Bank Said No? Top 5 Alternative Financing Options for Your Small Business
Madeline owns a small printing business and needs additional capital to purchase new equipment and to hire an extra sales representative. She approached her local bank for a traditional small business loan and was declined. Devastated, Madeline doesn’t understand why her successful business can’t secure a traditional bank loan. Unfortunately, this happens more than you would think. Small businesses are often unable to secure traditional loans to fund growth and get needed cash for expenses. That’s where alternative financing can greatly benefit small business owners like Madeline. With so many alternative financing options available, your small business can find the capital you need to grow, fund research and development, increase inventory and pay your expenses.
Here are the top 5 alternative financing sources for your small business:
1. Invoice Factoring
This is one of the best options for small businesses with money tied up in accounts receivable. An invoice factoring company, such as American Receivable, will purchase your current, outstanding invoices and give you a percentage of the value. When American Receivable collects payment on the invoice from your client, you receive the remaining amount due on the invoice, less a small factoring fee. Invoice factoring gets you the cash you need right away! A true advantage of this alternative financing option is that your eligibility is based on your client’s ability to pay, not your company’s credit rating.
Call 1-800-297-6652 for a free quote from American Receivable.
2. Personal Loans
These allow you to use your personal credit score and household income to get money for your business. A personal loan will be smaller than a business loan but can give you some alternative financing for your new small business.
3. SBA Loans
Loans from the SBA are guaranteed in part by the Small Business Administration. SBA loans are originated by traditional loan producers, but a portion is guaranteed by the SBA if you default. It allows a small business who otherwise would not qualify for a loan to get needed funds. The downside is that an SBA loan can have a lengthy application process, and it can be difficult to qualify.
4. Business Credit Cards
These accounts allow you to pay for business expenses without applying for a loan. You can even earn rewards and build your business credit score. It’s a bonus if you can find a card offering an introductory 0% APR for the first year. The downside is keeping a running balance for the long term can add up to higher costs owed if you are not careful.
5. Business Grants
These are the most difficult form of alternative financing to come by, but if you find your business qualifies for a business grant, you get free money to fund your business. Many business grants are government funded and geared towards veteran and minority-owned businesses.
Good News for This Small Business Owner
Madeline contacted American Receivable and was able to get the cash she needed to fund payroll and new equipment. With the increased sales from the new sales representative, she was also able to apply for a line of credit. Alternative financing options worked for Madeline’s small business. Which one will work for yours?
American Receivable has been helping small businesses with alternative financing since 1979 and is ranked #1 among the nation’s factoring companies. Find out how invoice factoring can be a solution to your business’s cash flow needs.
Call for a FREE Quote Today: 1-800-297-6652 or complete an application for factoring online.