It was a traumatic day when the local pub had to shut down.

The regular guests and neighbors realized they all loved 'their' pub. When there is a common goal like that, it's worth looking beyond the bank. Why? Because magic can happen when a local community goes on a financing journey of its own.

So how can a local business get funding through community financing?

5 community financing models for local business

• Donations, when a business adds enough value to people's lives, they may be willing to donate to keep it going. If the pub closed, guests would have to travel further, so it could be better to help it survive.

• Reward seeking, when a business can provide something tangible in return, people may be willing to make a donation. The pub can provide various rewards such as free space or 12 free meals.

• A local lottery can be an effective way to raise money and engage with the local community. The pub can provide many small and 1 big reward such as a year of free meals or even a financial price.

• In community lending, community members provide a zero-or low-interest loan to get the project or enterprise off the ground or invest in real estate. The pub can provide a relatively safe loan, and interests stay within the community.

• In community investing, community members buy equity and become co-owners of the business. The pub can diversify ownership to more people, making the financial position and business model more resilient.

Having a positive local impact is key for community funders. As a result, they will feel a strong relationship with the business and become loyal customers.

What local business near you could benefit from community financing?