Alternative Financing Options You Should Consider
Running a small business often comes with many challenges. One of the most common ones is funding, which you have likely needed at some point in your career. Traditional lenders like banks and credit unions aren’t always viable sources to go to when you need help. The good news is that there are alternative financing options that you can use to keep your business afloat.
One of the most stressful aspects of running a business is having to wait for your products to sell before you can afford to spend more. An invoice loan can help you get over this hurdle by allowing you to put some of your unpaid invoices up for sale. For a fee, a factoring company can give you funding based on your invoices. This is a great option if you’re confident in your products but you think it will take time to earn sufficient revenue.
Merchant Cash Advance Splits
A merchant cash advance (MCA) split is a short-term option that allows you to take cash and use it to cover expenses. It’s an advance on your next credit card payment. You pay back an MCA split by giving the lender a small portion of your earnings from credit card sales.
Equipment leasing can be advantageous if you need tools but don’t want to commit to paying for the full cost in one purchase. This financing option allows you to lease equipment for an agreed-upon period. In recent years, more individuals and small businesses have been turning to this option as an alternative to purchasing new equipment. At the end of the term, you may have the option to renew the lease or buy the equipment outright. Otherwise, you can move on to something else.
It may seem like alternative financing is helpful if you need short-term help, but you have to use more conventional means for long-term plans. Thanks to marketplace funding, you still have other options on the table. Private lenders, mid-prime lenders, and fintech executives can offer you plans that have reasonable interest rates and stretched-out terms.
As you can see, there are many paths you can take that won’t require you to go to a large institution. Financing options are continuing to diversify, which allows you to make decisions that can serve your unique needs.