How is Shelf Corp funding better than Crowd funding?

 

Gaining access to business credit or loans is a difficult process –especially for small businesses or startups. Many are, therefore, forced to seek options somewhere else. As awareness about alternative financing keeps on increasing, which is better – shelf corporations or crowd funding? Let us know about it in detail.

What is Crowd funding?

Crowd funding involves the use of small amounts of capital from multiple organizations or individuals for financing a new business venture. The immense success that is achieved with the help of crowd funding depends on the particular company raising the marketing and social profile in a manner to ensure media coverage and build trust. For most companies –especially small businesses, crowd funding might not be an easy way of producing the desired amount of cash they require for achieving the respective entrepreneurial dreams.

What is Shelf Corporation Funding?

In its essence, a shelf corporation is established just like any other corporation. A Shelf Corporation also goes by the name as a Shelf Company or an Aged Corporation. The corporation is formed legally and then, ‘put on the shelf’ wherein it tends to age for a specific period of time. The period could be either months or years.

During this period, the corporation will not engage in any business activity. It might not even have real assets. Owners of Shelf companies mostly set up these firms for selling them once they are fully developed and have formed an excellent credit rating.

Shelf corporations allow startups or small businesses to engage effectively in real estate agreements, credit, or business in the form of an established organization. As such, businesses purchasing shelf corporations are no longer required to undergo the lengthy process of setting up a business from scratch. There are some more reasons why businesses all around opt for shelf corporation funding:

• Saving expense and time of starting a new corporation or company
   
• Purchasing a shelf corporation allows your small business to ensure the needed longevity for gaining access to government contracts and bidding projects.
   
• Instant credibility and corporate history in the view of potential investors
   
• Opening doors for lucrative opportunities for setting up banking relationships, funding, and business lines of credit without the requirement of providing personal guarantee
  

Choosing Shelf Corporations Over Crowd funding

With crowd funding, you might get access to the required amounts of funds. However, you will be devoid of any business credit or banking relationships. Moreover, with shelf corporations, you can get access to instant credibility while allowing you to represent yourself as an established corporation. As you purchase a Shelf Corporation rather than opting for crowd funding, you can easily attract investors as well as customers on the go.

Most conventional funding entities (unlike crowd funding) look favorably for an established firm having ample years of experience in the given industry. Therefore, opting for shelf corporations over crowd funding can deliver you ample benefits as a small business or startup. When you use shelf corporations at the right moment, adding relevant age to the experience of your business can be highly profitable.