4 Industries Where Creativity in Financing Pays Off  

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It doesn’t matter how long you’ve been an entrepreneur or which industry you’re operating in – oftentimes, securing financing is one of the biggest challenges you’ll face.

One minute, you’ve got an incredible opportunity in front of you that is far too good to pass up. The next, you’re forced to let it do exactly that after financing takes too long to secure, is needlessly complicated, or just falls through for whatever reason. Thankfully, one of the qualities that has served your career well up to this point is your ability to think outside the box – which is precisely what is needed in these situations.

These days, innovative financing solutions are often needed, and the good news is that they generate incredible results with the right approach. In fact, there are a number of core industries where creativity in financing will pay off that are absolutely worth a closer look.

• Real Estate

Real estate is a perfect example of an industry that has long embraced creativity in financing. Sometimes, getting a traditional mortgage just isn’t an option for whatever reason. You may need to experiment with something like seller financing, which is exactly what it sounds like. This often helps save on things like closing costs, making it far more attractive of an option than people realize. There are also lease options available, as well as crowdfunding platforms that are geared specifically towards the real estate sector.

Of course, sometimes, the most creative way around any financing hurdles you’ve encountered is to not deal with them. Case in point: wholesale real estate. The beauty here is that you’re not actually financing anything because you’re not technically buying or selling a property. As the middle man in the equation, you’re simply getting a property owner to agree to sell it to you for one price and then getting an interested buyer to assume that contract for a higher price. The difference between those two numbers is what you get to keep for a profit.

Provided that you can get everyone to come to an agreement that they walk away happy with, there’s nothing for you to finance at all. It’s a great opportunity to get yourself involved in the real estate industry in a way that lets you start building a network of contacts. That way, as your career develops, you’re not only expanding your access to properties, but to more traditional financing solutions as well.

• Tech Startups

Along the same lines, technology startups have long been known to leverage certain “non-traditional” financing options. When you’re in the early stages of a company and every dollar needs to count, you don’t always have the ability to go the “normal” route in terms of where you get your money. Oftentimes, the best startups are built on the vision of one person. There may be very few people who can actually “see” what shape that vision will take, like the founder. This is great for innovation and risk-taking, but it makes it hard to go through traditional channels to get the money you need to keep the doors open.

Because of that, a lot of tech startups leverage opportunities like convertible notes, for example. It’s also a space where venture debt is common for funding flexibility. Then, if all goes to plan and your company starts to live up to its potential, you will eventually grow to a point where funding isn’t something you have to worry about because outside investors will be beating down your door for the chance to get in on the ground floor of something great.

• Healthcare

Another industry where creativity with regard to financing often pays off is healthcare. Many drug developers and manufacturers take advantage of grants and subsidies to get their important work done on a daily basis. Sometimes, there is no other way – the work put into developing a medication, not to mention the sheer amount of time it takes to conduct mandatory research and testing would make it impossible.

Because of that, many of these same companies explore a revenue-based financing model. As the term implies, this is when a business pays back the money that has been invested in it via a percentage of any future gross revenue that it earns. The money for the original funding is paid back over time, much in the same way a traditional loan might be. However, because the payments are based on revenues, there is a lot more flexibility regarding the timetable.

Some years will understandably be better than others, especially as the market (and even the world) fluctuates wildly. Revenue-based financing is a way to account for all this, all while creating a path for more sustainable growth for a business at the exact same time.

• Renewable Energy

Finally, we have the renewable energy sector – one that is becoming increasingly prominent as time goes on. Especially given everything going on in the world right now with climate change and similar issues, sustainability is a big priority for many people. Renewable energy-focused organizations are seeing a lot of activity as a result.

One of the more creative avenues they’re exploring in terms of financing has to do with tax incentives. Remember that a large number of countries around the world have set aggressive carbon footprint reduction strategies, and renewable energy organizations that support them are being rewarded. Similarly, unique financing opportunities like power purchase agreements (or PPOs for short) are being taken advantage of by those who know how to look for them.

Creativity Pays off in Financing

In the end, never let yourself forget the old saying, “Necessity is the mother of invention.” Yes, there will be times when financing seems like a foregone conclusion during your career. But there will also be situations where that won’t be true, and you can’t let a short-term obstacle get in the way of a potentially major long-term gain.

This is all part of the reason why many industries, especially real estate, tend to thrive by embracing inventive financing options. Not only can this be a great way to catalyze growth, but it also helps empower the type of financial resilience that will ultimately make you a better businessperson. That in and of itself may be the most important benefit of all.