Creative projects often need funding to get things going. It’s a bit like a startup; it needs financial capital to take off. These projects may get costly, too, so you definitely need funds for them.
These days, there are two main ways to get these funds: through loans from money lenders near me or through crowdfunding. Each one has advantages as well as challenges.
Take a look at the difference between the two.
Fan Funding
Having potential fans fund creative projects has become popular. Platforms like Kickstarter, Indiegogo, and Patreon come to mind when talking about this concept.
Basically, the idea is to persuade people on the Internet to donate money to fund your project. Those who decide to give will be called your backers. In exchange, they get perks once you launch your project. These perks include discounts, freebies, or exclusive content.
This is quite appealing because anyone can do it, and it can work for any kind of creative project. But it’s easier said than done; crowdfunding has its own set of challenges. Here are some pros and cons.
Pros of fan funding
- You don’t have to repay your backers.
- You don’t need a good credit score or a minimum monthly income.
- You get the support of your community of backers.
Cons of crowdfunding
- Backers can make demands for your project, which may force you to make changes you don’t like.
- There is no guarantee that you’ll get all the money you need.
- You have to fulfill your backers’ expectations for the project.
- You’ll have to work hard to market your crowdfunding campaign and consistently update your backers.
Loans
With loans, you don’t need to find willing backers. Instead, you have to find reputable lenders. There are certain qualifications, so not every creative person can take out a loan. But if you do qualify, you will get the exact amount you want to borrow.
Lenders will also not bother you with your creative project. They only care about you repaying the loan consistently each month.
Loans can be better than crowdfunding in some ways. Here are the pros and cons.
Pros of loans
- Lenders will have no say in your project in any way. In other words, you will have full control of your project.
- You are certain to get the exact amount you want to borrow.
Cons of loans
- You have to pay back the loan.
- If your project does not make a profit, you might be hard pressed to find the money to pay back the loan.
- You need a certain level of income and a good credit score to qualify for a loan.
Conclusion: Which one should you use?
Both fan funding and loans have their merits. Consider the pros and cons of each, then decide which one is best for your creative project.
If you decide to take out a loan, be prepared to pay it back. Make sure you will have the means to repay the loan – whether or not your creative project takes flight.