Alternative Financing: Does It Make Sense for Your Small Business?
For years, you’ve dreamed of starting your own business. After years of planning and preparation, you got your company off the ground. However, like most small-business owners, you quickly realize (if you didn’t know before) that running your own company is financially challenging. It’s common for people in your shoes to struggle with cash flow and profitability. This is exactly why startups and small business seek financial assistance to help make important purchases or get out of dent. You don’t always need to go to your local bank for assistance. There are alternative financing options that might suit your needs. You simply need to determine whether this strategy is wise for your organization.
Traditional Loans Haven’t Worked Out
When you need money for your startup or small business, your first thought may be to visit a traditional financial institution and seek a business loan. This can be a viable option for many companies. However, many lenders have strict guidelines for qualifying. If a lender has turned you down in the past, never fear. There are many alternative financing options you can turn to. Other methods of financing have a higher approval percentage than traditional loans.
You Need the Cash Fast
Another potential drawback to seeking financial help through a traditional loan is that the process can drag on. In some cases, you may have to wait weeks simply to hear whether the lender has approved your application. Then, there’s more waiting for funding. However, financing through alternative means such as crowdsourcing, factoring or online lending is usually a much faster process. There’s less paperwork to worry about, and you can hear back in the same day whether you’re approved. And perhaps the best news: You can get the cash within another day. You can then turn around and use the cash to urgent purchases.
Your Credit Is Less Than Ideal
Traditional lenders want to see good credit scores from prospective borrowers. If you’ve struggled in this department for whatever reason, all hope is not lost. Though you will likely pay a higher interest rate, alternative financing usually will work out for you even if you have less-than-stellar credit. Don’t discount your chances just because you’ve had some past challenges in the credit department.
When you need funding quickly for your small business, ask yourself whether alternative financing makes sense. If other lenders have said no to you before, try other means to obtain the cash you’re looking for to bolster your business.