Alternative financing is any type of business financing that do not come from suppliers in the mainstream as a street bank. mainstream financing is ideal for many companies, but banks usually have criteria that small businesses cannot meet, and they need other options. Before the recession, almost all successful small businesses have a constant connection with the bank to have received at least one credit line. The recession saw these lines of credit dry. Small businesses can not renew their credit lines or even get a job in a bank loan because they lost their customer base and sales cannot support their loan applications. In addition, their banks have strengthened their loans guide.
Here Are Some Alternatives Are Presented On Small Business Financing
- Purchase Order Financing: Purchase order financing is similar to the old practice of factoring, or take it one step further. To guarantee customer products company. They pay for the product to be manufactured, then take their cut and leave the company the remaining profits.
- Merchants cash advance: If your customers pay by card terminals, goodwill to cash payments based on future sales of cards gets, generally up to a month of arrival. It’s fast, easy and a good fit for companies with a large number of low-value transactions, such as cafes and shops – and refunds are taken at the source so that a simple and non-intervention in the house busy job.
- SBA 7 (a) loans: All debt financing sponsored by the federal government program, it is the most popular, and perhaps the best. It frees the flow of loan guarantees the lender against loss of part of the loan. This does not mean that the banks do not pay attention to loans 7 (a) They are required to maintain the unsecured part on their books. The interest rate may vary depending on the size of the loan, with small amounts which cost a little more. Buy there. Some banks collect service charges and good profits from the sale of the guaranteed portion of the loan insurance companies and pension funds; in such cases, the lender may be willing to offer a better price.
- Friends and family member: If you are lucky, friends and family members can be milder plenty of investors. They do not tend to commit your house, and perhaps even agree to sell their stake in your business with you for a nominal return.
- Peer-to-peer lending: peer-to-peer lending works like eBay transactions. the amount that is required to credit the page peer-to-peer and the maximum interest rate you pay is counted. Then, potential lenders bid on your loan. You must have a good credit score personal
- small business loans: The loan fund for small businesses is a fund of $ 30 million to encourage small business loans of capital through Tier 1 qualified community banks with assets of at least $ 10 billion. With a loan fund for small businesses, banks from the main street, and small businesses can work together to create jobs and promote economic growth in local communities across the country
- Personal Credit Card: issued by financial companies, which gives you the ability to borrow funds, usually at the point of sale could help fund smaller purchases for their business credit cards. Because of interest rates on credit cards, which are mainly used for short-term financing
- Group Finance: Made by popular sites such as Kickstarter and Indiegogo, the group financing the application process or funding small investment family, friends, and strangers in order to fund your business.
Financing a small business can be difficult to obtain, and at some point, you might even seem to have exhausted all the possibilities, but there are many ways to get funding, many can not know. If you think you have exhausted all the possibilities, comb over that list and dive deeper into areas that have not been tried (or review already have, or failed). Access to finance capital not only provides education but can tip on how to stop getting turned down for loans, so be sure to explore all options before calling it closes.