You’ll find a lot of articles with the top seven, but most ignore alternative financing options like number 8.
Commercial bank loans. – Key to remember: Because one bank says no, doesn’t mean others won’t say yes. If you are looking into this option, be prepared to apply at multiple banks.
SBA loans. – With a 7(a) loan: private-sector lenders grant loans, and the SBA guaranties up to 85 percent of the principal.
Investors. – Most small businesses prefer that investors provide equity in place of debt. Many find that finding numerous smaller investors is easier than one or two big ones.
Seller-based financing. – This is a good alternative when other options are limited. Also, the willingness of a seller to finance a buyer demonstrates a certain amount of faith that the product/business will succeed.
Partnerships. – As I heard one person put it: “Partners can provide a good source of funds, but sometimes too many cooks spoil the broth.” There are lots of pluses and minuses to partnerships. I explored many of them in a previous posting.
Venture Capital. – According to financial consultant and accountant Brad Saltz, venture-capital firms usually want a “much greater partnership and to have far more say…” in determining your company’s direction. They expect to see a large return within three to seven years.
Combination financing. – Also known as combi-deals. One example, is that it is much easier to get a bank loan, once you have found investors. This is because, investors provide the equity the banks need to see in order to be able to give you a loan.
Credit Card Factoring. – This alternative financing method can provide up to $250,000. Unfortunately, it is only available to existing businesses who’ve been accepting credit cards for 4 months. The plus is that it is unsecured, quick and doesn’t require that you have good credit. It is also known as business cash advance.
Happy Financing!