Are you having problems with locating the funding for your small business?

With the economic downturn, banks and other financial institutions have tightened their grip, making it extremely difficult for small businesses to obtain loans. What most people do not know is that there is an alternative source of capital that entrepreneurs can tap into to get their startup off the ground. It is called crowdfunding!

What is crowdfunding?

Crowdfunding is an innovative source of financing that can help strapped small businesses make it through hard times. It is the result of collective effort, attention, cooperation, and trust by people who pool their money together in order to fund a cause, project, or business -- usually via the Internet. The basic idea is to raise money through relatively small contributions from a large number of people. In a sense, crowdfunding is a cross between crowdsourcing and microfinance.

In effect, crowdfunding democratizes the investment process, benefiting small businesses and allowing people with low incomes to invest. With crowdfunding, you now have a tool with which to counteract financial and investment crises that affect businesses, particularly startups.

Normally, you would obtain financing by seeking funding from venture capital firms, angel investors, and other traditional lending institutions. However, the process can often be long and tedious, and with very little chance of success.

Crowdfunding has changed all that. Now, entrepreneurs can by-pass traditional lending institutions by interacting directly with numerous, potential investors, and asking them to invest in their ventures.