Business Finance

3 Ways to Secure Long-Term Funding for Your Business

One of the most essential things a new or growing business needs is long-term funding. Long-term funding frees business owners to take short-term losses that will allow them to pivot to long-term gains, and is essential in scaling up a business.

But how can you secure long-term funding, and what are the best, safest, and most reliable ways to do so?

In this article, we’ll explore three very different approaches to securing long-term funding, each with its own pros and cons.

1. Borrow from Friends and Family

While it can come with complications, one of the most common ways for small businesses to get off the ground is also the most old-fashioned: budding entrepreneurs borrow money from their family and friends to ensure they have the funds to keep their business running until it becomes profitable.

While not everyone’s parents will be able to give them million-dollar loans, you might be surprised at how much you can raise from people who have confidence in your abilities.

2. Get a Merchant Capital Advance

While small businesses have often turned to banks for loans in order to get started, the regulations and fees involved in getting funded through a bank line of credit can be exorbitant.

Fortunately, the market for small business funding is diversifying, and there are now alternatives available for businesses that were not able or not willing to take out a bank loan.

One of the most popular examples of this kind of funding is the merchant capital advance, which allows businesses to purchase funding for six to twelve months based on a single fee for the entire funding package. Payment is flexible, and gives business owners a variety of workable options to help them set up a payment plan that works for them.

If you’d like to know more about what a merchant capital advance is, or if you’d like to find out how you can secure one, you can get more info about how they work here.

3. Try Crowdfunding

Over the past five years, crowdfunding has become one of the most powerful vehicles for online fundraising available.

Crowdfunding sites like Patreon and Kickstarter make it easy to make a direct appeal to your customers and potential customers who might be willing to offer up-front financial support based on the promise of future or recurring content.

How does it work? Through popular crowdfunding platforms, producers trade bonus content or other rewards for regular monthly support or one-time donations. This sets up a regular revenue stream and allows for sustainable goal-based income generation.

While crowdfunding won’t work for every company, if you are already producing content or a product and have a loyal customer base who might be willing to chip in a little more to help you get to the next level, this can be a low-cost, low-risk option for attaining more long-term funding.

There are now more ways to raise funds for your business than ever before, but the key to securing long-term funding for growth lies in finding the funding model that works best for your product or service.

Borrowing from friends and family, merchant capital advances, and crowdfunding are all effective ways of making sure your business stays sustainable for the months and years to come.