Getting a small business off the ground is a difficult thing to do. Not only do you need a good idea that the public will embrace, you also need a small business investor to finance your venture. How do you go about getting this money? In the old days, going to a bank and getting a small business loan was the most common way for people to acquire the necessary funds to turn their small business dream into a reality. However, things have changed dramatically in recent years. People now have other methods available to them for acquiring financing.
Let’s take a look at some of the ways to find a small business investor:
1. Peer-to-peer lending
Peer-to-peer lending (P2PL) occurs when a person lends money to another person without the involvement of a bank. This is basically an unsecured personal loan with the interest rate being determined by the lender. If a person is approved, his or her interest rate is determined by their credit history, credit usage, loan term, loan amount and credit score.
Money is raised by obtaining donations from many people. This is usually accomplished by using the Internet. Started in 2003, crowdfunding has now become a $5 billion dollar business.
3. Angel Investors
Angel investors are people who have a large amount of money at their disposal that they are interested in investing in various projects. These projects often involve startup businesses.
How to find these investors:
1. Peer-to-peer lenders
A simple Google search will provide you with various P2P lenders to choose from. Lending Club, the largest of these sites, has been around since 2007. It acts as an alternative to traditional lenders. Prosper is Lending Club’s biggest competitor. These sites make it easier for risky borrowers to secure a loan. All of these sites are not created equal. If you decide to use this method to find a small business investor, do some research and visit many sites.
Once again, all you need to do is run a Google search to find a plethora of crowdfunding sites to choose from. The three biggest are Kickstarter, Indiegogo and Crowdfunder.
3. Angel Investors
Contacting an angel investor directly is very difficult because these wealthy people prefer to keep their anonymity and allow a team of experts to choose their investment projects for them. Local areas have their own groups of angel investors. Here is a list divided into various regions. It will give you many to choose from.