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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.