Charlie Brown
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Crowdfunding Vs. Title Loans: Which Should You Choose to Fund Your Business?

Charlie Brown

April 24, 2017

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Startups are mushrooms from every corner of the world. From vegan food to personalized yoga sessions, these new-age startups can deliver anything and everything to our doorsteps. However, these startups would have never existed without the necessary funding.

These days, starting a new business has become a little easier, and crowdfunding has a huge role to play in this shift in paradigm. Crowdfunding is a wonderful way to bypass all financial institutions (including banks) to procure the capital required for business.

No glass ceiling

While approaching a bank for a business loan, you must remember that banks are conservative. They can only offer a fixed amount of money based on your credit score and security. Crowdfunding has no glass ceiling. For example, JustPark managed to raise a whopping 3.7 million from UK investors in less than a year. It would have never been possible if the proprietors had approached a bank.

There are few other ways of getting the capital other than crowdfunding. You can opt for secured loans. If you are trying to open a small business that requires a little money, then a Title Loan is not a bad idea. It is where you can use your car title as collateral. The advantage of this kind of loan is that you are using money that you already have! You can also use the vehicle during this period as you pay off the loan in easy monthly installments. However, in case you fail to pay your installments, the company has the right to seize your car and sell it for pending payments.

About giving back

Many people only go for crowdfunding instead of small loans because they think crowdfunding does not involve paying people back. Well, that is not true. You need to pay the people supporting your business idea. These crowdfunding campaigns offer all kinds of rewards to investors who contribute money to the firm. A larger amount usually calls for more perks and bigger returns.

These benefits do not always come in the form of direct payments. Sometimes, it is direct access to "behind the scenes" of your company, the first taste of your new products and touring company offices. Though with loans, you need to make regular payments, the arrangement might still be better than crowdfunding returns for many businesses. Sometimes, following through with these rewards (returns to investors) can diminish your core business value.

Time is a big factor

A crowdfunding campaign typically lasts for about 1 to 3 months. In addition to that, there is a time required to create necessary videos, presentations, write-ups and proposals. You will need to create your compelling business profile before you can approach possible investors. In reality, crowdfunding campaigns sometimes take longer than six months and are more than the average time taken by a bank to process a business loan.

Most people will just tell you to check out local banks. However, the challenge with local banks is the elaborate procedure that keeps aspiring business owners hanging on the line for months. Sometimes, banks will refuse to pay a certain amount simply because your account with that particular bank is not active enough. Although banks do provide competitive interest rates and secured loans, these factors are not compelling enough.

Title loans are a smarter option if you are in need of quick cash. You can use your car as collateral to get the money from a lending party. As it is a secured loan, the interest rate will be lower than other small-business loans. You will not be going from door to door appealing for money to start your business. You will not have to cater to the qualms of hundreds of shareholders. Sometimes, you can get the loan amount the very same day your loan is processed. You can just fill out the application forms online, and a finical executive will get in touch with you within in a just couple of hours. Title loans are a great way to save time!

What is your cause?

Not all kinds of businesses qualify for crowdfunding. You can only be crowdfunded if you have a life-altering business idea that will take the current market by storm. If your idea is more conventional and less daring, you will find it hard to crowdfund your project.

Do not be heartbroken! You can always turn to other funding sources like the Title Loan companies discussed above to get better funding within a shorter amount of time. These sources are much better for traditional business concepts that are known to make money. As a matter of fact, you will find it much easier to get a larger loan amount from these traditional investment companies with a traditional business thoughts.

If you have an online food delivery idea, e-store plan or a clothing store in the queue, you better give up the plan of crowdfunding and start checking out the local agencies that give out Title Loans for small businesses.

Picking the best Title Loan

Choosing the best is no rocket science. The best title loan will vary from person to person depending on their individual needs. While some will go for the ones with higher loan amounts, others might go for the one with a lower interest rate.

We would suggest you pick one that has the perfect balance of all three factors: amount, rate and payment term. Ultimately, you should choose the source of funding that would help your business grow. The source should not become an issue in the long haul.

Take home

Both crowdfunding and title loans have their pros and cons. You cannot say that one is better than the other in all situations. While crowdfunding can be better for innovative business ideas that have a higher chance of succeeding, title loans are better for more regular business plans that show more security. In either case, the more suitable option will depend upon the personal choice, need, and circumstances of the individual(s) involved in business planning and financing.



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