Running a startup is a challenge even before the launch date. Collecting enough capital to get the resources that you need can be extremely difficult, especially for certain types of entrepreneurs. Find out when and why funding can be a massive roadblock for small businesses.
You Need Business Funding!
Unless you have thousands of dollars in savings stashed away or a generous fanbase willing to donate to a crowdfunding campaign, you’re going to get funding for your small business startup from one of the following ways:
- Venture capitalists
- Banks
- Alternative lenders
Find out which options are helpful for owners, and which ones are going to be hindrances.
Venture Capitalists
Venture capitalists are private equity investors that often support small businesses that they believe will make it big once they get off the ground. The only problem is that VCs are proven to prop up certain owners while leaving others behind. Women and POC have great difficulty receiving financial support, either getting significantly smaller sums or getting ignored completely.
Obviously, the challenge becomes greater when someone belongs to both of these demographics. Black women are currently the fastest growing entrepreneur group in the country, but they only get 0.2% of venture capital funding for their startup ideas. Those numbers don’t match!
Part of the reason for this funding discrepancy is that funders will support business owners that they relate to. Unfortunately, since most venture capitalists are white and male, they will primarily support owners that look like them. It creates a vicious cycle where a single group gets access to business opportunities, and everyone else has to struggle to get a fraction of those same opportunities.
Banks
If you can’t get venture capitalists to give you funding, it seems like the next best choice is to go to a bank. But, most banks refuse to give business startup loans to aspiring owners unless they meet their high application standards. Here are some factors that can automatically get your application rejected by the bank:
- Low credit score
- Short credit history
- No collateral
- Short business operating history
These standards will hurt members of marginalized groups more because they’re less likely to have significant assets for collateral or high credit scores. For instance, women have lower credit scores than men even when they spend less money and owe less to creditors. This is an obstacle that can feel near-impossible to avoid.
Alternative Lenders
If you can’t go to venture capitalists or lenders, where can you go? Well, alternative lenders can offer you fast funding for your startup idea without providing any unnecessary obstacles. Anyone can fill in an online application, even if they don’t have a perfect credit score or any assets to use as collateral.
You can circumvent those problems and get access to the capital you need. That way, you can start working on your business idea as soon as possible.
Move those funding obstacles out of the way by going to an alternative lender. All you have to do is fill out an online application and soon enough, your startup’s path to success will be clear.
