Carsey Perspectives: Innovative Financing for Community Businesses: Case Studies of New Approaches at the New Hampshire Community Loan Fund and the Local Enterprise Assistance Fund

Oct 31, 2017 | by
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Business owners seeking to start or expand a small business have limited options for financing. They can go to a bank for a loan, but they may have trouble qualifying for the loan due to the age of the business, absence of collateral, lack of equity in the business, thin margins, or other factors. While online business lenders may offer faster response times and lower underwriting hurdles, they often do so in exchange for exorbitant rates and reduced ability to customize their financing or add broader value to the business beyond the money. Business owners could try going to venture capitalists for equity, but venture capitalists and angel investors will demand some control over the company and need an exit strategy, generally requiring that the company be sold. The company might also not have a fast enough growth curve to interest a venture capitalist. Raising money through a crowdfunding platform, such as Kickstarter, is another option. But until recently, crowdfunding has been limited to raising donations, not investments, through such strategies.