subject: Small Business Funding -- How To Find Alternative Sources [print this page] It is a major decision when a business owner decides to look for access to capital. You might have come to the point where you have used up all your personal finances and realize that you finally must go to an outside source. On the other hand, you just might be looking to improve your business without using too much of your own money. Not a bad idea, at all. Well, in making this important decision, business owners, such as yourself, must understand the potential ramifications. So when seeking any outside source of financing, you must do your research.
Whether it's a bank or private lender, there are significant things you must be aware of, such as, their terms and conditions, fee rates, closing time frames, and more. You must understand these areas before you make that big leap. Financing your business can occur through various methods and sources. Using a bank is important but know that they look at your past performance verses your future potential, while alternative financing sources look at both.
Alternative funders want to know what you plan to do to grow your small business. They want to see that you are going for more clients, contract opportunities, and any legal avenues for generating income. Based on their method of financing, if applicable to your business, they will do their utmost to work with you. Here are five (5) alternative funding options when seeking access to capital:
Factoring Sources - They will buy your receivables at a discount, which means you are not creating debt.
Asset-Based Lenders - Once they assess your current assets, and place a value on them, they will lend you an applicable amount.
Purchase Order Funders - These sources will pay your supplier for you so you can fill large volume orders from your clients.
Micro Loan Lenders - These private lenders will lend you smaller amounts, anywhere from $500 up to $100,000, based on your business type, income and expenditures, and any other applicable factor.
Private Commercial Lenders - These lenders will assess both you and your property to determine the maximum they would be willing to lend you. Most often, they tend to make their decisions more based on the collateral you have presented.
The sources above can be of value to you in times when banks are saying "No" more than they are saying, "Yes". Be sure to check them out as you just might find them to be a source to help you expand your small business.
by: Karlene Sinclair-Robinson
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