When it comes to funding your startup, it’s important to know that not all methods are created equal. There are some that are ideal for startups in particular.

Crowdfunding 

This is an extremely popular method for raising funds for a startup company. Keep in mind that it’s easier to gain money for your startup this way if you have a unique and innovative product or service to provide.

Pros

It’s super easy to get started, as there are loads of crowdfunding platforms online to choose from, and social media makes getting the word out about your crowdfunding endeavor simple.

Cons

You will need to find a way to truly stand out if you want to gain 100% of your startup funds with this method.

P2P Personal Loan

This can be a great loan option in place of a traditional loan from a bank, although you will need to go through an application process that is very similar to a bank’s process.

Pros

It can be a lot easier for someone with a lower credit score to get a P2P loan than it is for them to get a standard business loan from a bank.

Cons

Unfortunately, the interest rates for P2P loans can be up to 36%, which is much higher than interest rates on bank loans. This can make some people immediately reject using this method for funding their startup, at least in its totality.

Rollover for Business Startups

With ROBS, you can move your personal IRA or 401(k) funds toward some form of investment into your company.

Pros

You do not need to pay interest on these funds like you would have to on a loan. Also, you do not get penalized for early withdrawal of your retirement funds if it is used in this manner.

Cons

You are using your retirement funds, which are meant for taking care of you in the future when you can no longer work. This is why it’s important to utilize this money in such a way that you will receive a return in funds, or in other words, a successful startup.