With many banks and major lenders less willing than they’d ordinarily be to lend to businesses due to the current financial situation, many businesses are looking at alternative financing as a means of funding their marketing campaigns. Although the current economic situation has affected banks and businesses around the world and thus rendered access to finance tight, it’s still essential to invest in marketing with many experts claiming that if there ever was a time to invest in marketing that time is now. So what is alternative financing, and are there any forms of alternative financing that businesses in need of funds to finance marketing campaigns should know about?
Alternative financial services
Alternative financial servicesfollow, often abbreviated to AFS, are financial services provided outside major banking and lending institutions. Many small businesses have become heavily reliant upon them as a means of credit, and not only to fund marketing campaigns. A prominent example of an alternative financial service is a payday loan, and as you can imagine, this is no way for a business to fund a marketing campaign. As alternative financial services are often expensive and can set small businesses back more than they stand to profit through marketing, are there any alternatives to alternative financing and if so, what are they?
Alternatives to alternative financial services
Small businesses and start-ups should be looking for alternatives to alternative financial services as a means of funding their marketing campaigns, so here are a few examples of alternative financing worth taking note of.
Venture capital – This involves getting in contact with a venture capitalist, essentially an investor who sources businesses with promising growth potential and invests in them in exchange for a share of ownership. Whilst venture capitalists usually possess both capital and expertise – which can prove beneficial for small businesses and start-ups – there is however, the possibility that the business owner will have to relinquish some control over the business, which isn’t something most business owners are willing to do just to finance a marketing campaign.
Peer to peer (P2P) lending – This is a promising form of alternative financing and one that’s provided countless small businesses with an alternative to banks and mainstream lenders. P2P lendingfollow provides a means for those with capital to lend money to those who need it, in this case small businesses looking for ways to fund marketing campaigns, with Zopa the most prominent example of a P2P lending company in the UK.
Business grants – Although many businesses feel that they simply aren’t eligible for a business grant because they’re not a ‘marginalised’ or ‘community orientated’ business, they should think again because there are many new business grantsfollow being made available all the time. This is a very real option for businesses, though if they’d like to stand a real chance of their application succeeding, they’re advised to get in contact with a firm that specialises in providing assistance with business grant applications.
Stock – This is an option that can deliver a quick influx of much needed capital, though it must be pointed out that it does take time to arrange first, so businesses in need of credit to finance their marketing campaign ASAP might be better off looking at alternatives. There’s also another drawback to selling stockfollow in a company that should be mentioned, one that’s very similar to that discussed above regarding venture capital. When businesses become companies to sell stock, they’re also selling control and they therefore become answerable to the shareholders they sell stock to, so once again the owners of the company are relinquishing control along with some of their profits.