer lending enables entrepreneurs to borrow money from lenders without involving conventional intermediaries such as a bank. A majority of P2P lending companies use websites and have an online application process. A big plus of this financing option is that it provides you with cash fast. Sometimes it takes only 24 hours to approve the loan. It is a quicker and more economical option to raise capital for your business.
Factoring
Factoring is another means of raising capital fast for your business. Factoring involves selling your accounts receivable to an invoice factoring company at a discount in exchange for money. However, studies reveal that this is a more expensive way to finance your business as the interest rates are higher. It also includes giving up a part of your profit for immediate funding.
SBA Loans
You can also opt to take a Small Business Administration (SBA) loan to finance your business. They offer several loan programs for small companies that you can take to help grow your business. SBA loans happen to be a reliable and less stringent source of funding. Your business has to meet its eligibility criteria and conditions to qualify for the investment. The bright side is that the terms and conditions for SBA loans are not very strict.
Business Lines of Credit
You can use a small business line of credit to get funds for your business needs swiftly. One great thing about a line of credit is that you can take it and repay it repeatedly. You don’t even need to have collateral like inventory or real estate to get a line of credit.
You do, on the other hand, need to show a lot of information such as financial statements, tax returns, bank information, etc. to secure a business line of credit. Lenders also tend to charge extra, with higher fee and other charges, although the interest rates are usually lower. So, compare this option with others to work out a more feasible borrowing option for your business.
Crowdfunding
Crowdfunding is an alternative source of financing for your business when you don’t have other options. With crowdfunding, you ask your friends and family to fund your business. It is now more comfortable for you to connect with a large number of relatives and friends by using crowdfunding websites. First, you inform the members of your social circle about your business idea. If they like your business idea, your family members and friends pledge to contribute some money to your business.
Customer Lenders
This option may surprise you, but your customers can fund your business as well. You can ask your customers to make full or partial payments to you in advance. You can then use this capital to finance your business needs. For this to happen, though, you need to have an established customer base already. Research reveals that having your customers finance your business is a great idea.
Home Equity
If you are facing problems with securing a loan any other way, you can keep your home as collateral. You can then direct the money you get to fund your business. Generally, you can borrow up to 85% of your home equity. Since these loans involve your home as collateral, you can get a line of credit at meager rates.
A big downside of this option is that the lenders can foreclose your home if you don’t pay the loan. Therefore, you should keep this in mind considering home equity as a funding option for your business.
Venture Capital
Venture capitalists are companies committed to funding businesses. These companies will also present money to launch your business in return for an equity share or a portion of ownership.
You also have the option of bargaining more with venture capitalists since you can make different pitches to several firms. Making pitches to various venture capitalists allows you to observe what type of financial backing they can give you. You can also choose from several different venture capitalists if you need funds to start your business.
According to studies, this type of financing is a good alternative in case you lack physical collateral to secure a loan.
Small Business Grants
If you are a commercial and for-profit organization, you might not qualify for a small business grant from the federal government. Small businesses that are devoted to scientific research and development, some minority groups, causes, etc. do get small business grants. If your domain falls in any of the groups, you can apply for a federal grant online at their website. Some states and towns also provide small business grants locally.
On the other, it is hard to qualify for a small business grant as the eligibility criteria are pretty strict, and there is a lot of competition.
Business Incubation
Private companies or municipal entities and public institutions, like colleges and universities, usually fund business incubation programs. Their objective is to assist in the creation and growth of young businesses by offering them essential backing.
However, the application process for business incubation can be painstakingly thorough, and the competition is quite fierce. Also, you need to commit at least a year or two of your time to the incubator. You will also have to take the various training and workshops that your incubation provider offers.
Conclusion
This article has given you a great deal of information about the different options available for financing your B2B venture. So, you are now on your way to getting suitable funding for your business.
Remember, the best financing alternative for your venture is the one that best matches your business requirements and circumstances. Only you can decide the best way to fund your business as you know the unique strengths and weaknesses of your business. We hope that you succeed in getting the best funding for your business and that your business flourishes as a result!
