Financing business growth–or starting a new business–without bank capital is difficult, but not impossible. There are many steps to making this work, and, if done properly, can be done with little money. However, many of these steps might take time and patience.
Instructions
- Use your family and friends–they are a long-tested source of capital. Many businesses, especially years ago, were financed this way and those who invest in it receive many benefits if the business takes off. Trading and barter even works, when one can employ certain skills, such as accounting, in exchange for the goods the business provides.
- Use outsourcing for certain jobs. This can be an excellent method of cutting costs and raising profits without recourse to any debt. Many areas of business life, such as communications, invoicing, paperwork and even bookkeeping can be outsourced overseas for a fraction of the cost of hiring locally.
- Take advantage of invoice factoring. This is an innovative way to raise money quickly without banks. A company sells its services and sends the invoices to a factoring firm. This firm then immediately pays you for the invoices while it waits to get paid by your customers. While the invoices are paid at a discount, the company gets quick money and early financing to develop.
- Seek out state and federal grants for research. These are industry specific, but many industries can receive research grants. These are often overlooked. Venture capital and research grants are two important ways the state and federal governments can assist small businesses to raise finds without banks. Generally speaking, federal grants only go to non-profits, but state and local grants can also be used by commercial applicants as part of an overall economic development strategy.