There are some very good reasons to opt for alternative funding: you were turned down by traditional lenders, investors or commercial lines of credit. Perhaps, you have a bad business credit rating. You really need money in a pinch, alternative financing generally takes lesser time for the approval process and usually the approval rates are much higher. Maybe, you are just fed up with paying high interest rates on credit card debt that is completely out of your control. Whatever your situation, you will find there are viable, well-proven and effective alternatives to using credit cards and other high-interest loans to get what you need – and deserve.
Many commercial lenders do not realize that they are biased towards lending money to people who can pay it back quickly and easily, and, thus, provide a large cash flow for them. These same commercial lenders are also quite partial to lending to established business owners who have been in business for some time. A new business owner does not typically fit into this category. As such, the financing options that an established business owner may receive are much more limited than those provided to the startup or new business owner Alternative funding.
Fortunately, with today’s improved technology and lenders, these days’ lending practices are being changed for the better. Lenders, such as Commercial Real Estate Funding (CRIF), have realized that they must focus more on risk mitigation when it comes to providing money to businesses. In order to reduce the risk to the lender, more lenders are offering alternative short term business loans to qualified borrowers. In addition, more lenders are now offering shorter term financing options. For instance, although banks still make majority short term business loan options of thirty-day duration, more lenders are now providing options that are up to ninety days in duration.
Start-ups and small businesses often do not have access to large amounts of venture capital. Small start-ups do not generally have the kind of deep pockets that would allow them to obtain bank loans from traditional financial institutions. Therefore, most new businesses are unable to acquire the type of credit they need in order to tap into venture capital. Many new companies are forced to adopt an “innovation strategy” in which they rely heavily upon private equity investors, or private funding sources. Private equity investors provide start-ups with the seed money they need, but again, these funds are usually very limited in size.
Start-ups that lack the venture capital that they need often turn to invoice factoring as a way of obtaining the kind of funding they need. As the name suggests, invoice factoring is a process in which entrepreneurs issue invoices to pay their vendors. The purpose of this process is to provide immediate financing to businesses that need it in order to complete certain projects. As the invoices begin to roll in, new business owners will be able to receive the funding they need to continue their business ventures.
Many new businesses will often encounter one or more financial difficulties. Some problems may arise when a company has just opened its doors for business. It may not have the cash on hand that it needs to keep its doors open. Other financial problems may occur once a company has acquired some new employees. These employees may not be paid on time, or their pay may not meet their expectations. In these cases, businesses will often turn to long-term loans or short term loans to help them through their cash flow problems.
Small businesses may need money for various reasons, and they may need it fast. If a business receives a loan from a lender that does not have good terms or if it receives a loan that is only for a specific time period, it may not be able to repay the debt as soon as it is owed. Business borrowers should look carefully at any loan that they are offered and should always consider whether the payment durations or the interest rates will be sufficient to keep their businesses viable in the long run.
Every borrower should carefully consider any loan request that they receive. Even if a bank is unable to provide the type of loan that is needed by a business, a reputable bank may be an alternative. Many banks offer a wide range of financing options for small businesses, and some even specialize in providing these types of loans. For a small business, using a bank as an Alternative Funding source can often be a viable option. When the bank offers a loan that is compatible with the business’ financial needs, the bank is usually very reliable and will be willing to work with the business.