Is financing a big headache? The library may be able to provide you with some relief.
By Library Staff Writer
With all the upheaval we’ve seen in our economy lately, many entrepreneurs have been feeling the same pinch as the rest of us. Money is tight so it’s become much more challenging to get traditional bank loans for starting or expanding a business. Entrepreneurs are left wondering if there is any way to secure financing.
A solution may lie in “creative financing”-a concept that has been taking hold in the small business community for some time. Discussions about this topic are appearing more frequently in all sorts of magazines and blogs.
Two types that are gaining popularity are “peer-to-peer lending” and “crowdfunding.” In peer-to-peer lending, entrepreneurs are matched up with individual investors, typically in an online environment. Sites offering this service include Prosper and Lending Club. Crowdfunding is a method involving multiple investors. Entrepreneurs set up profiles that explain their idea and how much money they’re seeking. Investors then pledge money toward the entrepreneur’s goal. It’s also conducted online, via sites such as Kickstarter, IndieGoGo, and Peerbackers. These sites make their money by taking a percentage of the investment.
Of course services like these have their pros and cons. Considering your target audience is a must before making any commitment. But if you are marketing a product or service to a younger, tech savvy audience, these types of creative financing can be a really great ways to raise money. The Wall Street Journal recently published an article that quotes Bo Fishback, VP of Entrepreneurship at the Ewing Marion Kauffman Foundation. Located in Kansas City, MO, this research organization is dedicated to start-ups. According to Fishback, “We’re at the beginning of a huge crowdfunding movement that will disrupt the traditional channels for funding.” He reasons that entrepreneurs prefer the idea of pooling small amounts from ordinary people, rather than “trying to say the right things to get a rich guy to cut a check.”
To find out more about creative financing strategies, visit the Capital Area District Library. We can track down current articles and point you to several books in our collection that outline some ideas and methods for creative small business financing:
o Finding the Money: The New Rules for Small Business Financing by George T. Solomon
o Get Your Business Funded: Creative Methods for Getting the Money You Need by Steven D. Strauss
o Locavesting: The Revolution in Local Investing and How to Profit from it by Amy Cortese
The Capital Area District Library Reference Department is located at 401 S. Capitol Avenue in Lansing, MI. Contact them at 517-367-6346 or by e-mail at reference@cadl.org.
This was printed in the October 23, 2011 – November 5, 2011 Edition.
