Other Sources of Business Funding
Small businesses tend to operate right on the edge, which means that most of them will need some financing assistance sooner or later. Unfortunately, getting a bank loan is not possible for a lot of growing businesses. More than half of all business loan applicants are denied, and most of those approved are well-established. Fortunately, there are number of other financing options that your business can turn to when the banks turn you down.
Small Business Administration Loan
A Small Business Administration loan is partially guaranteed by the government, so it is easier to get approved for this type of funding than for a bank loan. As an added bonus, they offer interest rates that can be much lower. You can also get them for smaller sums, making the repayments more bearable. The application process can be lengthy, though, so these are not good for quick fixes.
Alternative Lender
There are also a wide variety of financial institutions that are not banks but are able to finance your business. Their requirements are often less strict than the banks’ are, and they tend to approve more business funding requests than banks do. They also tend to go through the approval process much faster than banks do, meaning that you could get your money much more quickly.
Angel Investor
An angel investor, a person or business willing to invest in your business themselves, can be a valuable source of funding if you have a brilliant business idea, or when other options have run out. These investors can be very hard to find. And even if you find one, these investors only put money into a few of the opportunities at a time.
Fortunately, it is getting easier to find angel investors. Online peer-to-peer lending has become a valuable resource for entrepreneurs from all over the world. There are several websites set up to facilitate peer-to-peer loans.
If you want an angel investor to take your pitch seriously, you need to create a good business plan, know exactly what financing terms you are looking for, and know what terms you are offering in return.
Crowdfunding
Crowdfunding provides another way around dealing with traditional financial institutions. Instead of looking for a single angel investor, crowdfunding gives you the opportunity to get financing from a group of individuals, each contributing a small amount. There are several crowdfunding sites online.
Crowdfunding is not a loan. Instead, these microinvestors are buying into your business idea. You will offer them something, such as a product or free service, in exchange for the investment. You do not have to bother with applications, repayment terms, collateral, or other such problems. You only need to concern yourself with making a good pitch.
The Bottom Line
If your growing business is in need of financing, then remember the nontraditional financing options you have at your disposal. You might find a way to get the money you need much more easily, and on much better terms, than you could through a bank.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.
Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 800.405.6035 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
