Starting up your new business can be a wonderful thing, until you realize you need to find ways to finance your business.

There are some traditional ways you can think of, such as your own savings, getting a loan from the bank or asking good ol’ mom and dad for a no-interest “family loan.”

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However, if those aren’t options for you (and for many entrepreneurs that’s true), then you’ll  have to find more innovative ways to finance your new business.

But what are the best ways, and how many could there really be?

To answer that question, today we’ll look at the 13 most innovative methods entrepreneurs have used (and are using) to finance their new business.

You may end up using one or many of these, so be sure to read carefully. As always, be strategic in the finance method you choose, and make sure you can meet the financial obligations.

#1 Your own blood, sweat and tears

Yes, your own energy can be one of the best finance options for your new business. Many entrepreneurs use this finance method without even being fully aware of it.

What’s known as “sweat equity” is your choice to using your own unpaid labor and other resources to get what you need.

Therefore, instead of using money to hire a marketing agency or buy an app, you can do it all yourself.

Obviously, it will take you much longer to create an app than it would a professional, and your marketing mix may not work out very well for the first few weeks or months.

Nonetheless, it’s cheaper (free in a way) to do it yourself, and it also gives you that priceless asset known as “experience.”

#2 Barter and trade

Another innovative way for you to finance your new business is by trading your skills for another without exchanging any money.

You can understand this idea by understanding first of all what you need financial assistance for: to buy the goods and services that you need.

Some things you can’t practically trade for (well, maybe you can), like rent and utilities, but other things, like web design, you may be able to negotiate.

For example, if your new business is an SEO agency, you can offer your services in return for a free, custom-made website.

It’s a win-win, and you “finance” your business without needing a cent.

#3 Crowdfunding

OK, now to the more established finance methods. Crowdfunding is the method by which you ask the public for financial assistance for your business idea.

Each person gives any amount they choose and in return they get a reward (the product you’re working on). In that way, it’s like pre-ordering a product.

This is an effective option because you don’t need to approach a few people with a request for big sums of money.

Instead, you are asking many people for small amounts of money, which is very effective, as can be seen with the rise of Kickstarter and Indiegogo.

#4 Kickfurther

Websites such as Kickfurther (similar to crowdfunding) are made specifically for businesses, however. Instead of investors getting a reward for the money they’ve put up, they get part ownership of the inventory.

When the inventory is finally sold, the investors get their money back plus any profit.

#5 Invoice factoring

Invoice factoring is the process by which companies can get money for their invoices that haven’t been paid yet.

Basically, if you have sent out invoices that your customers haven’t paid yet (for whatever reason), you can use invoice factoring companies to go after those invoices.

When those invoices are paid, you give a percentage or flat fee to the invoice factoring company.

#6 P2P (Peer-to-Peer) Lending

Loans don’t have to be off the table, but you also don’t need to go to a bank to get a loan for your small business.

Instead, you can get loans from other individuals without any intermediary organization.

There is an inherent risk for the lenders, as they are normally not backed by much guarantee. However, the return on their investment is better than other more traditional ways, and the rates are better for businesses.

#7 Microloans (or micro-financing)

Microloans, also known as micro-financing, allows businesses, such as your own, to get smaller loans from non-bank institutions.

This form of loans actually started in developing nations as an innovative way to get funding for borrowers.

It was so effective that it quickly caught on in other parts of the world. You can get microloans from private companies (PayPal Working Capital), as well as government institutions (the US SBA Microloan Program).

#8 Purchase order financing

One of the biggest problems for startups that sell products is the difficulty for scaling up.

They simply cannot accept a large new order because they don’t yet have the required cash to build the product and deliver it.

That’s where purchase order (PO) financing companies come in handy, as they’ll be able to provide the funds directly to the suppliers.

#9 Government grants

Depending on where you are in the world, you may be able to meet your financing requirements with a government grant.

For example, the the US Small Business Administration provides grants with its Small Business Innovation Research and Small Business Technology Transfer programs.

You’ll have to meet federal R&D goals with a high potential, and then you’ll hav e a good chance.

#10 Lines of credit

You can go with private companies to give you lines of credit for certain amounts. For example, Kabbage offers lines of credit for $2,000 – $100,000.

You have 6 – 12 months to pay the money off, with monthly fees of 1-12%. The ranges are dependent on the type line of credit you can get.

#11 Merchant cash advances

There is also the option to get merchant cash advances for about 50 – 250% of your monthly credit card limit.

Your small business will repay loans by giving the lender a certain, fixed percentage of all the future credit card receipts until you pay off the loan.

#12 Non-bank loans for startups

There are certain lenders that will give loans in the range of $10,000 – $100,000 for small businesses.

For Accion, for example, the minimum credit score is 575 with proof of income and adequate cash flow.

Their annual percentage rate (APR) is around 11% and after approval, your funds are available in 3 days.

#13 Equipment loans

If your finance needs revolve around capital to buy equipment, you can get equipment financing up to $1,000,000, depending on the lender.

The requirements are different based on many factors, but generally you’ll need to have been in business for at least 2 years and a credit score of at least 650.

These innovative methods will help you to finance your new business so you can work on growing and developing it.

Good luck!

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