Start a Business with Home Equity

Are You Thinking If You Should Start a Business with Home Equity?

Whether it’s a good idea to start a business with home equity will depend on several factors. But it’s not outside the realm of possibility.

Home Ownership, Business, and Financing

Are you a homeowner? Do you have significant equity in your home? You probably already know that your home’s equity is valuable. But have you ever thought of using your home’s equity to finance a new or preexisting business?

Start a Business with Home Equity Lending

There are two main types of funds you can get out of your home’s equity. Both are second mortgages on your house. A home equity loan has a fixed rate, with a fixed rate loan amount and fixed repayment schedule. It’s a one-time lump sum loan that’s repaid monthly. In that way, it’s a lot like a regular mortgage.

Start a Business with Home Equity Lines of Credit

A home equity line of credit (HELOC) works more like a credit card. It has a variable interest rate. You can use the equity when you need it. This is up to a predetermined amount. You can borrow against it for a certain period. This is usually five to ten years.

You’re only charged interest when you withdraw funds. You only pay interest during this draw period. Hence the monthly payments are lower while you’re not repaying principal. After the draw period it converts to a fixed-rate loan for repayment of the principle.

During the time you’re repaying the principle, you can no longer withdraw funds. You must pay off the entire HELOC balance. With a HELOC, the interest rate will vary. As a result, your costs will go up or down with the prime rate.

Start a Business with Home Equity Loans vs. HELOCs

One issue is that a home equity loan has higher payments than a HELOC. This is because you’re repaying both principal and interest each month. For both types of financing, your home serves as the collateral. So if you default, it won’t matter if you have a HELOC or a home equity loan. You’ll lose your house either way.

Demolish your funding problems with 27 killer ways to get cash for your business.

Start a Business with Home Equity vs. Business Loans

Traditional small business loans can require a lot of paperwork. A bank may require paperwork like a projection of income and finance for the business, personal financial statements, your business lease, your business plan, three years of tax returns, and more.

The smaller and newer your business, the less likely you are to get a bank loan. Home equity can be easier to get. Home equity lenders aren’t concerned with your business plan. They just want to know about your personal resources.

Home Equity Loans: The Details

If you have the income, equity, and credit rating to repay the loan, you’re likely to get a loan or line of credit. Home equity interest rates are lower than business loans. This is because the mortgage lender isn’t taking on the risk of your business. Rather, that’s your risk.

If your business fails or isn’t as successful as you expected, you still have to repay the loan, or lose your home. The low interest rates offered on HELOCs can be misleading. this is because the rates vary during the loan period.

Most equity loans are fixed rate simple interest, but most HELOCs are offered at revolving variable rates. This makes them similar to credit card accounts. Hence, the line accumulates interest far more quickly, and the rate is subject to change. As a result, your best option may be to get a loan for an amount expected to cover immediate or short-term needs, with an equity line for any excess.

Home Equity Loans: Some Positives

A home equity loan may be best for one-time business expenses. And HELOCs may be better used by business owners as a cash reserve over time. Money from a home equity loan or line of credit can be used any way you wish, while business loans may be restricted in their use. The interest on a home equity loan or HELOC may be tax deductible.

You don’t have to pay a HELOC down to zero every year, as business credit lines may require. Interest paid on home equity debt can generally be deducted up to $100,000, or $50,000 if you’re married and filing separately, per the IRS. Interest paid on bank loans, personal loans, credit cards and other types of loans isn’t deductible.

The flexibility with home equity borrowing means, when pledging your home as collateral, the debt generally can’t be discharged in bankruptcy if the business fails. Plus you can’t refinance or consolidate without at least two years of profits as shown on your tax returns. If you use a HELOC to finance your business, pay vary close attention to making sure the business is profitable as quickly as possible. And get into a position to refinance or pay off the debt as soon as you can to mitigate personal risk.

Disadvantages of Home Equity Loans and HELOCs

One of the biggest issues is the possibility of going underwater. If you tap into your home’s equity, and later its value declines, you could owe more on your home than it’s actually worth. This is usually called being “underwater’’ or “upside down’’ on your mortgage.

There may be an issue with closing costs and fees. Home equity loans can serve as a second mortgage. So just like your primary mortgage, the closing costs, often somewhere between 2% and 5% of loan amount, can be expensive.

There may also be an early termination fee if you pay off the loan ahead of schedule. If you decide to sell your home before you’ve finished paying back the loan, the balance of your home equity loan will be due. Only you can decide if it’s worth it.

Which Businesses are Best for HELOCs and Home Equity Loans?

Risky businesses are not a good idea for HELOCs and home equity loans, seeing as your house is on the line. Hence a new product which may not catch on with consumers should be financed in some other fashion. Rather, a business in a well-known and used service industry – such as dry cleaning – would be a better choice. In essence if a product or service would be attractive to a venture capital firm, then it would probably be a poor choice for h0me equity financing.

HELOCs are Harder to Get Right Now

According to Forbes, even though a good 45 million American homeowners have about $6.3 trillion in available equity,“As of May 1, after raising their lending standards in April, JPMorgan Chase and Wells Fargo temporarily are not accepting applications for new HELOCs, “due to the economic uncertainty created by COVID-19.” In its mid-April announcement, Chase identified cash-out refinancing as an option available to homeowners seeking to tap their home equity”.

Consider Cash-Out Refinancing as an Alternative to a HELOC

Cash-out refinancing differs from a traditional refinance. It replaces the old loan with a new one that is for an amount larger than the amount needed to pay off the old note. The difference between what was borrowed and what it takes to pay off the previous loan goes into the borrower’s pocket, no strings attached.

Alternatives to Home Equity Financing

There’s a lot at stake if you use your home as collateral. And if you have a risky type of a business, then you’re unnecessarily jeopardizing your family. Business bankruptcy and even homelessness could ensue. So let’s look at how to protect you and your family.

Demolish your funding problems with 27 killer ways to get cash for your business.

401 (k) and IRA Securities Financing

You can get financing regardless of personal credit using stocks or bonds or a 401(k). Or you can use a guarantor instead. Borrow 90% of stock value, 100% for 401(k). You will still earn interest on investments. Pay rates of 5% and lower. And as a bonus, you can get inventory credit lines for 50% of value of your inventory.

Peer to Peer Lending from Funding Circle

Funding Circle is a peer-to-peer lender offering a line of credit. Their credit lines from $6,000 to $250,000. Pay rates as low as 4.8%. You pay interest only on drawn funds. Decision as fast as 24 hours and funds as soon as the next day.

Demolish your funding problems with 27 killer ways to get cash for your business.

Credit Line Hybrid

With a Credit Suite Credit Line Hybrid, you work with a finance source that specializes in unsecured credit lines. This is a very rare, very little know about program that few lending sources offer. Get up to five to eight times your current high limit, than what you’ll get on your own, because even one inquiry can cost you $25,000 or more. Individual approvals go up to $150,000.

You can get 0% financing for 6 to 18 months. Accounts report to the business credit reporting agencies. Multiple lines create help get you limit increases and give you more tradelines. Get approvals up to $150,000.

A 680 or better FICO score is required for approval. Guarantors are welcome! You must have 40% or lower credit card utilization, and 5 inquiries or fewer in the last 6 months. The consumer card program is easier to qualify for.

Business Credit

Business credit is credit in a business name, that’s linked to the business’s EIN number not the owner’s SSN. When done properly, you can get business credit with no personal credit check and no personal guarantee. You can get business credit as long as you have a business in the USA. You can build business credit for all sorts of businesses. You can get business credit even as a non-profit long as it’s incorporated.

You can get business credit cards with no personal guarantee. You can get 3 types of business credit cards. The first is vendor credit, which offers net 30 terms used to start a business credit profile. Second is store credit, where you can get credit cards with high limits at most retail stores. The last is cash and fleet credit.

Fleet credit is to buy fuel and maintain vehicles, whereas cash credit is Visa, MasterCard, American Express, and Discover cards you can use anywhere. Limits are often $5,000 – 10,000 to start and can exceed $50,000. You don’t have to buy bogus tradelines or shelf corporations, and you never have to put your house on the line.

Takeaways

Home equity loans and HELOCs are similar. They are both essentially a second mortgage on your home. But when you start a business with home equity, there are risks. Your house serves as the collateral for the loan, so if you default, the bank can take your house. There are other financing options which aren’t as personally risky. They include 401(k) financing, peer to peer lending, a credit line hybrid, and business credit.

Making the best decision for business funding is a big step. Let’s take it together.

The post Start a Business with Home Equity appeared first on Credit Suite.

What is Equity Crowdfunding and How Can You Use it For Your Business?

Creating a successful startup is hard; it’s even harder without access to startup funds. However, if you’ve got a great business plan and the ability to create a buzz around your brand, equity crowdfunding could be the perfect option for your business.

New legislation is opening up this crowdfunding option and making it a more viable method of raising capital for thousands of businesses.

An Overview of Equity Crowdfunding

Equity crowdfunding enables members of the public to invest in a privately-owned company. An entrepreneur or a business, generally a startup, will use an equity crowdfunding platform to offer securities in return for an investment from members of the public.

Most commonly, that security will be in the form of shares, and as the company grows and prospers, the value of those shares increases, offering the investor a return on their investment.

Why is this important for businesses?

If you’ve ever started a business, then you know it’s not straightforward, and one of the biggest challenges is raising funds to get your company off the ground. In the past, if you wanted to raise funds through members of the public, then you would need to find a venture capitalist or angel investor (people with a net worth of at least $1 million, or with an annual income of at least $200k).

However, the introduction of the JOBS Act in 2012 opened the door for privately-owned companies to raise capital through regular members of the public.

On the other side of the equation, equity crowdfunding allows regular investors to get in on the ground floor of a business opportunity. Even the biggest companies in the world like Google and Amazon started off life as startups, and with equity crowdfunding, regular people have the opportunity to invest right at the beginning of a future Google’s journey.

For every Google or Amazon though, there are endless examples of startups that fail. In fact, the 2019 failure rate for startups was 90 percent, so investing through equity crowdfunding is a risk.

Trends in Equity Crowdfunding

Many of the trends in equity crowdfunding stem from a need for consumer protection. When you invest in publicly-traded companies, you’re investing in an established, highly-regulated business, but it’s not necessarily the same story with equity crowdfunding.

It takes vast resources to become a publicly-traded company though, so it’s out of reach for startups and small businesses. Instead, they turn to alternative means of raising capital, such as equity crowdfunding, and while this offers regular investors great opportunities, it can also open them up to great risk.

This is why investing in startups was previously reserved for venture capitalists and angel investors because they were seen as having the means and experience to manage that risk. However, cutting the regular investor out of these options also created a two-tier system, where savvy investors couldn’t get in on enterprising startups.

JOBS Act 2012

While protecting investors is important, it meant that regular investors were missing out on promising opportunities, and startups were finding it hard to raise the capital needed to get their businesses off the ground.

This changed with the Jumpstart Our Business Startups (JOBS) Act, which set out legislation to open up the equity crowdfunding market.

Regulation remained strict, particularly compared with some other countries, but crucially, businesses could now reach out to “the crowd” for funding. With Regulation crowdfunding allowing companies to raise up to $1.07 million annually, and Regulation A permitting up to $50 million of funding each year, this offered businesses a viable option to raise capital.

JOBS Act Update 2020

In 2020, the Securities and Exchange Commission made some adjustments to the JOBS Act, raising the amount of capital businesses could crowdfund each year. Under the new regulations, businesses could raise up to $5 million annually through Regulation Crowdfunding and up to $75 million annually through Regulation A.

Since the average seed round in 2020 was $2.2 million, this made equity crowdfunding a much more feasible option for startups, allowing them to secure the funds they need to succeed in their business.

A Growing Market

Equity crowdfunding is a relatively new market, and although it’s valued at over $10 billion, that’s a tiny drop in the ocean compared with the $282 billion raised through venture capital in just a year.

However, equity crowdfunding is growing quickly, and when you look to the markets in other countries, there are signs that this fundraising option could grow exponentially in the coming years.

Over in the U.K., equity crowdfunding is much more established. This is largely due to more favorable legislation that has allowed equity crowdfunding companies to grow much more quickly. However, with the update to the JOBS Act, it’s likely we might see a similar uptick in the U.S. startup market.

How to Get Equity Crowdfunding for Your Startup

As you might expect with a growing market like equity crowdfunding, there are plenty of platforms to choose from. Each has its unique selling points, so it’s important to do your research and find the platform that’s going to represent the best deal for your business.

Once you’ve decided on a platform, you’ve got to apply, and this is a very important step. These platforms are extremely invested in protecting their investors, so they’re going to vet your application exhaustively. You’ll have to portray your business in a strong light, and offer up a business plan that represents value to the platform’s many investors.

If you’re accepted onto a platform, you can then decide on your terms (what type of security you want to sell, how much you want to raise, etc.). This is one of the big bonuses about equity crowdfunding because you’re in control of your terms.

You’re not negotiating with one single angel investor who might be able to negotiate you down. Instead, you’re putting your offer out to the crowd, and it’s up to each individual as to whether or not they take it up.

The last step is taking care of compliance by ensuring you have all the legal documents and pass the financial tests. For Regulation Crowdfunding (up to $5 million), you will need an independent financial review, but for Regulation A+ Crowdfunding (up to $75 million), you will need a full financial audit, which will take a bit longer.

If your business is found to be in good shape, then according to StartEngine you can be ready to raise funds through Regulation Crowdfunding in four to six weeks with very few costs, or through Regulation A Crowdfunding in about six months for a cost of roughly $50,000-$75,000.

Successful Equity Crowdfunding Case Studies

Equity crowdfunding might be relatively new in the financial world, but plenty of companies have had huge success with it.

BrewDog

When we think of startups, our minds are generally drawn toward tech, but one of the greatest examples of equity crowdfunding comes from the world of beer.

Starting life in 2007 as two guys with a love of beer, BrewDog has developed into a $2-billion company, and equity crowdfunding has a lot to do with it. The privately-owned company is 22 percent owned by a collection of 120,000 investors who have put in around $95 million as of 2020.

Successful Equity Crowdfunding Case Studies - BrewDog

In a world dominated by a handful of major brewers, this has allowed BrewDog to expand well beyond the reach of your average craft brewery, and they continue to use equity crowdfunding to invest in their green credentials.

Paradox Interactive

Gaming company Paradox Interactive was able to raise $3 million in the first 8 minutes of its offer going live. This goes to show the power of crowdfunding and the ability it offers businesses to raise capital quickly.

Later that year, Paradox Interactive went public, listing on NASDAQ at a value of $420 million. This demonstrates that equity crowdfunding is more than just a tool for raising money, it’s also an opportunity to create a huge buzz around your business.

When someone invests in you, they’re going to become a brand advocate, and when you’ve got thousands of these people around the world, it can catapult your brand into the public consciousness.

Knightscope

Security technology company, Knightscope is a perfect example of the flexibility equity crowdfunding offers. Initially raising $150k in just 7 days, Knightscope used this to scale, and then came back to the table 6 months later to raise $1.1 million.

This was nothing compared to the $20 million they would raise just two years later.

CEO, William Santana Li specifically noted the effect equity crowdfunding had on amplifying the Knightscope brand. This, combined with the capital raised has allowed the company to grow, reaching an estimated value of over $320 million, and leading to speculation that the business might go public.

This is another example of how good equity crowdfunding can give a start-up an excellent platform to go on to much bigger things.

Equity Crowdfunding Companies

The U.S. equity crowdfunding market is largely dominated by three companies: WeFunder, StartEngine, and Republic.

The top 10 platforms raised $209 million in 2020 and over $177 million of that was raised by these three companies.

WeFunder

WeFunder played a big part in lobbying the government over the JOBS Act and has been at the forefront of equity crowdfunding since its beginning. It has the biggest market share in terms of capital raised and can give your business excellent exposure.

One of the most appealing aspects of WeFunder’s offerings is the ability to sign up with no fees until you’ve successfully raised money.

This means you can dip your toe into the world of crowdfunding and focus on marketing your business as an investment opportunity before you have to worry about paying out.

StartEngine

StartEngine boasts a community of over 300,000 investors, which means it’s a great platform to get your startup noticed.

With over 375 successful raises, totaling over $250 million for its clients, StartEngine is one of the first places to look when it comes to equity crowdfunding.

Equity Crowdfunding Companies - StartEngine

StartEngine prides itself on helping you every step of the way, with a full-service plan that gives you complete control over your offer. It’s focused on keeping the power in the hands of the entrepreneur and allowing them to tailor their offer to suit their business needs.

Republic

Republic focuses on the ability of its platform to do more than just raise capital for your business. With over 350,000 investors, it touts its ability to create “true fans and engage supporters” all around the world.

This is certainly an underestimated part of equity crowdfunding, and it’s important to remember that it’s about more than just money. The exposure a successful crowdfunding campaign can bring you is a great source of marketing in its own right, and Republic is quick to highlight this.

Crowdfunding, VC Capital, or Angel Investments: Which is Right for Your Business?

On the face of it, crowdfunding sounds great, but as with anything, it has its drawbacks. When you’re weighing up how to get investment in your startup, you’ve got to look at the positives and negatives, and focus on how they fit in with your business plan.

Benefits of Equity Crowdfunding

Create thousands of brand advocates around the world.
Gain public validation from a successful crowdfund.
Boost brand awareness.
Maintain control over your business (you’re not offering investors a say in how the business is run).

Drawbacks of Equity Crowdfunding

You have to be in the right stage of your business development.
You’ve got to create a buzz around your brand.
It often takes prealigned investment to get people interested in your offer.
It can be a time-consuming process.

When you compare crowdfunding with venture capital or angel investments, it’s clear where crowdfunding triumphs, though: control.

When you have thousands of small investors rather than a handful of large investors, the external pressures and potential influence of your investors are much smaller.

Thousands of small investors aren’t there telling you how to run your business, but they are going out into their communities and spreading the word about your business, which can have a huge impact.

Conclusion

Building a thriving startup isn’t easy, but when you don’t have access to capital, it’s a lot harder. In the past, private companies had limited options for raising funds, but with changes to legislation, equity crowdfunding gives startups access to thousands of investors who are looking for the next big thing.

Not only is this an opportunity to raise a large amount of capital, but it can also supercharge your marketing by creating a huge buzz around your brand.

When you raise millions of dollars from investors worldwide, people will start talking about your business and become brand advocates, which is almost as valuable as the money you raise.

What’s holding your startup back?

The post What is Equity Crowdfunding and How Can You Use it For Your Business? appeared first on Neil Patel.

The Best Equity Crowdfunding Sites – and How Equity Crowdfunding Can Work for Your Business

If you are considering equity crowdfunding for your business, then you are, by definition, considering equity crowdfunding sites. We take a look at the best out there and dig into their nuances and differences. Make a smarter choice – knowledge is power!

What are the Best Equity Crowdfunding Sites All About?

When you consider equity crowdfunding sites, you will need to take a number of factors into account. Crowdfunding is a way to get funds from a lot of people, versus one or two investors.

With equity crowdfunding, you raise cash through the sale of securities such as equity, debt, revenue share and more. These security sales would be coming from a company that is not listed on stock exchanges. Equity crowdfunding has been around for less than 10 years. It is not the same as rewards-based. Rewards-based crowdfunding comes from places such as Kickstarter.

Equity Crowdfunding Sites versus Rewards-Based Crowdfunding Sites

What are the differences between equity crowdfunding and rewards-based crowdfunding? The major difference is what investors get for their investment. With reward based crowdfunding, investors generally receive some incentive for their donation. That incentive is not equity in the company. But with equity-based crowdfunding, the investor receives equity. That is, they get a share in the company.

Also, as a general rule, equity-based crowdfunding brings in larger amounts of money. This is because it draws a different type of investor. So, how come not everyone choose that? The key is some businesses are better suited for equity-based crowdfunding than others.

Details on Equity Crowdfunding versus Rewards-Based Crowdfunding

With equity crowdfunding sites, you raise capital from the crowd online. Potential investors visit a funding portal website. There, they can explore different equity crowdfunding investment opportunities. Note: there are limits on how much capital an individual can invest based on their income and net worth. Plus, investors must be 18 years old, or older.

The main purpose of equity crowdfunding is to sell securities in a business. Hence, this is also the main purpose of equity crowdfunding sites.

In contrast, with a platform such as Kickstarter, businesses make money by pre-selling their products. But on equity crowdfunding sites, companies sell securities, in the form of equity in the company. Or it can be in the form of debt, revenue share, convertible note, and more. Equity crowdfunding gives investors a stake in your business.

What is in it for Equity Crowdfunding Investors?

Equity crowdfunding investors are playing a long game. They stand to make a profit if they make a good investment, and the company they invested in grows. Here, the business can create hundreds of brand ambassadors who want to see you succeed. They are an audience the company can depend on to spread the word about their business and share the product with their own networks.

The ability to cultivate reliable brand ambassadors can be one consideration when trying to offset the cost of equity crowdfunding on a platform

What is in it for Business Owners Hoping for Equity Crowdfunding?

The business owner gets to dictate terms. The entrepreneur raising capital has total control of the offering. So this is including what to sell, how much, and, at what price. The owner can set the terms, including their valuation and how much capital they hope to raise.

Companies can set a minimum funding goal along with their desired maximum. So if they do not fully reach their funding goal, the entrepreneur can still successfully raise capital. Those who want to invest can do so even if the market interest is not enough to reach the goal.

Businesses raising money via equity crowdfunding sites are private companies. A business using equity crowdfunding does not have to issue an IPO (initial public offering). The business does not have to become a fully reporting public company. this is helpful, as being a fully reporting public company is financially burdensome for most small businesses. Investors do not have to be accredited. A business can raise funds without having to turn to venture capitalists.

For more information, see forbes.com/sites/howardmarks/2018/12/19/what-is-equity-crowdfunding.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive

A Look at all the Best Equity Crowdfunding Sites

Crowdfunder

Crowdfunder is an equity crowdfunding platform. With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors.

Starter listings are $299 per month. Premium listings are $499 per month. In their community, there are over 130,000 entrepreneurs and investors.

Crowdfunder does not work with every industry.

The following are prohibited industries:

Guns and Firearms
Tobacco, Cigarettes, and Cannabis
Pyramid Marketing
Adult Products and Entertainment
Gambling
Contests and Raffles, and
Illegal Substances and Drugs

For more information, see crowdfunder.com.

Fundable

Fundable is a crowdfunding for business platform. It allows companies to raise funds via equity sales. Those funds come from investors, customers, and friends. They have over $80 million in funding commitments.

Fundable will charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per merchant processing transaction. They do not charge success fees.

Fundable is one of the equity crowdfunding sites (such as Crowdfunder and Fundrise, below) which seem to be more accessible to regular folks.

They do not seem to focus on just one specific industry.

For more information, see fundable.com.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive

Crowdstreet

What is so special about Crowdstreet?

The industry most likely to use equity crowdfunding is real estate. This is because real estate allows for a much larger asset to be there from the very start. For a startup company based upon an idea for a new product, there is extraordinarily little available to seize in case the investment goes south. Whereas with real estate, even if there is never any development, land has an intrinsic value no matter what.

Crowdstreet allows you to invest online in commercial realty. Investors can choose between direct investing, fund investing, or managed investing. Crowdstreet boasts over 101,000 investors and over 260 commercial real estate developers.

Direct investing has varied minimum investment amounts. The minimum for fund investing is $25,000. The minimum for managed investing is $250,000. Hence this is one of those equity crowdfunding sites that is more for professional investors.

For more information, see crowdstreet.com/marketplace/overview.

RealCrowd

Real Crowd is another real estate investing platform, via equity crowdfunding. RealCrowd charges a technology access fee to the operating partner for their services. They do not charge investors any upfront fees, ongoing asset management fees or promote/carried interest in the investments.

You can browse offerings before you sign up. The information includes minimum investment and average returns. This allows for a lot of the decision making to happen before you even log in. Real Crowd offerings are open to accredited investors.

For more information, see https://www.realcrowd.com/how-it-works.

Fundrise

Fundrise is a great starter site for those that want to break into the world of equity crowdfunding. They do not require that you be an accredited investor. The minimum investment for the starter account level is $500. Minimum investment amounts go all the way up to $100,000 for the premium account level.

Fundrise will charge 0.15% in annual advisory fees for managing your account through the online platform. They do not charge any transaction fees, sales commissions, or additional fees for enabling features on an account, such as dividend reinvestment or auto-invest.

Fundrise will also charge 0.85% in annual management fees for managing a Fundrise portfolio. They could potentially charge other fees, such as development or liquidation fees, for work on a specific project. Dividends earned are net of any fund fees.

For more information, see: https://fundrise.com.

Alternatives to Equity Crowdfunding

If you do not wish to give away any of your equity, then rest assured, you have other options. Build business credit is one option. And others include inventory financing, merchant cash advances (if you have sales coming in), and securities financing. With securities financing, you use your stocks, bonds, 401(k), or IRA as collateral for borrowing.

Try a Credit Line Hybrid Instead

Another great option is our credit line hybrid.

A hybrid credit line could be just what you need.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive

The gist of a credit line hybrid is you can leverage good personal credit in order to get business funding. Because a good personal credit score is the main thing the lender is looking for, it can be perfect for a startup venture. So, it is another option to consider. You do not necessarily have to give up business equity in order to finance your entrepreneurial venture.

Equity Crowdfunding Sites: Takeaways

Equity crowdfunding involves calling on a crowd to invest in your project. Rather than pre-selling products, you are selling pieces of your business.

The industry most likely to use equity crowdfunding is real estate. But other industries can use equity crowdfunding. Be sure to check the platform and see if there are any restrictions. Some industries will not do well at all and may even be shut out by a platform. Fees and investment minimum amounts will vary widely.

If you are interested in equity crowdfunding for your business, the best thing you can do is to shop around. Rates vary dramatically. But also check on success rates. Many equity crowdfunding platforms are expensive, or they have high minimum investment amounts, or both. Do not waste your time and money if you are not sure there is a good fit.

And, if you decide equity crowdfunding is not for you – or even if you do but want a fall back – then consider other forms of business funding. That should always include building business credit.

The post The Best Equity Crowdfunding Sites – and How Equity Crowdfunding Can Work for Your Business appeared first on Credit Suite.

Athene, MassMutual Made Over $3 Billion Takeover Offer to American Equity

A pair of insurance companies made a bid for American Equity Investment Life Holding last month, in a bet that the small Iowa insurer’s retirement-income products will continue to be popular with conservative savers.

The post Athene, MassMutual Made Over Billion Takeover Offer to American Equity first appeared on Online Web Store Site.

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Six Ways to Creatively Fund a Startup Without Using Equity During a Recession Cycle

Creative Recession Cycle Funding For New Businesses

As an entrepreneur, raising money for your new startup business can seem hard to execute. You’ve probably seen dozens of competition funds out there, so you have chances to secure funding. Ultimately, you want funding for your startup to come from investors. But getting investors can be impossible for a new startup. Recession cycle funding for startups can happen.

Using your equity might seem like the best idea to fund your business as you wait for investors to come. Most new startup business owners, fall prey to taking out the equity to fund the business before the revenue starts rolling in. You don’t have to take out equity to fund your startup. It’s not necessary. The success of your business solely comes from decisions you make as the business owner.

Here are some ways to creatively make money for your new startup without taking out of your equity.

Recession Era Funding

The number of United States financial institutions as well as thrifts has been decreasing progressively for a quarter of a century. This is from consolidation in the marketplace along with deregulation in the 1990s, decreasing barriers to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts

Assets focused in ever‐larger financial institutions is problematic for small business proprietors. Big banks are a lot less likely to make small loans. Economic recessions mean banks become extra mindful with lending. The good news is, business credit does not depend on financial institutions.

Recession Cycle Funding: Crowdfunding

Use Kickstarter. There’s a method to the madness in using Kickstart to fund your startup. First, do your research before pitching your idea to Kickstarter. Find out if there’s another project they have approved like your startup. So if they deny your idea, refer to similar projects they have approved. And when you ask for money from Kickstarter, be realistic and ask for money to help you survive for a few months. Don’t forget to spread the word to your friends and family asking them to help fund your start up.

Recession Cycle Funding: Bootstrap

Put your Money in First. When you first start out, tap into your own saving accounts, home equity, retirement accounts, etc. This might seem a bit risky, but you should invest in your own startup venture before you expect other investors to put money into it. Most investors will want to see the owners of the business have invested some of their own cash in the business to show confidence.

But there can be some issues with bootstrapping your business.

Still, here are some ways to bootstrap to build more financial resources.

Share and Save on Services and Equipment

Share office services and equipment. You’ll probably need to get a co-work space where you can share the office space and equipment with other business owners. This will help you cut the cost of renting an office space and paying the high monthly rent.

Use the computers and servers you have. Don’t go out and buy new equipment when you start your startup. Use the computers, software, and desks, etc., you already have. Don’t spend extra money renting new equipment.

Recession Cycle Funding: Grants

Pursue non-dilutive capital. Look for government grants to get more money for your startup. Cities and states have grant programs offering low-interest rates on loans. Having access to these resources give startups the ability to qualify for large sums of money.

Recession Cycle Funding: Startup Business Credit Cards

Business credit cards can be a great way to get a startup off the ground.

We looked at a number of business credit cards, and did the research for you. So here are our picks.

Per the SBA, business credit card limits are a whopping 10 – 100 times that of personal cards!

You can get a lot more money with business credit. And you can still have personal credit cards at stores. So you would now have an added card at the same stores for your company.

You don’t need collateral, cash flow, or financials to get business credit. This is still true during a recession cycle.

Benefits can vary. So, make certain to choose the benefit you would prefer from this assortment of alternatives.

Dependable Credit Cards for Fair to Poor Credit, Not Calling for a Personal Guarantee

Brex Card for Startups

Look into the Brex Card for Startups. It has no annual fee.

You will not need to provide your Social Security number to apply. And you will not need to supply a personal guarantee. They will take your EIN.

Nonetheless, they do not accept every industry.

Likewise, there are some industries they will not work with, as well as others where they want added documentation. For a list, go here: https://brex.com/legal/prohibited_activities/.

To determine creditworthiness, Brex checks a business’s cash balance, spending patterns, and investors.

You can get 7x points on rideshare. Get 4x on Brex Travel. Also, get triple points on restaurants. And get double points on recurring software payments. Get 1x points on everything else.

You can have poor credit scores (even a 300 FICO) to qualify.

Find it here: https://brex.com/lp/startups-higher-limits/

Secure Business Credit Cards for Fair Credit

Capital One® Spark® Classic for Business

Take a look at the Capital One® Spark® Classic for Business. It has no yearly fee. There is no introductory APR offer. The regular APR is a variable 24.49%. You can earn unlimited 1% cash back on every purchase for your company, without any minimum to redeem.

While this card is within reach if you have fair credit scores, beware of the APR. But if you can pay on schedule, and in full, then it’s a bargain.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-classic/

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

Exceptional Business Credit Cards with No Yearly Fee

No Yearly Fee/Flat Rate Cash Back

Ink Business Unlimited℠ Credit Card

Check out the Ink Business Unlimited℠ Credit Card. Past no yearly fee, get an introductory 0% APR for the first one year. After that, the APR is a variable 14.74 – 20.74%.

You can get unlimited 1.5% Cash Back rewards on every purchase made for your company. And get $500 bonus cash back after spending $3,000 in the first 3 months from account opening. You can redeem your rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®. You will need excellent credit to get approval for this card.

Find it here: https://creditcards.chase.com/business-credit-cards/ink/unlimited

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

Company Credit Cards with a 0% Introductory APR – Pay Zero!

Blue Business® Plus Credit Card from American Express

Take a look at the Blue Business® Plus Credit Card from American Express. It has no yearly fee. There is a 0% introductory APR for the first 12 months. After that, the APR is a variable 14.74 – 20.74%.

Get double Membership Rewards® points on everyday company purchases like office supplies or client dinners for the first $50,000 spent annually. Get 1 point per dollar afterwards.

You will need great to outstanding credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/bluebusinessplus-credit-card/

American Express® Blue Business Cash Card

Also have a look at the American Express® Blue Business Cash Card. Note: the American Express® Blue Business Cash Card is identical to the Blue Business® Plus Credit Card from American Express. But its rewards are in cash instead of points.

Get 2% cash back on all eligible purchases on up to $50,000 per calendar year. After that get 1%.

It has no yearly fee. There is a 0% introductory APR for the first one year. Afterwards, the APR is a variable 14.74 – 20.74%.

You will need good to excellent credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/business-bluecash-credit-card/

Terrific Cards for Cash Back

Flat-Rate Rewards

Capital One ® Spark® Cash for Business

Check out the Capital One® Spark® Cash for Business. It has an introductory $0 yearly fee for the first year. After that, this card costs $95 each year. There is no introductory APR deal. The regular APR is a variable 18.49%.

You can get a $500 one-time cash bonus after spending $4,000 in the initial three months from account opening. Get unlimited 2% cash back. Redeem at any time without minimums.

You will need great to excellent credit scores to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash/

Flat-Rate Rewards and No Yearly Cost

Discover it® Business Card

Check out the Discover it® Business Card. It has no annual fee. There is an introductory APR of 0% on purchases for 12 months. After that the regular APR is a variable 14.49 – 22.49%.

Get unlimited 1.5% cash back on all purchases, with no category restrictions or bonuses. They double the 1.5% Cashback Match™ at the end of the first year. There is no minimal spend requirement.

You can download transactions| quickly to Quicken, QuickBooks, and Excel. Note: you will need great to superb credit to receive this card.

https://www.discover.com/credit-cards/business/

Bonus Categories

Ink Business Cash℠ Credit Card

Take a look at the Ink Business Cash℠ Credit Card. It has no annual fee. There is a 0% introductory APR for the first year. After that, the APR is a variable 14.74 – 20.74%. You can get a $500 one-time cash bonus after spending $3,000 in the initial 3 months from account opening.

You can get 5% cash back on the initial $25,000 spent in combined purchases at office supply stores and on net, cable, and phone services each account anniversary year.

Get 2% cash back on the first $25,000 spent in combined purchases at gasoline stations and restaurants each account anniversary year. Get 1% cash back on all other purchases. There is no limit to the amount you can earn.

You will need superb credit to get approval for this card.

Find it here: https://creditcards.chase.com/business-credit-cards/ink/cash?iCELL=61GF

Boosted Cash Back Categories

Bank of America® Business Advantage Cash Rewards MasterCard® credit card

Take a look at the Bank of America® Business Advantage Cash Rewards MasterCard® credit card. Get an 0% introductory APR for the first 9 billing cycles of the account. Afterwards, the APR is 13.74% – 23.74% variable. There is no yearly fee. You can get a $300 statement credit offer.

Get 3% cash back in the category of your choice. So these are gasoline stations (default), office supply stores, travel, TV/telecom & wireless, computer services or business consulting services. Earn 2% cash back on dining. So this is for the initial $50,000 in combined choice category/dining purchases each calendar year. After that get 1% after, with no limits.

You will need outstanding credit scores to qualify.

Find it here: https://promo.bankofamerica.com/smallbusinesscards2/

Flexible Financing Credit Cards – Take A Look at Your Alternatives!

The Plum Card® from American Express

Check out the Plum Card® from American Express. It has an introductory yearly fee of $0 for the first year. Afterwards, pay $250 per year.

Get a 1.5% early pay discount cash back bonus when you pay within 10 days. You can take up to 60 days to pay without interest when you pay the minimum due by the payment due date.

You will need good to exceptional credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/the-plum-card-business-charge-card/

Unbeatable Cards for Jackpot Rewards That Never Expire

Capital One® Spark® Cash Select for Business

Have a look at the Capital One® Spark® Cash Select for Business. It has no annual fee. You can get 1.5% cash back on every purchase. There is no limit on the cash back you can get. Also earn a one-time $200 cash bonus when you spend $3,000 on purchases in the first 3 months. Rewards never expire.

Pay a 0% introductory APR for 9 months. Then pay 14.49% – 22.49% variable APR afterwards.

You will need good to outstanding credit to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash-select/

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

The Recession Cycle Funding for You

Your absolute best business credit cards hinge on your credit history and scores.

Only you can pick which features you want and need. So be sure to do your homework. What is outstanding for you could be catastrophic for somebody else.

And, as always, make sure to establish credit in the recommended order for the best, fastest benefits.

Recession Cycle Funding: Takeaways

Raising money during a recession cycle might feel a little overwhelming. It takes time to build up funds to start a new business. But you don’t have to feel you have to use your equity to fund your new business. There are so many other ways you can find money to help your business grow. Don’t get focused on making quick money. Think about the long-term growth of your company, and how your decisions today will affect its finances in the future. Develop a plan to find money from different resources before using company equity. And yes, you can even do this during a recession cycle.

The post Six Ways to Creatively Fund a Startup Without Using Equity During a Recession Cycle appeared first on Credit Suite.

Equity Crowdfunding: Recession Investing is a Legitimate Option

The long predicted impending recession is here. Now it’s time to figure out how to survive. Equity crowdfunding recession investing could be a viable option.

How Equity Crowdfunding Recession Investing Could Be Your Ticket Out

I am sure you are thinking, “Your ticket out of what?” The answer is, “Your ticket out of the recession.” Everyone hopes to escape unharmed, and few will. Even if you get out with a few bumps and bruises, equity crowdfunding recession investing can offer just enough padding to help you avoid any broken bones.

The number of US banks has been decreasing slowly for a quarter of a century, as is seen from consolidation in the market. Also, deregulation in the 1990s decreased barriers to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts.

Too many assets in larger financial institutions is a problem for local business owners. Big banks are less likely to make small loans. During recessions, financial institutions end up being more cautious with financing.

In short, recessions are a fact of life, and when that time comes, as it now had, banks hold on to their money much more tightly. This is why equity crowdfunding recession investing is not only a legitimate option, but maybe even a necessary option.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Why Crowdfunding?

Crowdfunding has become all the rage and it’s no wonder. It’s pretty much free money that you don’t have to repay, and you can get these funds without having to give up any ownership or control over your startup company. In addition, there is less hassle than with traditional financing.

Real Estate crowdfunding is different from startup crowdfunding. It’s the same general idea, but there are a few tweaks for the industry. You need to know more about real estate investing first however, before you can start to think about equity crowdfunding recession investing.

Types of Real Estate Investments

There are a couple of different types of real estate investments. Which one works best for you will be an individual decision, but when it comes to equity crowdfunding recession investing, here is what you need to know about each.

Residential Real Estate

There are two types of residential real estate investments. You can invest in property to re-sell for a profit, or you can invest in rental property.

Property for resale typically refers to house flipping, which is tricky. You have to find a home in a location that will sell. There has to be a balance between the work that needs doing and the resale price. A lot of things have to fall into place. Still, many people make a successful living flipping houses.

Rental investments include either single family homes, apartment buildings, or duplexes. Improvements may be necessary depending on the situation. It is important to be sure any improvements actually add value however. There is a point where you will not be able to get the cost of improvements back through rental income.

Commercial Real Estate

These are commercial real estate investors that purchase property for commercial use. These are the people building shopping centers, strip malls, and buildings for businesses. Most often they are companies rather than individuals.

The companies still need funding for their real estate projects. Thanks to the JOBS Act of 2012, they have a new way of getting that funding. It not only helps them, but it also lets individuals enjoy the benefits of commercial real estate investing. It may not sound like much, but previous to this it was very difficult for individuals to break into commercial real estate investing. The problem was the high cost. What is this awesome new dream come true you ask? That would be equity crowdfunding for real estate investors.

How to Choose Your Real Estate Investments

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Location Not Only Matters, it is VITAL

You have to consider the location of the property when making your investment decision. Flipping a house that is in an area no one is buying in is not a good idea. Even the most amazing house in the world won’t sell if it is in a bad area. Locations high in crime, in the floodplain, or some other less than desirable area are not good ideas. Even if it does sell, the price will likely have to be so low you see a loss.

Be Consistent

To make real estate investing work for you, find your niche and stick to it. If you are going to flip houses, flip houses. If you are going to be a landlord, do that. Commercial property investment your thing? Stick with it.

It is almost always impossible to do everything, and it is impossible to do everything well. Pick one area of real estate investment and stick to it.

Know Your Options

While equity crowdfunding recession investing is a legitimate option, you can’t know if it is right for you without knowing all the options.

What are your funding options? You can self-fund, which isn’t possible for most. In the past, the only other option was financing. There are plenty of real estate lending products available from various sources.

Thanks to the JOBS ACT of 2012 however, there is now a new possibility on the list. That is equity crowdfunding recession investing for real estate.

How Does Equity Crowdfunding Recession Investing for Real Estate Work?

To understand how this funding option works, you need to understand how crowdfunding itself works. With the JOBS Act of 2012, small businesses gained relief from a lot of requirements in place by the SEC. These requirements held many businesses back.

The official title is “Jump Start Our Businesses Act of 2012.” By design, it relieves small businesses of many of the strict requirements put forth by the SEC. President Obama signed it on April 5, 2012.

It releases some restrictions on raising capital, including allowing small businesses to go public with less than $1,000,000 in annual revenue. It also increases the validity of crowdfunding for both startup and real estate investing.

The Act allows for open investing options that do not require investors to register with the SEC. This is true as long as they meet certain guidelines. Thus, crowdfunding platforms were born. For entrepreneurs looking to “kick start” their business idea, you now see sites such as Kickstarter and Indiegogo.

These sites allow individuals to post a business idea and accept investments. These can go as low as $5 and as high as, well, the sky ‘s the limit. In return, investors receive some sort of reward. It may be a some of the profits, a free product, or any number of things. It is often a reflection of the level of investment. Today there are tons of crowdfunding platforms all over the internet.

Equity Crowdfunding Recession Investing for Real Estate

Though similar to crowdfunding for small businesses, it isn’t exactly the same. There isn’t a need for perks or rewards for investing usually. Additionally, there isn’t usually a lot of campaigning. Most of those that list on real estate crowdfunding sites are commercial real estate businesses. They are seeking funding for their projects. Investors choose the ones that they feel will offer the greatest returns for their budget.

Anyone can invest in a commercial real estate portfolio. It is similar to investing in a stock market portfolio. Then they can enjoy the returns without actually buying an entire piece of commercial property.

This is how commercial real estate investors can raise equity and avoid a loan. At the same time, individuals can enjoy the benefits of commercial real estate investing for as little as $500.

Top Sites to Find Equity Crowdfunding Recession Investing for Real Estate

There are many sites that offer equity crowdfunding for real estate investors, even in a recession. These are just a few. It will take some research to figure out which one will work best. When deciding, be sure to take into account ease of use and the lowest possible investment level. If they do not offer an investment option that will fit your budget, there is no need to waste your time.

Crowdstreet

The options and training with Crowdstreet are what make it top notch. You can choose from portfolio or direct investing. It is easy to make decisions with confidence because they offer a lot of training material for investors.

The lowest investment for portfolios are $25,000, but the minimum for direct investing varies.

RealCrowd

The best part about RealCrowd is that you can browse offerings before you sign up. The information includes minimum investment and average returns. This allows for a lot of the decision making to happen before you even log in. You can know before you even create an account if this site is for you, or not.

Fundrise

Fundrise is a great starter site to break into the world of equity crowdfunding for real estate investors. The number one advantage of this site is that the minimum investment is $500. They also have lower fees than many other sites.

There are a lot more sites that have a wide range of options and advantages. It would definitely be worth it to take some time to look at them and see which one will work best for you. This is true whether you are a company seeking funds or an individual looking to invest.

Remember, individual crowdfunding sites can change terms and details without notice. Be sure to go to the site directly for the most up-to-the-minute information.

Equity Crowdfunding Recession Investing Offers Plenty of Benefits

On the property owner’s side, there are many benefits. The top one is the ability to raise funds without debt. This is the same reason crowdfunding is a popular way to fund a small business startup. It isn’t free money. There are fees and profit sharing involved, but it is often substantially cheaper than debt.

For individual investors, it is a great alternative option to stock market investing. The returns are typically larger and more consistent. The minimum investment can be very manageable. Those sites that have a higher minimum investment are options for investors looking to cash out current investments or retirement funds. They can try out a new option.

More Equity Crowdfunding Recession Investing Tips

Be Honest

Always be honest. Lying and cheating never pays. Much of real estate investing depends on referrals. You will not get referrals if you do not practice integrity in your business.

If you are a landlord, be a good one. If you build commercial property, don’t cut corners. The same thing applies if you are flipping houses. Do not accept bad work to save money. Make sure your contractors do the best work they can so that buyers, investors, and renters get what they pay for.

Keep Up with the Industry

Ignorance is not an excuse. Continue to educate yourself on real estate market trends, housing trends, and more.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Do Market Research

Speaking of the market, you need to know it inside and out at all times. You should be intimate with it. Read articles, watch videos, and do whatever you can to keep up with your corner of the market.

A Legitimate Option

Equity crowdfunding recession investing can open up a whole new world for many. Pretty much anyone can earn a nice passive income. Real estate investors have an alternative funding option, and it is often more manageable than financing.

If there is a gap, there are plenty of other options still available. Many lenders offer real estate investment loan products with credit score requirements as low as 600. Interest rates vary, and due to the nature of the industry, terms are typically 13 months to two years.

If you are looking for financing to supplement your equity crowdfunding recession investing, be sure to shop around, the same as you would shop around for a crowdfunding site. Do your research so you can choose the best option or combination of options for your needs.

The post Equity Crowdfunding: Recession Investing is a Legitimate Option appeared first on Credit Suite.

Equity Crowdfunding: Recession Investing is a Legitimate Option

The long predicted impending recession is here. Now it’s time to figure out how to survive. Equity crowdfunding recession investing could be a viable option. How Equity Crowdfunding Recession Investing Could Be Your Ticket Out I am sure you are thinking, “Your ticket out of what?” The answer is, “Your ticket out of the recession.” … Continue reading Equity Crowdfunding: Recession Investing is a Legitimate Option

Reward Based Crowdfunding vs. Equity Crowdfunding

Crowdfunding can be a great option for funding a business, if you run a successful campaign. The problem is, though some campaigns are very successful, many are not. It helps to understand the different options available.

Which Option is Best for Your Business: Reward Based Crowdfunding or Equity Crowdfunding?

There are many benefits to crowdfunding, the most popular being the debt free financing of your business. However, there are a couple of different types of crowdfunding, and there are even more platform options. Some options work better for certain types of businesses than others.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

What is Reward Based Crowdfunding

Reward based crowdfunding is crowdfunding in which backers receive a reward for their investment. This could be something as simple as a thank you note or as elaborate as the actual product. For example, a jewelry maker may offer a free pair of earrings.

One smart jacket company offered free coats with investment, and a cooler company offered free coolers. One word of warning, be sure you can keep your promises. More than one company has gone south or at least ended up in major trouble because they could not keep their promise to investors.

What are Some Benefits of Reward Based Crowdfunding?

The biggest benefit of reward based crowdfunding is that it’s one of the cheapest ways to raise capital. There is no collateral requirement and no credit check or prior business experience required. There is no need to have professional financial or legal help, as the process is simple. You do not give up any equity or control in your company, and you get tons of exposure to your audience on the front end.

That said, it’s not all sunshine. Many, if not most, campaigns do not raise enough funds to fully finance the business. That means other means of financing have to be utilized. Also, some platforms will not allow you to access any of the money if you do not reach your goal.

Reward Based Crowdfunding vs. Equity Crowdfunding

The major difference in these two types of crowdfunding is what investors get for their investment. With reward based crowdfunding, investors receive some incentive for their donation that is not equity in the company. With equity-based crowdfunding, the investor receives equity, or a share in the company.

Another difference is that, as a general rule, equity-based crowdfunding brings in larger amounts of money. This is because it draws a different type of investor. The question then becomes, why doesn’t everyone choose that? The key is, some businesses are better suited for equity-based crowdfunding and some are better suited for reward based crowdfunding.

Is Reward Based Crowdfunding Best for Your Business?

So, which types of businesses do best with crowdfunding based on rewards rather than equity? Typically, this works best for startups in creative fields. Those that do not qualify for traditional business loans, but have a strong project. Sometimes these businesses just want to test the market, and a crowdfunding platform is a great place to do that.

It doesn’t really work well for those businesses with a complicated product or service. It can be hard to explain the value of these types of companies to the masses. This type of funding tends to work best for businesses that offer:

New Local Services

If you think about it, this makes sense. If you want to open a local business, especially in an area where there is a direct need, it could do well with small business crowdfunding. Local Lift is designed specifically for local businesses to request funding, gauge interest, and even build a customer base before opening.

New High-Tech Gadgets

This doesn’t mean just a new take on what is already out there. Rather, this is something that is completely unique. That is what is going to get the most support. Also, it needs to have a working prototype and there needs to be research behind it.

Unique Inventions for the Home

This category gets a ton of support, especially for items that solve everyday problems. For example, the fly killing salt shotgun and the wet diaper sensor have seen great success!

New Tools for Cooking at Home

These are gadgets that will let you do something at home that you normally can’t. An example is carbonating your own soda. Another one is something that lets you cook things faster, or easier. Items that serve multiple purposes are another option. Maybe an easy way to make sushi at home? New kitchen tools for the home are often successful.

Platforms for Reward Based Crowdfunding and Equity Crowdfunding

How do you get started with crowdfunding of any type? There are a number of platforms out there. Some are only for offering rewards. Others allow you to offer equity as well. The most popular are Kickstarter and Indiegogo, but they are not the only players in the game.

Kickckstarter

With over 14 million backers, Kickstarter is one of the largest crowdfunding platforms in the world. They boast over 130,000 funded projects. These include products and services related to:

Publishing
The arts and film
Comics and illustration
Design and tech

Kickstarter requires you to have a prototype. In addition, projects cannot be for charity. However, nonprofits can use Kickstarter. This is one platform that does not allow equity crowdfunding.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Other banned projects and perks include anything to do with:

Contests and raffles
Cures and medicines
Credit services
Live animals
Alcohol
Weapons

Kickstarter will collect a 5% fee on all funds. They also use a payment processor, Stripe, that applies payment processing fees (roughly 3-5%). Unsuccessful campaigns do not pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micro pledge fee of 5% + $0.05 per pledge.

Indiegogo

Indiegogo has over 9 million investors. They do not allow campaign goals below $500. Also, they charge 5% platform fees and 3% + 30¢ third-party credit card fees. Note that fees are deducted from the amount raised, not the goal. As a result, if you raise more than your goal, you will pay more in fees. They do not accept PayPal.

Indiegogo is noteworthy because they offer flexible financing in addition to fixed financing options. So, if you do not make your goal and you chose flexible funding, you can at least hold onto what you collected. This is the opposite of how crowdfunding normally works.

RocketHub

RocketHub is better suited for those who need venture capital. They give you an ELEQUITY Funding Room. There, you can pitch your idea and see if it stimulates any interest from donors.

This platform is specifically for business owners working on projects related to:

Art
Business
Science
Social

If you achieve your fundraising goal, you will pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. But if you do not reach your goal, then that fee jumps up to 8% plus the credit card handling fee. That means RocketHub is best for companies that are more confident they will make their goals.

CircleUp

CircleUp aims to help up and coming brands and companies raise capital for growth projects. However, companies must apply and show revenue of at least $1 million to get a listing on the site. That said, the platform will sometimes make exceptions.

CircleUp can be good for those who already have a somewhat established business. That includes business owners who want both funding and guidance in order to take their businesses to the next level.

If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.

GoGetFunding

GoGetFunding has been around since 2011. They let fundraisers keep the money they raise, regardless of whether they meet their target. If your business idea is unproven and you are unsure of whether you can meet your funding needs with a crowdfunding for business campaign, flexible funding can be a great option.

They charge a 6.9% fee. This is pretty high, but it includes both the platform fee and the payment processing fee. Therefore, it is actually more cost-effective than many other crowdfunding for business options.

Crowdfunder

With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors. Self-start listings are $499/month. Self-start plus is $999/month. In their community, there are over 15,000 investors and 200,000 startups.

Fundable

This is a crowdfunding for business platform that allows companies to raise funds from investors, customers, and friends. They have over $80 million in funding commitments.

Fundable does allow equity crowdfunding campaigns. Also, they charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.

Fundly

Fundly allows for crowdfunding for creative ventures. If your business has a creative lean, this might work for you.

There is no minimum amount to fundraise or to keep money you raise. You can usually withdraw payments within 24 – 48 hours of the donation. In addition, they offer automatic transfers. It is free to create and share an online fundraising campaign.

Yet, Fundly will deduct a 4.9% fee from each donation you get. A credit card processing fee of 3% is also taken out from each donation. Also, there are nonspecific automatic discounts for larger campaigns.

Tips for a Winning Campaign

There is no such thing as guaranteed success. These steps can help make sure you give yourself the best chance possible when it comes to fundraising through crowdfunding.

Research

You have to know your market and what demand looks like. The only way to find that out is to research. Figure out how much money you actually need before you set your goal. Lots of business owners have started crowdfunding campaigns only to find the demand isn’t there or their goal fell short of the actual need.

Make a Prototype

Truly, you have to have a sample to show investors. It’s important. People are almost always more likely to let go of money if they can see something tangible. This is so vital that Kickstarter actually requires you to have a prototype to show potential investors

Think About Which Platform You Should Choose

Once you know who your target audience is, you can determine if you would be best served by Kickstarter, Indiegogo, or another, lesser known platform. If your audience doesn’t use the platform you are on, it won’t matter how great your idea or product is. They’ll never see it.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Give Good Stuff!

This is huge. Don’t make promises you can’t keep, and don’t give away the company. Still, if someone one is going to help you get started, they deserve something amazing. Offer more than a thank you note. Be bold with what you offer as a reward for their support, without harming your success.

Goal Setting is a Must

Setting goals you can reach is necessary to success. Make certain you look at the numbers in relation to actual facts before you set a fundraising goal. Be certain you have production facilities on the line that can meet the timeline goals. Do not randomly set goals with no clue what it will take to reach them.

Marketing Matters

You can’t just throw any old campaign together. If you create a video, it needs to be professionally edited. Any social media should be specifically targeted toward your audience. If they are a techy audience, pull out all the tech stops. If they are an older crew, they may need less fanfare and a more straightforward approach. The fact that videos work well reigns pretty much across audience lines however, so definitely consider a video.

Is Reward Based Crowdfunding for Your Business?

The answer is, it depends. It is worth a shot for many businesses, but for sure it should not be counted on as a total funding solution. There are some campaigns that raise all the money they need, but that is usually the exception rather than the rule. Most have to explore other funding options as well. However, you will have a much higher chance of success if you choose the right type of crowdfunding, the right platform, and the perfect marketing plan for your specific business.

The post Reward Based Crowdfunding vs. Equity Crowdfunding appeared first on Credit Suite.

Mentioned Income Home Equity Loan

Specified Income Home Equity Loan

Residence equity financing is a kind of protected finance. In order to identify the equity worth of the customer’s house, the customer requires to take assess the residence on the existing market. If you get a house equity lending you take the danger of shedding your residence if you are not able to pay the regular monthly settlements since in house equity fundings, you will certainly establish your residence as security.
Specified earnings house equity lendings are the kinds of residence equity car loans that indicates the loan provider is not going to be verifying any kind of revenue or possessions of the debtor of the house equity for them to accept the lending. Specified earnings residence equity financing is a fantastic option for consumers that are self used and also requires to have a house equity car loan, nonetheless, the debtor should have an excellent debt ranking in order to get a stated revenue house equity lending.
To put it simply specified earnings residence equity financing is a specialized financing the does not verify the revenue or properties of a customer with the common paperworks, such as those that are self used or employed debtors. Specified earnings residence equity lendings are kinds of fundings that enables a consumer with exceptional credit scores ranking to gain access to funding without the normal documents. There are likewise some stated earnings residence equity lending programs that permit the consumer to fund one hundred percent of the worth of their residential or commercial property for buy or re-finance.
The typical method to certify for a house equity car loan is by determining the customer’s financial obligation proportion to be specific that the customer is within the standards. That is why some house equity lending institutions are prepared to refine a residence equity lending without making inquiries the customer’s revenue documents (like tax obligation reimbursements, pay stubs, and so on).
Some house equity loan providers require the customer to specify a specific quantity of buck possessions that will certainly be verified, although, there are additionally some lending institutions that use a “no earnings no properties” programs that surrenders the requirement for documents.

If you acquire a house equity financing you take the threat of shedding your house if you are incapable to pay the month-to-month repayments since in residence equity lendings, you will certainly establish your residence as security.
There are several kinds of residence equity finances; one kind of house equity car loan is the stated revenue residence equity financing. Mentioned revenue house equity finances are the kinds of residence equity car loans that indicates the loan provider is not going to be verifying any type of revenue or possessions of the consumer of the residence equity for them to accept the financing. Mentioned revenue residence equity funding is a fantastic option for debtors that are self used and also requires to have a house equity finance, nevertheless, the customer has to have a great credit scores score in order to get a stated earnings house equity car loan.

The post Mentioned Income Home Equity Loan appeared first on ROI Credit Builders.

Success once again… $300,000.00 in Private Equity financing!