Where to Turn If Your Traditional Financing Options Aren’t Fitting the Bill


If you’re just a few years into your small business financing journey, chances are you’ve investigated many types of business loans in your day. Perhaps you’ve scoured all the traditional financing options out there — like bank term loans or credit lines — and are starting to feel like these don’t quite fit the bill. Maybe you applied for a loan and were denied, or the terms offered didn’t match your current needs. What’s the next step?

If you’ve heard about financing outside of the mainstream, but never actually considered it for yourself, now could be the time to see what else is out there. We’re here to demystify some of these lesser-known small business financing options.

1. I’m Not Looking for a Long-Term Commitment

Not every business decision needs to have your long-term goals in mind. Thinking short-term might be the best small business lending option for you depending on your needs. A working capital loan could cover those day-to-day expenses like payroll, inventory or even marketing fees. With terms typically ranging from four months to two years, these types of loans could provide you with some relief without having to factor in repayment over the next few years of your business cycle.

2. Financing My Shiny New Equipment

If you thought banks were the only option here, think again. Manufacturers and distributors provide equipment financing, too. These are typically industry-focused and can adjust to specific market pressures better than banks. Third-party equipment financing and lease providers often cover several industries. They broaden their understanding of different market dynamics and know how to reduce risks by using industry specialists. If your credit profile is iffy or if you haven’t been in business long and you want your lender to think of you as someone other than “Michael 645 FICO,” you might try one of these.

3. Bartering This for That

Is your cash tight? If you’re a service provider, consider swapping or bartering. Yes, this is legitimate! Fortune 500 corporations use swaps, and the GAAP (generally accepted accounting principles) recognize them. But bartering only makes sense if you can exchange a service you have for one you need. For example, you can swap your interior painting services for the same dollar value in marketing or bookkeeping services. When you paint the office, you record that part of the barter as revenue. Then, when the other firm revamps your website and marketing materials, you treat it as an expense.

Credit card receivables can help provide an alternate type of business loan.

4. Can I Use Someone Else’s Credit?

Yes, you can — but probably not in the way you thought. If many of your customers use credit cards to pay for your products or services, you generate credit card receivables, and you can use those receivables to obtain a loan. Providers often structure such loans as a merchant cash advance. This means the lender takes a portion of each future credit card transaction over a certain period in order to repay the loan. Lenders typically base these advances on your credit processing amount and history, as well as your business bank account levels.

To get money for your business, you should first be aware of the range of small business lending options, and when each applies. These examples should help you feel more confident in making a well-informed decision about the types of business loans that are best for you and your company now.

Tags: , , , , , , ,