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How Technology is Making it Easier for Small Business Owners to Access Capital

When our parents were starting businesses, they had only a few options to find capital to start and grow those businesses. They either applied for loans at the local bank, borrowed the money from a relative, or took out a second mortgage on their home to back their own ideas.

As time went on and the notion of investing in someone else’s business became popular, the windows of opportunity opened up much wider and business owners had several options to pursue to get their businesses off the ground, albeit with someone else also taking a percentage of their company.

Still though, the practice of capital investment is one of the most popular ways startups raise money to scale their businesses. Less and less, people turn to traditional financial lending institutions to get the money they need, with more and more people are opting to just finance a lot of their startup costs themselves with savings and credit cards.

But for those who don’t have that option, or for those who are already elbows-deep in a business that is costing them money, not a lot of options have existed to keep going, until recently.

These days, businesses have many options to find and raise capital to continue running or to scale their business, and it’s not another lending institution that is making that possible. It’s technology.

Applications are Faster, Safer, and More Readily Available

When people started to realize that the internet was not just good for socializing, but also for raising funds for business startup and development, one of the best things about this discovery was the speed with which technology made it possible to get those funds.

In the early days, websites just listed phone numbers where you had to actually call a company and go through the application manually, but at least finding the phone number was faster.

These days, however, the technology has developed so much that business owners can seek out funding options within minutes – not weeks – and they can apply for not just one, but several funding options within those minutes.

Plus, they can usually find out within a few more minutes if their application has been approved or if it needs to be pushed up the line. Even though, at least knowing that your application is in processing with real-time updates can save a business owner a lot of sleepless nights.

Crowdfunding Makes Everyone an Investor

One of the most remarkable things about lending driven by technology is what has transpired in the crowd-funding space. Instead of just a select few with the resources to invest millions in a company that had high hopes of massive returns, everyday people can take dollars out of their pockets and invest it in a good idea that speaks to them.

The red tape associated with crowd-funding loans is minimal and if you do a good job of promoting your business or product, you can at least count on the exposure, plus some cash in the bank.

What’s more, other companies have seen what crowd-funding can offer businesses of all shapes and sizes and have started to come up with their own ways of making funds available to business owners who may need to bridge the gap for a while during a particularly slow season or to get new requirement or develop processes.

Some companies have come up with merchant cash advances that allow established business owners to borrow against the future-value of their sales.

With very little sales history needed, and no credit checks, these merchant cash advances are saving businesses all over the world. Not every merchant services provider offers this kind of option, but it’s one that is worth looking into, particularly if you are a business owner who has run out of other options.

It’s also good for business owners who don’t want to have to use traditional lending or make it public that their business needs help with cash flow.

Technology Connects Business Owners

Finally, technology makes it easy for business owners to get the word out about fund-raising efforts so that wide-reaching investors can opt-in if they feel the need to get involved. What’s more, technology makes it easy for those investors track, often in real time, what is going on in the company, thanks to the social media boom.

Everyone is expecting to see where the money goes and how it is being used – keeping companies more honest than ever. Even crowd-funding platforms have rules about when you get the money and how you are to report back to your investors just what you did with that money.

For any small business owner, or even an enterprise entrepreneur, understanding how technology can help you access capital when you need it most is an important piece of information. And of course, one of the best ways to find out that information is to use the very same technology to search for options to fund your business.

 

 

 

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