Photo credit: Silicon Valley Business Journal
Everyone has been talking about crowdfunding lately, but what about momfunding? Or friendfunding? Earlier this week, family loans site TrustLeaf released their first guide on “How to Borrow Money from Friends and Family.” For any small business owner who’s done this kind of loan before, the value of doing it right cannot be understated.
Unlike crowdfunding, where entrepreneurs ask for donations from strangers (sometimes with a gift in return) TrustLeaf helps small business owners raise money through their existing social and family network. “Crowdfunding is great if you have a sleek prototype or a chic new fashion line, but doesn’t make as much sense for say, an auto repair shop.” says Anson Liang, TrustLeaf’s founder.
38% of all US small businesses start out with friends and family loans; on average, borrowing $25,000. Compare that with popular crowdfunding site Indiegogo, which only brings in about $1,000 on average per campaign. Kickstarter performs better, but the vast majority of campaigns raise less than $10,000, which in turn is less than half of friends and family loans on average.
Due to the hardships between 2007 and 2010, the banking industry has gone through a number of changes designed to get through the recession. With the economy finally regaining strength and stability, small business owners looking to realize their dreams or expand their horizons are understandably curious about how the banking industry will affect them. The good news is that solid ideas with a strong target audience are still in good standing.
Available Credit Sees Ups and Downs
Because of the recession, most banks felt the need to create a number of newer, stricter regulations, especially involving credit. Up to 2010, little credit was available as banks worked to make sure they could cover their own liabilities. In the intervening years, however, the economy has slowly but steadily become stronger.
The increasing bankruptcies or dissolution among small businesses has mirrored the decreasing confidence of small entrepreneurs have had in the already sluggish economy. Since the start of recession, securing funding for a small business is more difficult than ever. One example is getting credit to start a business venture. Since lenders and investors know the fact that small businesses are more prone to risks, they are getting wiser and stricter on who will be eligible to lend credit. This leads small business owners to pursue alternative funding options and other sources of funding that are often overlooked but might prove to be the start of smooth sailings for a business.
Welcome to March, the month of… nothing really. The year always starts out with so much promise, so much enthusiasm! Then fast forward three months and you’re missing the holidays already and summer just can’t come fast enough. In case this has been your attitude lately, cheer up! The truth is that the economy is looking better and better as the days pass and consumer spending is increasing as a result. This means that businesses of all kinds are finding themselves with more customers and more profit. Many businesses aren’t necessarily feeling the improvements yet but 2011 is predicted to be one step further on the road to economic recovery. Here are some forecasts that economists and analysts alike are making about the economy and finances in 2011. Also included are some tips on how to make the improvements we are seeing work for you. Continue reading