Creative Ways to Finance Your Business

Originally published by Carrie Myers Smith on IDEA Health & Fitness Association, Feb 02, 2016. Read the full article here.

Need money? Try these alternatives to find funds for your business.


fWhen I opened my studio several years ago, I had very little credit with which to purchase equipment. Okay, the truth was I was drowning in debt due to my divorce. There was no way a bank was going to lend me money, so on went the creative thinking cap.

One of my clients was retired from a major Fortune 500 company and was a very successful entrepreneur and consultant. I approached him regarding a loan. I went prepared with a shortened, modified business plan (as opposed to a long, drawn-out one) that included my ideas, what I would spend the money on and how I would make money through the studio. I estimated how much money I would need for equipment, signs, business cards, a radio campaign and website costs—everything required to get started.

My lender opened a bank account with $5,000 in it and handed me the debit card to purchase what I needed.

Obtaining a loan from a friend is just one way to fund and grow your business, whether it’s a startup or it’s already established. Here are a few more options.

Bartering and Presales

Since my lender was also my client, I was able to resolve the debt with a combination of monetary payback and bartering—that is, providing training in exchange for the money lent.

Bartering your services in exchange for money in the form of a loan is similar to presales, which can be “a very powerful form of both funding and validation for small businesses and startups,” says John Turner, CEO and founder of UsersThink.

“Presales can be an especially powerful option for those with limited financial resources but a fair amount of social or online reach,” Turner explains. “So those with large social networks, large newsletter lists or websites with a good amount of SEO benefits could test the waters with preorders on their own site, then promote the offer further and qualify it by saying that only a limited number of spots are being created or a limited number of items are available. This method might be better for those who don’t want to take an ‘all-or-nothing’ crowdfunding approach. It’s also worth considering if you already have a fair amount of clout and reach.”

I recently used this approach on a smaller, more personal scale, when I needed money for a certification program. I offered a deal to a long-term client: If she would prepay for a larger training package, I would give her an even better per-session rate than she was already getting. I received the money I needed to pay for the certification program up-front—which saved me money compared with paying per month for the program—and she got a great deal.

Another, less traditional way to barter is to work out a deal for the rent or lease on your space. For example, my studio was in an old school building that already housed an established gym. The owners of the gym owned the entire building, and they were excited to add a studio to their tenants, as it would complement what they already offered. We even worked up a joint membership package. In addition, the owner wanted to see me succeed and knew how difficult it can be to get started, so he offered me a deal on the rent. Instead of a flat rate for rent, I gave him 30% of my membership fees per month. This took away the pressure of having to make a certain amount of money per month to cover the rent, allowing me to focus on my members and clients.

Partner With a Company

Want to host an event, but don’t have the up-front funds to do so? Try partnering with a company that is willing to offer cash and product in exchange for exposure.

Several years ago, a PR professional advertising a new product from a large, established international company contacted me to offer this deal: The company would give me the funds necessary to cover marketing, space rental, anything that would be needed for a 1-day event—as well as gift bags that included samples of the new product. In exchange, the company/product logo would be included in all marketing materials.

I was able to offer a women’s retreat day that included yoga and a guided snowshoe walk. I used the money for a radio campaign, fliers, snacks for the day and the guided snowshoe fee. The company got the word out about their new product, and I got to host a fabulous day for women in the community.

Chamber of Commerce

Your local Chamber of Commerce can be a potential source of funding for your business. For example, our local chapter holds an annual “Shark Tank”–style contest that spans several months. Entrants draw their business vision (literally draw their vision on a napkin!), create an outline for their business plan and then write an official business plan. Contestants are eliminated at each stage, and the competition culminates in the remaining participants pitching their business idea to a board of successful local businesspeople. The winners receive cash to help start or grow their business.

While your local chapter might not offer such a contest, it will likely have resources available that can help you with your business.

Alternative Finance Companies

Alternative finance companies are popping up for those who don’t qualify for a traditional bank loan. These companies claim to have a simplified application process and more lenient qualifications for securing a loan.

“Applying for a long-term loan from a traditional bank can be grueling,” cautions Stephen Sheinbaum, founder of Bizfi. “You may have to produce months of financial statements, and all your information will likely have to be submitted in person.”

Instead, Sheinbaum advises you to consider an online alternative finance company. “Many of these companies offer a variety of products, including short-term financing, equipment financing and even long-term loans guaranteed by the U.S. Small Business Administration.”

One of these is Sheinbaum’s own company, Bizfi, which has originated $1.3 billion in funding for small businesses and offers a fast online application for multiple financing products, including SBA-guaranteed loans that can be used to buy real estate.

Since its inception in October 2013, Dealstruck, an online direct lender, has lent over $100 million to 700-plus small businesses. According to its bio, Dealstruck often lends to small-business owners who don’t qualify for traditional bank loans. The goal is to help business owners build their credit profiles and eventually transition into a traditional bank relationship.

If you’re looking for money specifically for equipment, LeaseQ™ may be just what you’re looking for.

“Fitness equipment financing is a great tool for borrowers who are looking to open their first training center, studio or gym, but don’t qualify for a traditional bank loan,” explains Cory Damm, vice president of client services.

“Financing equipment rather than buying it outright is the first step in that process,” Damm continues. “Traditionally, finding the right lender for equipment financing is time-consuming and can be challenging for first-time owners who might not qualify for a traditional bank loan. Financing equipment through alternative finance platforms gives fitness professionals access to hundreds of nonbank lenders in the market who serve all credit and equipment classes. Fitness pros can even find specific niche lenders—like Rigquipment Finance, which specializes in funding CrossFit® facilities.”

“It was easy working with LeaseQ when I obtained my free weights, inertial exercise trainer, rack systems, benches, bars and other accessories,” says John Williams, chief performance officer of Axon Speed Group in the Atlanta area. “The biggest advantage to obtaining equipment through LeaseQ was the ability to maintain cash reserves. I was able to keep cash available while still having access to equipment.”

Whether you’re a startup and need seed money or you’re an established company looking to expand, there are many options out there.