Small business owners often ask if they can consider working with alternative funding services. The answer is a resounding yes! Although there are many different forms of financing available to small businesses, not all of them are created equal. There is the traditional secured loan, which is a great option for financing some routine expenses, like payroll and advertising. However, secured loans come with high-interest rates and large down payments requirements that can make them impractical for some small businesses.
There are also many different options available through non-traditional sources such as credit cards and debit cards. While they have their advantages, they also carry higher interest rates and transaction fees that can hurt a small business’s bottom line.
On top of that, there is the fact that credit card companies rarely issue additional credit when a business has run out of credit card cash. This leaves them with only cash on hand, and the other forms of alternative funding services can be quite expensive as well.
One way to get around these issues is to work with a private funding source that does not require collateral or a down payment. Many people are skeptical of this approach because they believe that only large businesses can utilize this type of financing. The fact is that many different kinds of small business funding have successful financed with these alternative methods in the past, and small business owners looking for financing can find many different sources today. Here are some of the most popular alternative financing options:
Small Business Credit Cards: Many small business credit cards offer funding at a low rate and require no collateral. These payment services can even work for new businesses that don’t have significant assets to offer upfront. Many small business credit cards today allow you to set up an account just like your normal credit card. You can use the money from your account to make purchases or even take out a line of credit.
Purchase Order Financing: Many small businesses find that they need cash to meet some immediate expenses, but they also want to expand their business in the future. To do this, they often turn to sale order financing instead of regular financing.
While sale order financing is not widely used by businesses, it is one of the most successful alternative funding services for small businesses. Sale order financing allows a business to purchase low-end goods that they need to expand in the future without having to raise additional capital.
Private Lending Institutions: Most banks provide some kind of small business financing option. Many banks provide financing for most small businesses. These alternative financing options can be very useful for businesses that don’t have significant assets to offer upfront.