Nearly every business needs outside financing at some point. Below we explore six popular alternative financing options.
Business Line of Credit
With a business line of credit, you receive a credit limit upon approval that you can access as needs arise. Unlike a bank loan that you must reapply for after paying one balance in full, you can use a line of credit over and over as long as you don’t exceed your credit limit. This ensures you have prompt access to cash when you need it.
This alternative financing option can make a lot of sense if your company regularly updates equipment such as computers, vehicles, or construction equipment. You benefit by receiving immediate access to the equipment without the worry of it depreciating or becoming obsolete after you invested thousands or even hundreds of thousands of dollars into it.
Invoice factoring is a popular type of alternative financing because it doesn’t require you to have good credit or even any credit at all. This is due to the factoring company reviewing your customer’s credit history and not that of your company. You sell unpaid invoices from your best customers in exchange for the invoice value less factoring fees and money held in reserve until your customer pays.
Merchant Cash Advance
If you make frequent daily sales via cash register, a merchant cash advance provides an upfront lump sum that you pay back with a percentage of daily cash register receipts. As with the other business loan types, you also pay interest.
Small Business Administration (SBA) Loan
Since the SBA guarantees repayment of loans, it greatly reduces risk to the lender. SBA loans often have lower interest rates and longer repayment terms as well.
Unsecured Business Loan
As the name suggests, you don’t need to place any form of collateral to receive this loan. However, interest rates tend to be higher than secured loans and you will probably face greater scrutiny during the application process.
Is one of these forms of alternative financing right for you? Contact Pendleton Commercial Financing today to learn more.