Financing Your Dream: Alternative Ways to Get Funding For Your Business, Home, or Education
They say America runs on loans. According to the most recent statistics, over 60% of students use loans to cover their tuition and expenses. Small businesses especially need loans, and in 2010 alone, banks gave out over 4 million to entrepreneurs. Most individuals cannot pay for big-ticket purchases like tuition, cars and home outright. However, if you are dreaming of college education or running your own business, you’ll most likely need a loan of some sort. While your instinct may be to go to the bank, don’t forget about alternative ways to fund your dream. Here are 3 alternatives to traditional bank loans.
Grants or Scholarships
Believe it or not, many organizations offer scholarships for qualified students and grants for business owners. While good grades are important, many offer different types of scholarships and financial help to students based on merits other than grades. Some foundations offer scholarships to students who go to certain schools, in memory of their founder. The same goes for business grants. There are all kinds of grants for small business owners, such as those geared towards women, minorities, veterans and even people with disabilities. It may take some research, but this alternative beats taking out a loan and paying interest!
Structured Settlement Cashout
Many people receive structured settlements from insurance or court claims. That means they get certain amount of money on a regular basis, depending on their agreement. If you do have a settlement, you may consider searching for a third party to get a lump sum amount. While getting a structured settlement cashout may not be a popular decision, it could be a way to fund your dream. While you will get a lesser amount when you cash out, you may save thousands of dollars in interest payments if you took a standard bank loan. So do your math!
Word of caution: If your structured settlement is your only source of income, opting for a lump some will eliminate that steady monthly cash you’ve been counting on, so do plenty of research and seek wise counsel before you decide to “cash in.”
Crowd funding and Peer-to-Peer Lending
With today’s technology, you don’t have to rely on traditional sources for a loan. You don’t even have to rely on people you know. There are many tech-based platforms where you can get funding, including peer-to-peer lending and crowd funding. With peer-to-peer lending, you can apply for a loan from individuals or several individuals via the internet. You will have to sign up for a service and send them your information. Based on your request, you will be given a rating (based on your creditworthiness) and a loan rate. Members of the site (lenders) will loan you funds and you will pay them back based on your loan rate. It’s a great way for people who don’t qualify for bank loans to get funding, and for people who lend, it can be a great investment because they can lend out small amounts at a time to reduce their risk.
Crowd funding is similar to peer-to-peer lending except you don’t necessarily have to pay the funds back. In a way, it’s like getting donations, but you can also give freebies or products to people who donate to you. If you’re trying to get a product off the ground or have something to give to your donors, crowd funding is a great way to get the funding you need.
When getting funding for your dream business or career, you don’t have to stick to the traditional channels. There are many alternatives out there, and by utilizing them, you can soon get your dream off the ground.Image by 401(K) 2013
I am Kathy Manson and grew up in a working class family in Lowell, MA. I have completed my Bachelor Degree in Business Management from Boston College. I have worked for a number of big financial firms like Charles Schwab and Fidelity Investments until I decided to strike it out on my own as a structured settlement consultant at www.SelectFunders.com