When you want to finance a green business there are a number of methods that you could use. Outside of the more ‘conventional’ options such as bank loans, government grants, and venture capital however – there are an increasing number of very different alternatives that are often being used to finance green businesses.
While not all of these methods may be suitable for every business, nonetheless, it helps to know about them. That way you can evaluate which ones you feel might be worth pursuing, and stand a better chance of raising the capital that you need for your business. In particular the unconventional financing methods that tend to work especially well for green businesses include:
- Crowdfunding
In the last few years crowdfunding has become a popular method of raising capital for new businesses that are environmentally-friendly. Essentially it finances the business by raising money from contributors in exchange for perks. Sometimes it is even used as a method of generating pre-sales, which are advanced sales of a product before it is actually produced. Generally crowdfunding works best for green businesses that are creating a product that is exciting and able to stand out so that it has the mass appeal that is necessary to generate large amounts of capital.
- Business competitions
Because the green business space has grown so rapidly and attracted so much interest, there are many business competitions that are now focused on it. Some of these competitions provide funding directly, while others may be tied to a grant of some kind. Although far from a ‘guaranteed’ form of funding, these competitions are often beneficial nonetheless. Even if you don’t win, odds are you’ll be able to fine tune your business idea, gain exposure, and all that may even lead to financing from other sources.
- Self-funding and personal loans
While not that ‘unconventional’, self-funding and personal loans are often avoided because of the risk that they involve. That being said under the right circumstances they may be the best way to raise the initial capital that you need to create a demo, case study, or sample that could then be used to secure additional financing. Naturally, your personal finances and credit rating will count for a lot if you go down this route, and you may want to use debt consolidation loans to manage it better if necessary.
Make no mistake. There are several other interesting methods that you might want to look into, including microfinancing, social-venture funds, and so on. Regardless of which method you choose however, just make sure that you have a solid business plan that stands up to scrutiny. It is worth noting that if you can start and run the business before seeking financing then that will further improve your chances, as it will prove the validity of your business model. In any case, be sure to take advantage of the current exposure green businesses are getting, and use that to secure the capital you need for your business.
Article Submitted By Community Writer