Alternatives To Traditional Bank
Alternatives To Traditional Bank

With the proliferation of financial technology in the last few years, small business owners have plenty of other options to turn to other than the traditional bank loan route. This is good news for any small business owner who wants to expand, advertise, or hire new staff but is struggling to come up with the cash to do it with. Here are some of the ways that entrepreneurs and small business owners are choosing to raise funds in 2024
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MCA

When your business accepts credit cards as a method of payment, it enables you to receive up to $250,000 cash advance in the form of a merchant cash advance. The deposit is often made in as little as 24-hours into your business account. Also known as credit card receivable funding, the loan is based on the predicted number of future sales that will come in.

To qualify for this type of cash advance, a business should collect a minimum average of $7,500 in revenue over the last quarter. A merchant cash advance equivalent to approximately 70 to 100 per cent of monthly sales is available to anyone who qualifies for it. This is a comfortable loan amount that is easily repaid and provides enough working capital for growth.

Crowd Funding Platforms

There are three categories of crowdfunding platforms from which the small business owners can choose:
  • Reward-Based Platforms are the most popular type of funding amongst seasoned crowd funders. All you need to do to qualify is set up a campaign and collect your donations. In exchange, you have to provide some incentive to the contributors such as advertising space on your vehicle or website. The key is to be as transparent and legitimate as possible on your chosen platform.
  • Loan-Based Platforms are ones where you reach out to peers, other businesses, and cash-rich individuals to see if they will lend you money instead of traditional bank loans. Your business plan or extension plan will have to be presented in a way that makes your request for a loan sound plausible. Loan-based platforms can be set up on specifically designed crowdfunding websites developed for this purpose.
  • Offering Equity in your business in return for a loan is not strictly crowdfunding. In this instance, the investors are accredited-individuals and not an average person. This option is viable, though, if your business is more of a startup than a standard small business.

Target As Many Lenders As Possible

A scattergun approach is often the best way of getting a loan. Make sure your papers and documentation are impeccably presented and make appointments with as many lenders as possible. If you have an excellent personal credit score, and accounting to prove your business is a viable proposition, the chances are when a lender finds that you are shopping around, they offer you a loan. They may even choose to lower their rates and offer you better terms if you can get a more favourable offer.

Lenders want your business, so don’t be afraid to look at all your options.