Alternatives to Bank Loans for Small Business Owners

Many small local businesses have trouble obtaining loans from the bank. Are you finding yourself in this situation?

small business alternatives to bank loans

Perhaps the bank won’t finance your new equipment purchases or they’re killing your dream to expand your dining room. Perhaps they will consider loaning you money, but your bank loan officer tells you that you need to submit a business plan and then you’ll need to wait for months before you receive a loan approval.

That’s just not an efficient way for you to do business! If you need working capital to take advantage of high ROI opportunities for your company right now you should consider alternatives to the traditional bank loan.

5 Types of Small Business Alternative Lending:

1. Working Capital Loan: You can apply for a working capital loan through an alternative lender like ARF Financial and receive an approval in 48 hours with loan fundings within 7 to 10 business days. ARF Financial has relationships with FDIC-insured community banks around the country who are ready to provide you with the funds necessary to take advantage of your high ROI opportunities. ARF Financial puts up the collateral on your behalf so that you can receive an unsecured loan quickly. Learn more today.

2. Angel Investors: If you are looking to fund a startup, you may not qualify for many lending options. In this case it would be a good idea to reach out to angel investors. These are typically people who have successfully grown their own companies and want to help other early stage companies get off the ground. An investment from an angel investor will usually come in the form of a $25,000 – $50,000 check in exchange for 20-25% ownership of your company. You do not need to pay back the investment, but the angel investor will always own a part of your company.

3. Crowdfunding: Many people are now familiar with the website Kickstarter and some of the more unique business success stories emerging from that crowdfunding platform. Indiegogo is yet another crowdfunding site that has emerged. But before you choose a crowdfunding platform, remember to read the fine print for fees or percentages of money raised that the site will take. Some sites will allow you to keep any funds you raise while others require you to meet your fundraising goal before any funds are released to you. Also keep in mind that if you don’t have a unique value proposition or some name recognition already, you may not reach your fundraising goals.

4. Grants: Government grants are a possible source of funding if your business is in a research or scientific field.  However, you must meet federal development and research goals, in addition to having a high probability for commercialization.

5. Invoice advances: How this lending process works is that a service provider gives you money for the invoices you have already sent to clients. You then pay back the provider once clients have paid those invoices. This tactic may save some businesses from having to take out larger loans but the APRs on these advances can be more than they are worth. In some cases you may end up paying 50-200% APRs which will hurt your cash flow in the long run.

If you would like more information on small business alternative lending, contact the finance experts at ARF Financial today. We’re here to help!