Small Business Lending Options for 2015

Lending money to start-ups and expanding businesses isn’t just for big intimidating banks anymore. In fact, small business owners looking for a loan have had more than just one option for a while. There are private investors, peer-to-peer lenders and, in recent years, crowdfunding to consider when an entrepreneur needs some extra capital.

However, each of these choices has different pros and cons depending on who you are and what you need. Plus, the ebb and flow of trends and economy may continue to challenge traditional ideas about how to fund the starting of a business. So what is the best way for the intrepid entrepreneur of 2015 to fund his business goals?


Crowdsourcing is an old idea that has been transformed by the use of today’s technology and social media. Technically, whenever a company holds a contest or tweets a question asking for designs, ideas or inspiration they are crowdsourcing . Crowdfunding sites like Kickstarter and Indiegogo have taken that basic principal and made into a way for people to donate money to projects they believe in or want to see come to fruition. I say “donate” but, in a way, it is an investment. People give money in exchange for a product, service or entertainment that they want to become available.

For entrepreneurs, this is a way to not only get funds without having to pay it back with interest, it is also a way to market your business and get an idea of how people feel about your products and services.

It may seem unlikely that people would be so willing to give money to companies with little more than an idea and a plan but you might be surprised. For instance, in November, Youtube entertainer Olan Rogers was surprised when his fans started an Indiegogo campaign to help him replace his recently crashed car. Rogers wasn’t seriously hurt in the crash. He wasn’t even at fault. Yet the campaign met its $10,000 goal despite the fact that he specifically asked fans not to donate.

Crowdfunding can be a powerful tool but does it work for every business owner? It’s a good idea for artists, filmmakers, musicians and people with flashy new ideas. But what if you have a good idea and a solid business plan for something that is more mundane?

An accountant or a lawyer who wants to leave their big firm to start a small business on their own may have trouble getting enough people excited about their business to crowd fund it.

Plus, crowdfunding works best for projects that need a small amount of funds. Rodger’s fan’s campaign had a $10,000 goal and enough excited people to meet it quickly. However, an expanding business that requires money for employees, property and products may need something closer to $100,000.

For the business owner who needs a lot of money in a relatively short amount of time, small business loans are still a solid option. However, you still have several choices to consider. Do you choose a bank, a private institution or a peer-to-peer lender?

Banks are intimidating and dealing with them may be difficult at times but they are still one of the best options for a small business loan. If for nothing else, the legitimacy of big banks is never as questionable as private lenders. Although they tend to have ridged rules and procedures, you typically know what to expect before accepting a loan. Plus, you can get money on the same day or week that you apply. Banks tend to offer the lowest interest rates but they are also very selective. You will need to have good credit and a persistent attitude.

If you don’t qualify for a bank loan, investigate other options like Small Business Association (SBA) loans, which are federally funded. They will help direct you to banks that are specifically looking for small business owners to lend money to however, rates through loans found via the SBA aren’t as good as ones from a bank.

There are also a variety of non-bank lenders. “If you can’t get a bank loan you still have several options,” says Rob Webber, CEO of Money Saving Pro, a consumer advocate group that has researched and reviewed some of the top alternative small business lenders. “Online lenders look more deeply at borrowers than banks do. They look at your business’s actual cash flow and expenses rather than just your credit.”

While online alternative lenders will give you more chances to qualify for a loan than a bank, the interest rates might not be as desirable as a bank loan. They are also not closely regulated by banks or government so it is important for you to be able to recognize fair rates for someone in your financial position.

Your options for funding your business have a lot to do with who you are and what you do. If you have an interesting project idea that just needs a little extra capital, Crowdsourcing may be a viable option. If you have a traditional business plan, traditional business loans are still a good option, even in 2015.

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