What Kind of Alternative Financing is Right for Your Company?
When traditional financing is not a practical option for your company, alternative methods may be required. This is usually the case with small businesses, but any size business could benefit from alternative financing options as well. Since there are so many different types, it can be difficult to know which is best for your company. Luckily there are many options, and one is sure to work for you.
When Your business is just taking off, you won’t have any business credit built up. This can make it difficult to get approved for a business loan through a bank or with an online lender. Instead, you can apply for a personal loan that can be used for your business. This way, you’re using your own credit to apply for the loan under your name. The down side to this is that if you’re not able to pay the loan back, your personal credit is impacted rather than the business.
Crowdfunding is one of the most popular forms of alternative financing these days. With the internet and social media, it’s easy to get your product out there for people to preorder. Then once you have the funds to actually make the product or start the business, you can deliver those preorders and have a head start at continuing with your business. This is a great option for businesses creating new and creative products that can be easily shipped.
A microloan is a small loan, typically with a low interest-rate. They’re usually reserved for minority or disadvantaged small businesses, but it’s worth looking into either way. You won’t find microloans offered at most banks. In fact, most are offered by non-profit groups looking to help out small businesses who otherwise wouldn’t have a chance for success because of their circumstances.
Lines of Credit
A line of credit is similar to a credit card, but it’s to be used for rarer circumstances. This is typically used when a business doesn’t necessarily need a set dollar amount for a loan, but just needs a little safety net in case of a bad month or an equipment failure. They’re great if you don’t need money immediately but want to have some money ready for emergencies.
There are many forms of alternative financing, so these are just a few to get you thinking outside the box. You can speak with your lender to see what other options you may have. You’ll be surprised how easy it is to get financing, even without a traditional business loan.