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With the pool of unsecured financing drying up and many banks simply closing their doors, looking for money to fund your small business can be intimidating. If you’ve tried all the conventional routes to no avail, it’s once again time to get creative. Here are a few of the newer, less mainstream ways to get the money you’re looking for:

Peer-to-peer lending (also known as P2P lending, person-to-person lending and social lending): According to Wikipedia, peer-to-peer lending is “the name given to a certain breed of financial transaction which occurs directly between individuals (”peers”) without the participation of a traditional financial institution.” Peer-to-peer lending has been met by some bumps in the road – namely the big one called the SEC. Registration is now required, but that only goes to lend credibility to those participating in the lending process. Because of the stricter regulations, some P2P lending sites have closed. One to definitely check out is Lending Club. According to Business Week, “Since it started as a Facebook application in May 2007, Lending Club has made more than $33 million in loans, and has turned down loan requests equaling nearly nine times that amount.” That’s a pretty good track record built on sound lending practices. Others include 40billion.com, Pertuity Direct and Prosper.com (not currently accepting new lender or borrowers registrations while it completes the SEC approval process).

Crowdfunding (also known as crowdfinancing): I love the power and wisdom of the crowds. And I love it even more when it means pooling resources to help fellow entrepreneurs. Derived from the term crowdsourcing (from Jeff Howe’s blog appropriately entitled Crowdsourcing: “Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”), I first heard about this concept last year when speaking with a fellow community guru. Wikipedia defines crowdfunding as “an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small donations.” There is usually a minimum required to ‘donate’ (invest) in a product or service, and in turn you bear some of the risks and potential rewards – as do all other ‘donors’ (investors in a sense).

Crowdfunding sites worth checking out include KickStarter.com, Spot.us, A and Fundable. Here are a few other great resources on this alternative means of financing: Crowdfunding FYI and Crowd-Funding.

I don’t believe the SEC has stepped in on crowdfunding – yet. But there is a need for it to be regulated, to prevent scams and protect those involved in the programs. So my best advice is to be vigilant, cautious and do your homework.

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