There is no reason to assume that if a bank rejects your loan or credit application then there is no way for your small business to raise cash or find funding. In fact, there are a growing number of ways in which SMBs can secure crucial lines of credit and loans that provide vital flexibility.
Here are a few of the most popular and prevalent alternative finance options currently available:
1. Invoice factoring and discounting
If you’ve never heard of invoice factoring or discounting and you’re a small business boss then it is time to do a little research and find out how the option might work for you. What is invoice factoring? What these two similar solutions are designed to offer is a chance for companies to effectively sell and leverage their invoices in a way that provides upfront cash injections when they are needed the most. Terms vary but there are a growing number of ways in which invoice finance can be accessed and used to keep cash flow problems from sinking your business.
2. Asset refinancing
Cash flow pressures can emerge as a real issue for small businesses in any sector and regardless of the overall viability of a particular enterprise. One way of offsetting these concerns and freeing up funds is to pursue a process broadly termed asset refinancing. This involves selling ownership of assets that belong to your business while arrangements are made to ensure they can still be fully utilised as normal. This option works well for companies that face cash flow problems despite having a number of high value assets.
3. Fast business loans
No loan should be taken out by a company director or founder without a clear understanding of all the terms and conditions that a particular deal entails. However, there are instances in which speed is very much of the essence and when what are called ‘fast business loans’ can mean the difference between survival and failure for a small company. There are a growing number of reputable and reliable providers of fast business loans that are well placed to provide much quicker access to finance than more traditional lenders.
4. Merchant cash advances
Among the small business sectors to have struggled most in securing access to finance beyond the banks in recent years has been those involving retailers, shop owners and restaurants. Merchant cash advances are designed specifically with the needs of these businesses in mind and they can be taken on as loans to be repaid in line with revenues rather than with pre-agreed interest rates.
Banks might remain the first port of call for companies facing financing problems or those that need loans to fund their expansion efforts, but the reality is that banks have become much more reluctant to lend to SMBs than they once were. In light of which it’s important for SMB CEOs to realise that other options are out there and they can provide real relief and open up huge potential.
Photo credit: Craig Plersma / Flickr