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How to Get Cash for Your Business When the Banks Say ‘NO’ (Nontraditional Business Funding)

Getting funds for your growing business is never easy. With banks becoming notoriously conservative and offering tight lines of credit, non-traditional routes to get cash have become more of a norm and their use only continues to rise.

With the passage of time, people are coming up with more innovative ways to fill the void that traditional routes of funding have created. The following are five nontraditional means that you can employ to get funds for your business:

1. Peer to Peer Lending

It’s a practice where internet sites such as ‘Lending Club’ and ‘Prosper’ pair loan seeking individuals or businesses to lenders. There is no involvement of a bank or any other lending institution, instead a third-party intermediary is responsible to take care of this matchmaking business. Let’s have a look at how this setup works:

1. Visit a peer to peer lending site and specify what amount of loan you require and its purpose.
2. The third-party intermediary checks your credit score and provides the necessary information and financial reports to the potential money lenders.
3. Multiple lenders start bidding on your loan for whatever amount they are willing to invest.
4. The loan is finalized by the intermediary.

It’s a viable alternative for people seeking loans. They get the capital they need, and lenders earn higher than average interest on their investment.

2. Crowdfunding

After the government loosened its restrictions on crowdfunding, it became one of the biggest source to collect funds for your business in a nontraditional way. Crowdfunding is a process of collecting funds from common people with donations, loan or investment through the internet. You have a chance to reach a larger audience and ask for funds rather than depending on one lender. In return you must provide these investors some incentive or sometimes a stake in your company. Crowdfunding sites like ‘Kickstarter’ and ‘Fundable’ help you in setting up these campaigns.

3. Microfinance

If you are starting out small and do not need a big investment, then considering these non-profit organizations for your monetary needs may be your best option. Microloans are often available in the range of $5000-$50000.

Before you apply for microfinance, make sure you have enough activity in your business bank account. These micro financiers base their lending decision on income vs expenses, so make sure your accounts are balanced out nicely.

4. Business Invoice Factoring

If you are a B2B or a Business-to-Government business, and have strong credit-worthy customers, then you should look into invoice factoring as a way to collect funds.
Factoring companies provide you with a loan against unpaid invoices that would otherwise require you to wait 30, 60 or even 90 days for payments, for a fee.

Invoice factoring can be expensive but if you really need some fast cash, then this could be your go-to option.

5. Incubators Program

Finding an incubator program is in the wish list of every entrepreneur who is starting up a new business. The benefits provided by each incubator may vary, for example, some provide work space, some provide opportunities to meet investors and mentors, and some provide services like help in marketing, reduced rent etc. You may also find some incubator programs where they directly provide capital to fund businesses.

While being part of an Incubator, you can build your business on a solid foundation. The value that you get from built-in peer community and mentors is priceless and will ultimately help you in achieving business goals.

Other Alternatives

If you are not comfortable in any of the above mentioned nontraditional sources, then please contact us. We offer cash flow based, non traditional business funding for nearly any business type. Learn more here

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