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5 Unconventional Sources for Small Business Capital

Before signing a bank loan, weigh your funding options to see if it's necessary.
Writing on a check.

The experts always seem to focus on getting a bank loan when they discuss how to get small business capital to grow your business. There are many other options. In fact, you should avoid using loans and credit cards to fund your business. If you need more money, consider these unconventional sources for small business capital:

1. Family

Ask family for small business capital. Be professional and have a business plan to share with them. Approach them with a business proposition they can't refuse. At the same time, refuse any proposition they offer in exchange for funding your business that's unreasonable. It's hard to set boundaries with family who help you out financially, but you could hurt your business if you don't.

2. Personal Belongings

Don't hold on to extra personal belongings when you need small business capital. Clear out your garage, storage unit, basement and rooms in your home (of the things you don't need). This includes furniture, electronics and appliances. Have a yard sale or place ads on You could end up with several hundred dollars that you can apply towards web hosting and Internet access for a year, or other business expenses.

3. Former Employers

If you left your job on good terms, your former boss may be a source for small business capital. Ask the company to hire you as a consultant. Use the money you earn to fund your business start up or expansion. They'll also make a great reference for other freelance jobs or prospective clients. Think about what tasks would be suitable for outsourcing that also match your skills and experience. Sell your employer on the idea, like you would a client.

4. Barter Goods and Services

Bartering is more appealing in a down economy, because people don't have as much cash. If you haven't had much success in the past with bartering, try it again. Find suppliers and clients who would be willing to barter goods and services with you. Bartering reduces the need to spend more money, and so it's an indirect source for small business capital. See how you can barter your time and labor in your personal life too. You can take the money you save on personal expenses, and apply it to your business.

5. Industry Contests

Keep abreast of contests and competitions in your industry. For example, if you're a freelance writer, there may be a writing competition that offers cash prizes for winning entries. You may have an innovative idea and business plan, and a business plan competition may award you with small business capital for it. This is different from entering sweepstakes which are scams. Legitimate contests in which you have to use your talents and skills to win are a good source for money, and you can include them on your resume or business profile if you win.

It's not easy to find small business capital using unconventional sources, but your hard work will pay off.

Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.

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