Man this is an interesting topic. Im going through the same stuff myself- ive been playing with this one group for about two years and were breaking the bank trying to release an album independently.
Im going to sound like an advertisement here (as I posted the following link in another topic), but there is a way to get funding, you just have to be willing to work. Kickstarter.com is a great way of getting funding for different projects. Im actually in the middle of a campaign now (to check out my page, visit http://www.kickstarter.com/projects/...upcoming-album
) and, while its going a bit slow, we still have nearly 40 days to complete our project. Get creative to market your music, do something new; playing great music will only get you so far nowadays. You have to be creative and adamant.
If you have built up a decent fanbase from playing locally and regionally, continue to stay connected with those fans, and give them a reason to buy your product, theres no reason you cant make the money yourself. I know a lot of people are going to call me crazy, but its true- you dont need to sign over your rights and go into debt to make it. Let me repeat: YOU DONT NEED TO GO INTO DEBT TO MAKE IT. Independence IS the future of the music business.
There are so many case examples of this success, too. Take Trent Reznor, for exampl. While he started off as a signed act to a major label, he broke away from their contract and has been running independently since. One promo tool he used was the use of pre orders; on his website, he had a $250 package that sold out within within 30 hours. Over 200 had been sold. Do the math...thats big money for a single person to take in.
Think about it like this- your group makes 100% of the profit if you remain independent while barely taking 5-10% if youre signed. That means you have to sell at least 10x as much signed to make the same profit. If youre creative enough, you can build a fanbase...you just gotta start thinking.