If you have a great idea for a project, that’s one thing. If you also have the time, skill, and ability to see that project through from start to finish, that’s another. But once you’ve done all of those things—you still might not be able to get your project off the ground if you don’t have any money. One of the most difficult things about securing finances is that it usually takes a substantial amount of time to see results. On the other hand, securing finances for your project doesn’t always have to be that difficult. There are certain methods you can try which might allow you to see results quickly, and here are some of the most effective ones.
1. Asset-Based Loan
An asset-based loan is a loan that allows you to use something you own as collateral. In other words, if the people you borrow money from don’t get their money back within a set period of time, then they can take your property as compensation.
As the Illinois hard money lenders explain, there are different types of asset-based loans, depending on what your project is. If, for example, it’s a real estate project, you might be eligible for one of the following:
- Fix and flip loan – selling your home for a good price usually means investing in renovations first, and this type of loan covers exactly that.
- Rent loan – if you need to buy something expensive, but don’t have enough money to pay for it all at once, you can use the rent from your property to cover that cost.
- Construction project – if you want to build a new home or some other kind of commercial property, you can use the equity from your existing land as a down payment.
- Unsecured loan – if you have personal assets that are worth more than what you need to borrow—like a car or a boat—you might be able to put them up as collateral for this type of loan.
While all of these examples are related to real estate, they make a good illustration of what kind of projects can be financed using asset-based loans. You can ask some experts like socal home buyers on how to sell your house for a good profit.
Crowdfunding is often used by people who don’t need a substantial amount of money but want to generate interest in their project, like artists who want to make an album. Oftentimes, these are one-time projects that can’t be repeated (sort of like a book or album release). On the other hand, you could also crowdfund for ongoing costs related to your project (i.e. hosting fees) if it’s something scalable or recurring (like a website), or even for anything in between. One of the more popular crowdfunding websites, GoFundMe, is also one of the most flexible when it comes to what you can do with it. Some examples of projects on GoFundMe include:
- Graduating seniors who need some extra cash—in order to go study abroad for a semester, for example.
- Selling handmade goods—like photographs or paintings.
- Raising money to get medical treatment not covered by insurance.
- Answering calls for help from people who are in dire need of financial assistance (e.g., the Orlando shooting victims).
One way to ensure your particular project gets funded is by offering incentives. These can be anything from a thank you card to a ticket to the premiere of the movie—basically, something your backers will enjoy. The more appealing your incentives are, the more popular your project is going to be—and that’s what crowdfunding is all about.
3. Target Early Adopters
On the other end of the spectrum, instead of trying to reach a wide audience, you might want to consider focusing on early adopters. When creating your project pitch, you should think about who might be interested in seeing it happen. There are plenty of investors that look for projects that are unique and innovative, or that cater to a niche market. With this in mind, consider the following:
- Who would be interested in your product?
- How can you make it stand out from the rest of the products on the market?
Your pitch should include everything there is to know about your project—how long it will last, the specifics surrounding it, etc. Don’t forget that research is key when you’re trying to find potential backers for your project. Not only should you look into whether or not people are ready and willing to invest in it, but also exactly how much money you’ll need to get it going.
4. Peer-to-Peer Lending
Peer-to-peer lending is a financing method that’s unique because it’s not often tied down to specific projects or uses, and the amount you can borrow also varies greatly depending on different factors like your credit score, income level, and other relevant details. People apply with a lending website and are either approved for a loan or turned down. The most common use of peer-to-peer loans is for consolidating high-interest credit card debt—so if you want to consolidate your finances, this might be the way to go. The key to borrowing as much as possible is to have a good credit score and enough income that you’ll be able to meet the repayment terms. In addition, it’s important not to miss any payments because this could lower your credit score—and might even lead the lending company to sue you for the debt.
5. Get A Small Business Loan
If you’re looking for something relatively fast and simple, applying for a small business loan might be the way to go. There are many government-backed loans available at lower interest rates than those of other types of credit, plus they tend to have shorter repayment terms. There are also millions of dollars available every year through the government’s Small Business Innovation Research (SBIR) program—and some of them don’t even require that you pay them back, making them perfect for projects that don’t have an immediate return on investment. Keep in mind that these usually come with more strings attached than other types of loans—especially when it comes to protecting the investment. For example, you’re required to use the money for specific purposes (research and development, marketing), and might need to get permission before doing something like hiring new employees.
Whether you decide to get an asset-based loan, turn to crowdfund, or secure a small business loan, keep in mind that there are always options for getting your project funded. As long as you make it clear how much money is needed and what kind of return on investment can be expected, you should have no trouble quickly securing finances for your projects.
About the Author
Zeke Gavin is a freelance financial planner who aims to educate the younger generation and equip them with fundamental financial knowledge to help them make smart decisions on where to invest their money.