Our goal at Lending Valley is to provide all small business owners access to the best loans possible for their business. You can rest assured we will get you the best rates in the market!
Alternative lending is a broad, umbrella term referring to any type of loan available to business owners that is not a traditional bank loan. Many times, business owners explore alternative funding options when they cannot secure a bank loan, but this is not necessarily the case. For business lending needs, it is best to stay updated with Unsecured business loans options.
You may need more money than the bank approves, you may already have a bank loan which prevents you from taking out another one concurrently, or you might want to work with investors. Whatever your reason for seeking alternative funding, below are the five best alternative lending options for most businesses.
Even if you are working as a DBA, it is a good idea to keep your business and personal accounts separate for tax and bookkeeping purposes, if nothing else.
But every small business owner is personally invested in his or her company, and responsible for debts incurred by their business if it goes under (unless it is structured as an LLC), so this is not always possible. Either way, loan officers and potential investors want to be sure you can pay back any money borrowed, so your personal finances should be in good standing. This is particularly applicable to new businesses since they have no credit history.
You should also have a written Business Plan — hopefully, one which includes profit projections over the course of the loan you are trying to get. While it may be possible to secure funding without one, it’s extremely unlikely.
Community Development Lending funds are usually disbursed by the US Treasury to non-profit organizations.
These NGOs then offer microloans – very small loans with (usually) low-interest rates – to local area businesses in order to promote growth and development throughout the region. Although usually associated with rural communities, they have become increasingly common in depressed urban areas, as well. Their overall purpose is to attract companies that will provide jobs to local residents and develop the area.
Many of the loans they issue are targeted at specific types of businesses, such as energy companies, libraries, recreation centers, and the like.
The SBA also provides microloans to almost any type of local business, as well as mentors, lists of NGOs offering Community Development Lending Funds, and much more.
Lending investors are matchmakers for investors and small businesses. Lending investors are similar to realtors in that they already have a network of contacts in the investment community with whom they have established a working relationship.
They know who likes to invest in what and which investor(s) is right for your needs. Investors are too often viewed, and treated, as “silent partners” – distant money men whose only purpose is to throw cash your way when you need it. They actually have a lot to offer from a business standpoint, though.
After all, if someone chooses to invest in your business, they believe in it and believe it can be profitable. You don’t have to promote an investor to the CEO of your company, but you should not pass up the opportunity to tap them for business and financial advice.
Always keep in mind that it is their money you are spending and let that temper your decision-making processes (without letting it weigh you down). You both have the same goals: To see your business succeed and provide a healthy return on investment, or ROI.
Credit cards are basically non-traditional bank loans in and of themselves and many companies offer dedicated business accounts with terms specific to their needs. The rewards programs, discounts, and incentives are aimed at satisfying business demands, and generally different from those associated with personal credit cards.
Credit cards are particularly useful for large purchases. Although you will be paying interest on those purchases for some time to come, you are building your company’s credit. If the large purchase is an upgrade, the extra income you expect it to bring should cover the interest fees. Don’t get unsecured business loans to stress in over your head, though!
Smaller purchases on business credit cards or through business accounts also help build a credit history, even if they do not necessarily improve your creditworthiness.
Many purchases you make can be considered business-related and qualify as tax write-offs, including magazine subscriptions (related to your work), coffee, Internet costs, and even a portion of your household and living expenditures if you work from home or store inventory there.
Speaking of which, tax incentives and write-offs are a great opportunity to save money and are often included in community loans and funding (above). While these are not loans, they are an alternative funding method few business owners think to take advantage of. While there are not a lot of those infamous “tax loopholes” for most small business owners’ income bracket, do not overlook everyday money-saving opportunities.
Not only will they save you money, but your attention to detail might also impress possible investors and loan officers.
Crowdfunding has become a staple of alternative lending. Everybody seems to use it for all sorts of things, from celebrities to inventors to social advocates and beyond. If you own an e-business, or your business provides a product or service that you feel others might get behind, there are at least a half-dozen crowdfunding sites on which you can seek funding.
On most crowdfunding websites, you must choose a fundraising goal. If you do not raise that much or more, you receive nothing – though you might still attract the attention of interested investors.
Crowdfunding is particularly useful when launching a new business or product, you are launching or upgrading an online business, or you already have a loyal customer base. Some websites allow you to keep any amount of funding you raise but, either way, a service fee is involved.
Even though it is most often associated with social media marketing, old school e-mail and newsletter campaigns are also great for drumming up interest. Crowdfunding is worth considering if your business, product, or plan is right for it. A good PR campaign to raise awareness, with a strong focus on social media and customer outreach, attracts potential backers. Offering them freebies, “unlocking” special features or other products at higher donation levels, and creating packages for specific donation tiers are some of the ways successful crowdfunders urge backers to donate.
Get in touch with us for any assistance related to Unsecured business loans.
Grants are not easy to come by but, if you and/or your business qualify, you don’t have to pay them back. As a rule, grant proposals are also difficult, but whoever helped you write your business plan and/or loan proposal should be able to help.
Many people incorrectly assume that grants are only provided to non-profit organizations. There are many types of grants that are available to all kinds of businesses, and are largely dependent on factors like location, the number of jobs the business will provide, and the development of the community. We can also help you out with guaranteed bad credit business loans.
You can check government websites for more information on grants and even submit proposals through some, but your local Chamber of Commerce can provide you with more specific information to save you some time.
Bank loans are far from the only means of funding your business, new or otherwise, and having a bank loan does not prevent you from seeking other alternative lending sources or accepting money from them. In fact, if you already have a bank loan, your business already has a credit history which might help you secure funding elsewhere.
You will get the best deals at the Lending Valley.
