3 Alternative Financing Options for Small Businesses in 2019

A faster, no-hassle loan whenever needed is the dream of small businesses worldwide. Unfortunately, post the 2008 recession, small ventures and local businesses have had to bear the brunt of newer and stricter norms for loan disbursal by big banks. All hope is not lost however, as alternative financing options have grown to fill the vacuum and all that is needed are business funding strategies.

Fintech or alternative loans look at a broader range of collaterals than banks, and are dedicated to serve the needs of those who have weaker credit scores or urgent requirements. The collaterals may include real estate, invoices, and expected income. The approval process is quick (they are dedicated to serve small business needs), and a loan can be obtained even in 24-48 hrs. The interest rates however are on the higher side, and thus requires precaution.

Online finance is a very popular option to emerge of late. A few click on the website can bring about quick processing and loan approval. Peer-to-peer lending too is popular, and the industry has grown into billions of dollars. Online finance can be based on expected revenue, especially for service industries. The interest rates here are attractive, and the process is easier.

Another alternative financing option is that of merchant cash advance. The cash advance is made in consideration of expected sales, and the latter is what is actually being sold at a lesser price. The advance is for smaller durations, usually around three months, and repayments may be made every day. The interest rates of merchant cash advancers are typically very high and can go above 20 percent.

Crowdfunding is an innovative and extremely popular way to raise money for new ideas, concepts, prototypes and creative products. The public donates small amounts towards a set goal of the campaign in a fixed duration. The donors are given discounts on first sales, merchandise and other goodies. However, some platforms require that the campaign goal be met, or the money is returned to donors.

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