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The Pros and Cons of Alternative Funding Sources for Small Businesses?
The Pros and Cons of Alternative Funding Sources for Small Businesses?
1. Crowdfunding
Pros
: Access to capital, market validation, and exposure.
Cons
: Time-consuming, platform fees, public scrutiny.
2.
Angel Investors
Pros
: Significant capital, expertise, and flexible terms.
Cons
: Equity dilution, investor expectations, competitive to find.
3.
Venture Capital (VC)
Pros
: Large capital, strategic guidance, future funding.
Cons
: Equity dilution, high return expectations, hard to qualify.
4.
Peer-to-Peer (P2P) Lending
Pros
: Easier access, lower interest rates, quick processing.
Cons
: Personal liability, limited loan amounts, lender risk.
5.
Revenue-Based Financing
Pros
: Flexible repayments, no equity dilution, quick access.
Cons
: High cost of capital, revenue fluctuations, eligibility criteria.
6.
Factoring/Invoice Financing
Pros
: Quick cash flow, no debt or equity, fast processing.
Cons
: High fees, short-term fix, potential customer relationship issues.
7.
Microloans
Pros
: Accessible for small amounts, lower interest rates.
Cons
: Limited funding, strict eligibility, repayment pressure.