Alternative Financing: A Detailed Breakdown
In both personal matters and business needs, it’s ingrained in people’s minds that when they need a loan, they head to their local financial institution to discuss their options. While this might be the right move for you in your small business, don’t think there aren’t other methods for obtaining the funding you need to jump-start your business and get the money you need. Alternative financing is growing increasingly more popular and viable. Under the right circumstances, these might make more sense for your organization. It’s important to explore some of these financing choices and decide whether they’re right for you.
It’s hard to imagine any business succeeding unless it has the right tools and equipment in place. Your customers rely on high-quality, useful products, goods and services. It’s difficult to provide these if you have substandard, unreliable equipment to produce such materials. The challenging part for you as a business leader is finding the cash to pay for all the supplies and equipment you need to efficiently run your business. Decent equipment is expensive, but you don’t have to buy it; you can lease it. When you lease equipment, you don’t have to pay the full upfront cost. You also don’t have to worry about spending a lot of money only to see the equipment sit on a shelf or in a corner somewhere and not get used. Leasing equipment makes sense for special projects too.
This form of alternative financing, also known as accounts receivable financing, allows you to sell your outstanding accounts to a third party, known as a factor. The factor pays you a lump sum for the accounts and then takes responsibility for collecting on them. The benefits are that you can quickly get a big influx of cash without going through the long hassle of an approval process. You can then use the money for other important facets of your business. Plus, you don’t need to worry about spending time, money and effort collecting on delinquent accounts.
Don’t scoff at this notion; many small businesses find this to a legitimate, helpful way to get the money they need. Online lenders, unlike traditional banks, don’t have stringent requirements for lending. You can also borrow a wide range of cash and use it for just about anything you need in your business.
Alternative financing options are available for you and your business to help it flourish. Consider these three methods of funding for your organization.