Which is better, SBA loan, small business credit line or crowdfunding?

Question:

Which is better, SBA loan, small business credit line or crowdfunding?

Business Financing:

Business financing is the means of sourcing funds to start or expand a business. It helps kickstart or expands a business. Some methods of business financing include crowdfunding, SBA loans, credit cards, friends and family, and grants.

Answer and Explanation:

Crowdfunding is better.

Crowdfunding is a means of raising capital where one looks for funds through online campaigns. The fund seeker pays back the donors using gifts instead of money. This option is better for the following reasons:

  • Serves as a marketing tool. An aggressive crowdfunding campaign will help introduce the product in the market easily, especially where it attracts more investors.
  • Helps in brainstorming. By sharing the idea online, it can help get feedback and guidance on how to make improvements.
  • It's a fast way to raise funds. Crowdfunding does not require long processes such as applying for loans, thus making it a simple and quicker way of raising funds.

Learn more about this topic:

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What Is Financing? - Definition & Types

from Corporate Finance: Help & Review

Chapter 8 / Lesson 7
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