Finding funding for your small business can be one of the most challenging aspects, especially if you don’t fit into the traditional business lender’s ideal mold. When your credit history isn’t perfect or you’ve had a failed business venture in the past, you’ll have a difficult time qualifying for traditional lending options.
That’s where alternative financing comes into play. Though you might be concerned about high interest rates and high fees, there are a variety of viable non-traditional financing options that offer fast cash without dragging you down. Here are some of the best.
Peer to Peer Lending
“Peer to peer lending is a unique investment option, which allows consumers to provide financing directly to consumers, without the need of a bank,” explains an article from P2P Lenders Review. “It provides a borrower with the ability to obtain affordable capital in a more efficient manner while also providing lenders with a good return on investment.”
You’ll solicit the help of a person in a similar business niche rather than a financial institution. To make sure you’re borrowing money from a trustworthy individual, use a certified peer to peer lending platform like Prosper Marketplace, Upstart, or Lending Club. Carefully review and compare each marketplace before choosing a lender.
Rather than walking into a bank to take out a loan for your business, you can do it from home. It’s much faster and often easier to qualify than in a traditional sense.
Online lending is already very popular, and expected to continue growing. According to the former U.S. Treasury Secretary Larry Summers, online lenders are expecting to reach more than 70 percent of small businesses in the next few years based on convenience and ease.
“Factoring is a transaction in which a business sells its invoices, or receivables, to a third-party financial company known as a ‘factor,’” says an article from RTS Financial. “The factor then collects payment on those invoices from the business’s customers. Factoring is known in some industries as “accounts receivable financing.”
It’s a pretty unconventional method for getting csh, and it has more losses than a typical loan. However, it’s a great way for small business owners to get money right away rather than waiting a month or two for a loan.
The method of gathering money from customer supporters and investors through an online social donation platform is gaining esteem in the world of small businesses. Rather than looking for a single investment, companies look for hundreds or thousands.
Before starting a crowdfund, make sure you understand both the method and the rules of the site you use. You don’t want to get stuck with a high fee for accessing your money as many platforms require.
Don’t let a denied loan application stop you from starting or maintaining your small business. Turn to some of these alternative financing methods that will allow you to flourish.