The greatest problem with funding your idea or a personal project is that your idea may not be eligible for a small business loan. Usually, it is because most freelancers file their business and personal taxes together. This makes banks and credit union see you as a huge risk, due to the fact that it is impossible to legally separate your personal and business finances. Even if you do get a business loan, you will have no protection against liabilities whatsoever. With this in mind, here are six alternatives to SMB loans that people might find more convenient for their personal projects.
Start a crowdfunding campaign
People who have a particularly creative project in mind, the one they believe would add value to others online, may decide to start a crowdfunding campaign. After all, if that one guy on Kickstarter managed to collect over $55,000 to make a potato salad, you could put your project on display and hope for the best, as well. On the other hand, you are in no way restricted to Kickstarter. Platforms like Patreon allow freelance artists to get paid by their patrons either on a monthly basis or per project. This is particularly useful for YouTubers or others who create series of projects over the course of several months or years.
Sell an asset
Another great idea is to sell an asset in order to fund your personal project. Let’s be completely honest – if you can’t find someone to lend you a large sum of money to get your business off the ground, this might be the only option. Sure, selling your car, a property or a jewelry collection that you own is far from desirable, yet, there is some logic to it. After all, a car or a necklace once sold can be bought again. In fact, if your project hits off and becomes as successful as you’ve hoped, you might even be in a position to treat yourself to something even more valuable. Nevertheless, when talking about gifts or family heirloom, it may not be as easy to give up on them as they have a sentimental value.
Get a personal loan
In a situation where you can’t apply for a business loan, which is usually the case with freelance businesses and personal projects, you need to consider the option of applying for a personal loan. Here, however, you have to seriously consider several key aspects. First of all, you need to put on paper your monthly expenses.
Apart from your daily expenses and utility bills, you also need to consider the cost of software licenses that your freelance business depends on, as well as some other business-related expenses. Then, you need to add the interest rate and the monthly credit payment. Once you have the final figure, you need to be honest with yourself about whether you will be able to pay it back. For those who feel confident about their project, looking for low rate personal loans is the next most logical step.
Don’t quit your day-job just yet
A lot of people use freelancing as a source of side-income, yet, once you start earning a bit more, you might want to reconsider this approach and decide whether you should start freelancing full-time. Since your side project may not be self-sustainable in the long run, you should definitely stick to your day-job and use it to maintain the cash flow. Unfortunately, this can be completely exhausting but with the right organization, you might be able to pull this off. As always, there’s a price to pay for success and if you don’t have an asset to sell or money to invest, you will have to pay with your effort.
Create a side-revenue
Another method for providing funds for your business can be creating a side-revenue. There are many ways in which you can do this, and the choice is yours. For those who still have enough spare time, doing an additional freelance work (perhaps, in a different line of work) might be a viable choice. Others might benefit from selling items they don’t need on eBay, even if we’re talking about items like used boxes or old Nintendo cartridges. Finally, people who don’t have any of these commodities available might want to consider getting another roommate.
Apply for a business grant
Finally, depending on the industry you’re in, you might become eligible for a business grant. Unlike with loans, you won’t have to repay a grant, which is an obvious advantage. If you belong to a certain demographic group, you might even be eligible for a grant program. In some countries, veterans have an easier time getting grants provided by government agencies. Either way, the massive advantage of a grant is that you won’t have to pay it back. In this respect, going for a grant is probably the best course of action in any case.
At the end of the day, funding a personal project is not unlike funding a small business. The greatest difference here lies in the fact that you won’t be able to get a small business loan, which is a go-to solution for many first-time entrepreneurs out there. Fortunately, with so many options at your disposal, this shouldn’t make you much worry that much.