Today’s tough economical times don’t really give you leeway you had hoped for when your dream is to open your own small business. Not only is it pretty difficult to get approved for a business loan, but it is also equally as difficult to branch out into a new profession that you may or may not have experience in. While there are many obstacles standing in your way, sometimes just knowing why it is difficult to get approved for a small business loan can shed some light on an otherwise gloomy situation.
According to the National Association for the Self-Employed, president Kristie Arslan explains to Yahoo! She states that even though small business owners don’t need a lot of money to get their business up and running—the traditional lending institutions don’t view them as being moneymakers. Therefore, since most banks don’t see small businesses as being profitable, they decline the loan and move on to the next applicant.
Over the last few years, however, entrepreneurs and artists have rose above this challenge and taken this battle to the World Wide Web, and have sought help from a variety of online community sources. Instead of allowing banks to have full control over whether they decide to follow their dreams, they’ve decided to use a more creative means of raising money, commonly know as crowdfunding.
What is Crowdfunding
Crowdfunding is a growing trend that takes place online. What makes crowdfunding unlike any other resource for obtaining money is that you reach a broad spectrum of people. You have a chance to post your ideas on various websites along with a detailed plan on how you hope to pursue your dream. Readers can donate money in the form of a personal loan.
Services such as these are especially useful when banks turn their backs of aspiring business owners and decline all personal loans for starting a small business.
Problems with Crowdfunding
One of the problems with crowdfunding is that it is based solely on a person or person’s willingness to volunteer their own money. In today’s tough economical times, it can be quite a difficult challenge to convince someone that the money they are loaning will be used to fulfill someone else’s dream. How many individuals are that selfless when it comes to money? Not many, I suspect. However, while the humanitarian aspect of this idea is pretty touching, it’s not very practical.
It doesn’t matter whether a donator gives $1 or a $1,000, they must be alright with the idea that the money will be given to the individual and they won’t be able to bank on any type of return. This is because it is illegal in the U.S. to shell shares to unaccredited investors.
The Federal Government May Help
However, the government may soon be changing this law. Recent talks have been discussed which talk about loosening the rules in relation to crowdfunding. One of the rules they are thinking about changing is allowing donators to invest in aspiring companies.
The beauty of crowdfunding is that shows the importance of going for your dream and reaching out to others to make it possible. Anyone with an idea can take it online and get feedback from other entrepreneurs and people in the same situation. You’ll also receive feedback as to whether your business plan sounds promising or not, which can be helpful in deciding whether or not this is something you want to continue to pursue.