.png)
The Small Business Administration (SBA) provides a range of loan options designed to facilitate the growth and development of businesses across the United States. However, not all businesses meet the criteria for SBA loans. The good news? Numerous alternative financing options can help you secure the capital you need to expand, meet operating expenses, or handle unexpected costs.
Here are the top alternative financing options for your business.
1. Business Credit Cards
Ease of Qualification: Easy
Speed of Funding: Quick
Standard Rate: APR varies from 12% - 29%
Business credit cards are a convenient option, especially for new businesses. They're most suitable for covering recurrent, smaller expenses. The downside is that the interest rates can be quite high, so they aren't ideal for long-term financing.
2. Merchant Cash Advances
Ease of Qualification: Moderate
Speed of Funding: Quick
Standard Rate: Factor rate 1.2 - 1.5
Merchant Cash Advances are straightforward. You receive a lump sum in exchange for a fixed percentage of your daily credit card sales. However, the fees and interest rates can be extremely high.
3. Invoice Factoring
Ease of Qualification: Moderate
Speed of Funding: Moderate
Standard Rate: 1% - 5% per month
Invoice factoring involves selling your unpaid invoices to a factoring company. You get a percentage upfront and the remainder when the client pays, minus the factoring company's fee.
4. Peer-to-Peer Lending
Ease of Qualification: Moderate
Speed of Funding: Moderate
Standard Rate: 6% - 36% APR
P2P lending platforms connect businesses directly with individual or institutional investors. You generally get more favorable terms than a traditional loan but may still need a decent credit score.
5. Online Lenders
Ease of Qualification: Easy
Speed of Funding: Quick
Standard Rate: 7% - 99% APR
Online lenders offer a variety of loan products, often with more lenient qualification criteria than traditional banks. However, you might face higher interest rates.
6. Equipment Financing
Ease of Qualification: Moderate
Speed of Funding: Moderate
Standard Rate: 8% - 30% APR
Equipment financing is specific to purchasing equipment and uses that equipment as collateral. This is usually a lower-risk loan for the lender, meaning better terms for you.
7. Microloans
Ease of Qualification: Moderate
Speed of Funding: Moderate
Standard Rate: 10% - 18% APR
Microloans are small, short-term loans often provided by non-profit organizations. They're excellent for very small or new businesses but come with limitations on how you can use the funds.
8. Crowdfunding
Ease of Qualification: Varies
Speed of Funding: Slow
Standard Rate: Varies
Crowdfunding platforms like Kickstarter or Indiegogo allow you to raise money from the public. This is great for product launches or creative projects but generally not suitable for ongoing operational costs.
9. Venture Capital
Ease of Qualification: Hard
Speed of Funding: Slow
Standard Rate: Equity
Venture capital is equity financing, meaning you give up a share of your business for investment. This is only suitable for high-growth businesses and usually involves giving up some control.
Experienced Executive Lead with a demonstrated history of working in the marketing and advertising industry. Strong business development professional skilled in Customer Service, Advertising, Business Development, Marketing Strategy, and Sales Management.