Find funding options that can help you make your vision happen without getting caught up in miles of red tape.
It can seem like no one wants to invest in adult entertainment companies. Getting the proper funding for your shop, graphic novel, club, movie or magazine often means clicking through lender after lender to find they don’t support your industry. Cultural hang-ups, stigma and heavy regulation make it difficult, but not impossible to get the funding you need. Loans and other financing options out there, we’ll explore what might fit your business best and how to apply.
5 financing options available for adult entertainment companies
Even though your business may be in a restricted industry for many big-name lenders, you still have multiple options to consider for financing. These include: crowdfunding, alternative business loans, angel investors, commercial real estate loans and peer-to-peer loans. Sometimes, it just takes one investor or industry affiliate to turn your funding dreams into a reality.
The least-traditional financing could be the easiest to set up for your business. Of the two big crowdfunding sites for businesses, Kickstarter doesn’t allow pornography, but it has allowed other types of erotic material. Indiegogo has restrictions on what can be offered for perks, but if you follow those protocols, you could use the platform as a way to build support for your project.
Fundraising isn’t limited to the Internet space though. Does your local community have a thriving burlesque scene? Inquire about hosting a benefit show. Your industry affiliates and friends may be a great source for advertising, fundraising events and potential donors.
Alternative business loans
While most banks and traditional lenders will steer away from this industry, some alternative lenders like GoKapital can service adult entertainment companies. These lenders evaluate your business revenue and bank statements to assess eligibility. You may pay higher interest or fees than you would with a traditional business loan, however.
Venture capitalist firms often have strict profiles for you to meet before they’ll provide funding, and agreements that prevent them from funding adult entertainment businesses. Angel investors aren’t limited by such factors. Some sites allow you to search for angel investors who are specifically looking to get in with the adult entertainment industry.
Commercial real estate loans
Looking to open a new location? A commercial real estate loan may be the way to go. Loans secured by property can usually be obtained at a lower rate, and you’ll likely find more lenders willing to work with your industry.
Peer-to-peer (P2P) lending can offer another solution that works around a market that generally doesn’t serve adult entertainment. Investors are matched with those looking to borrow through P2P lenders, and loans are partially or fully funded by individuals rather than banks.
Compare alternative business loans
How do I decide which loan type is best for my business?
- Financing amount. Depending on your networking skills, crowdfunding could garner a good amount. One adult film was able to raise $23,000 on Indiegogo, while a graphic novel erotica anthology campaign received over $160,000 in support on Kickstarter. A peer-to-peer loan won’t gather you as much money as an angel investor, but may be useful for smaller projects or as a supplement to other financing types.
- Restricted lending. It’s likely you know that some lenders won’t provide funding for adult entertainment. But even if you find one, qualifying is especially difficult by being on the financial world’s blacklist. Be upfront about what the loan is for when applying if it’s not immediately obvious whether or not the lender will allow adult entertainment businesses as patrons.
- Repayment. Getting successfully financed comes with responsibilities. An angel investor is going to be repaid in equity, which means sacrificing a portion of your stake in your business. Crowdfunding is usually repaid in perks, which can be difficult to manage without experience or a significant amount of planning. Loans can be difficult to get, but repayment is generally straightforward.
- Overall cost. This doesn’t just apply to the overall cost of a loan. A crowdfunding platform will likely take a cut, and perks will usually have some cost to arrange. Fundraising events can be costly, too, if you don’t end up with many donations. Find out what you can get for trade or as a donation before deciding if one type of financing is more costly than the other.
- General eligibility. Once you find a lender that allows your industry, you’ll need to be sure you meet the other requirements. Average monthly or annual income, length of time in business and personal credit score can all affect your eligibility.
What do I need to apply?
Applying for a loan or with an angel investor will likely require a few documents. Be sure to prepare at least the following:
- Detailed business plan. Show that you’re more than just a person with an idea. Have a full plan with reasonable goals and actionable items that you can follow through on. Being able to articulate your vision to a lender or investor will make you seem like less of a risk.
- Proof of income. Bank statements, your previous year’s tax returns, donor receipts, invoices and profit and loss documents are all great ways to show your income.
- Relevant licenses and permits. Make sure you read up on local area laws. Different places may require that in addition to your business license, you get a permit for operating an adult entertainment business. One of the more obvious licenses you may need is a liquor license if you’re operating an establishment that serves alcohol.
- Personal documents. No matter where you go for funding, you’ll likely need to prove you are who you say you are. Make sure to have government-issued identification on hand, such as a state driver’s license or passport.
5 tips on applying for financing as an adult entertainment business
- Carefully follow zoning and licensing mandates. Thoroughly research the laws and regulations surrounding your particular project. While adult entertainment businesses don’t have to worry about the Comstock Laws anymore, there are still obscenity laws and regulations in place across the US.
- Show your niche has a market. Provide research that the niche you’re looking to sell to isn’t oversaturated.
- Beef up your business plan. Adult entertainment isn’t always taken seriously, especially when certain areas of the industry are saturated with free product. Make sure you can fully highlight the value of your business and where your potential is for growth.
- Know your cash flow. Be able to demonstrate that you have the resources necessary to repay any money that you borrow. Also, make sure to show that the funded amount will satisfy the cost of your project.
- Be specific, not graphic. Give your investors a clear picture of what the money is going toward and why their assistance is necessary.
6 tips on how to advertise without it being written off as spam
- Support your local sexual wellness center. Samples or paying to advertise with a local center could help get your business in front of an interested audience — and potentially do so at a low cost.
- Market to your user. This seems obvious, but there are a number of products that are marketed toward women that completely ignore this message. Evaluate who your audience is and what they normally respond well to, and adjust accordingly rather than simply following industry norms.
- Explore affiliate programs. Online advertisements are often dismissed out of hand by younger consumers. Find affiliate programs that promote clear advertising on sites you genuinely wish to be associated with to get the most out of this service.
- Go to adult entertainment conventions and conferences. Being seen as a vendor can up your credibility significantly, and it gets your name out there. Conference websites generally have vendor lists, and you’ll likely be reaching some non-local audiences.
- Update your website. While out-of-the-box websites can be easy to put together, they can also be unattractive. Look at websites for top brands in and outside of your industry and take notes. Clean, crisp designs with little in the way of excess is usually a good route to go.
- Hand out VIP goodie bags at burlesque events. Local burlesque troupes may welcome sponsors. Get advertising on the show’s billing by providing a product sample for their VIP crowd.
Creative thinking and planning will go a long way when it comes to financing your adult entertainment business. No one likes to be told to network, but it can be especially important when you’re looking to effectively get funded. To get the most bang for your buck, compare lenders before settling on one just because you know it works with your industry by exploring our guide to business loans.