It seems there is a news story nearly every day about the revealed misdeeds of corporate banks. Wall Street’s corruption has seemingly trickled down and effected the lives of many individual consumers. Businesses have suffered, too, and many have been left repaying unfair loans with hugely inflated interest rates. This makes it all the more puzzling why many business owners and entrepreneurs still think of bank loans as the only way to secure funding. It is true that banks advertise and promote their loans, so they are often the most visible, but that certainly does not mean that they are the best option. Many businesses are now turning to alternative financing to get the capital they need.
SBA loans are one of the most popular options for small businesses that cannot or choose not to pursue a loan through a bank. These loans are backed by the Small Business Administration and are also known as the Certified Development Company Program. These loans are federally regulated and allow businesses to acquire funds for buying fixed assets, machinery or property at rates below the market standard. Unlike the majority of loans from banks, newly established companies are candidates for funding, and businesses can use funds for a variety of purposes. While they are more accessible than bank loans, they are still difficult to be approved for in many cases.
Another popular option for alternative financing is a merchant cash advance. Businesses can utilize this option to receive working capital, and in exchange, they sell profits made from future credit card transactions. Unlike financing through a bank or SBA, this is not a loan. It is a transaction made through an investor in which future capital is sold for a lump-sum payment. Companies can use this to pursue expansion, cover daily costs of operation or finance new projects. Since payment is made in one lump-sum, there is a lot of flexibility in potential uses.
There are plenty of alternative financing options available for businesses looking to circumvent banks, and there is generally a greater degree of freedom in these options, too. How you use the funds is generally at your discretion, and this flexibility can certainly help you achieve your goals. Creating a plan for the funds can help you stay dedicated, though. Whether you choose to apply for a traditional loan, an SBA loan or utilize another form of financing, you should conduct rigorous research to determine which option will work best for you.