Traditional banks typically turn down loan applications from new businesses that lack an operating history or satisfactory credit score. As a result, many Louisiana startups never develop beyond an idea.
Fortunately, these alternative financing options can help your business get off the ground and succeed.
A partnership structure allows you to share your vision and financial obligations with someone else. In addition to offering financial support, a partner’s skills and experience can make up for those you lack.
Venture capital companies that see your business’s long-term growth potential may exchange financing for an ownership stake. Your business will also benefit from the industry connections and wealth of knowledge these companies are willing to share.
Private individuals or groups that appreciate your business model may be willing to mentor and finance your startup. They often expect an equity stake in exchange for giving financial support.
Multiple backers who admire and believe in your business model may want to donate financial support. Crowdfunding platforms allow you to solicit donations from anyone in your network, but you must indicate a fundraising goal that your reach within a specific period. Otherwise, you forfeit the funds you raise.
Online platforms match borrowers and lenders through an evaluation process that determines their default risk and tolerance. Borrowers must make up for low credit scores and the high risk to lenders by agreeing to pay higher than average interest rates and other fees.
Grant awards usually come from the federal, state and local government or private sector organizations, which often dictate how awardees use the funds. Therefore, grant applicants must undergo a lengthy application process when competing for funds.
Regardless of your funding source, your business’s success depends upon a clear vision and plan for achievable goals.