The Different Options for Alternative Financing
If you’re the owner of small business and you’re looking to improve your cash flow without using conventional financing, there are a few alternative financing options you should know about. There are several reasons your business could use a short-term loan, whether you’re looking to have positive working capital, be able to scale your business, grow your advertising efforts or simply pay your employees on time. Regardless of your reasons, there are several options you can consider. Take a look.
Invoice Funding
As any business owner knows, sending an invoice to a customer doesn’t mean immediate money in your bank account – in fact, it could take 30 or even up to 90 days to receive payment after sending them the invoice. In the meantime, though, you still need to be able to cover your regular expenses and fulfill orders. This is where invoice funding comes in. In this financing option, you can sell your outstanding invoices to a factoring company, who will then give you an advance of 70% to 90% of the amount invoice. It may involve a fee, but the turnaround time is quick and if your customer doesn’t pay their invoice, you aren’t on the hook for the amount.
Marketplace Funding
One type of financing typically offered by non-bank private lenders, mid-prime lenders and business funders in the finance and technology sectors is marketplace funding. This option is somewhat in-between bank loans and merchant cash advances and is generally well regulated. If you’re looking for a longer-term loan, marketplace funding tends to offer two-year terms, making this a good choice for businesses looking to spread payments out.
ACH Merchant Funding
Another option that’s become more popular in recent times is merchant funding. Merchant cash advances can come through in as quickly as a few days, making them highly convenient when you need immediate cash flow. One type to consider is an Automated Clearing House, or ACH, advance, which is an advance repaid from your account to the funder via Automated Clearing House payments.
For your business to thrive, you need enough cash flow to support operations like payroll, marketing, and even expansion and growth. However, it’s not always possible to have enough positive working capital to cover all your expenses outright. If this sounds like you, alternative financing could help your business cover your needs and achieve your goals. Consider trying one of these options to support your business operations today.
