Good funding solutions are vital to the success of any business, but unfortunately, small businesses rarely have access to adequate capital. That’s why entrepreneurs need to look at alternative funding options that can help them succeed and get their products or services out into the marketplace. If you’re thinking of trying alternative financing for your business, here are a few solutions to consider.
Six Alternative Funding Solutions for Small Businesses
Asset-Based Lending. You use assets you plan to acquire as collateral to borrow money with asset-based lending. You will not own your assets until the asset financing company receives your last payment. Depending on your needs, you can choose between lease purchase or hire purchase financing. The asset does not appear on your balance sheet for the former type of funding until the loan amount and the purchase fee have been cleared. Then, on the other hand, the latter appears on your balance sheet.
Invoice Factoring. B2B companies can benefit greatly from invoice factoring. This type of financing involves creating invoices for clients or customers and sending copies of the invoices to the lender. Once the company provides the lender with a copy of the invoice, lenders pay a percentage of the invoice value. After the lender receives the full payment from the client or customer, the remaining invoice value is transferred to the company after deduction of the applicable fees.
Lines of Credit. A funding solution like this helps businesses finance short-term expenses such as equipment purchases, inventory expansion, and operations. You have access to funds through a line of credit, which is similar to a credit card. You can withdraw any amount of money you want from the financing company, and they will make regular payments to you. The financing company makes regular payments, and you can withdraw as many funds as you wish. The only interest you pay is on the amount you withdraw!
Purchase Order and Trade Finance. Finding funding to purchase pre-sold goods or raw materials is the most challenging part of running a small business. By opting for purchase-order financing, distributors and producers, or wholesale suppliers, can grow their business without increasing bank debt or selling equity. In addition, financing for purchase orders and trades offers flexibility and speed. Besides fulfilling large orders, companies can improve their delivery times, make more profits, and gain market share with this alternative solution.
Turnaround Finance. Debt and equity financing firms can assist struggling but viable businesses needing financial assistance. Identifying and recognizing a company’s problems is the first step toward the turnaround, implementing a successful strategy, and changing management. Therefore, the use of turnaround finance is only appropriate if a company is profitable or has stable revenues and a proven business model. Businesses having financial difficulties caused by credit restrictions or cash flow disruptions can use this funding solution. Such problems include declining stock prices, losing clients, delayed payments to creditors and employees, and layoffs.
Merchant Cash Advance. Merchant cash advances are secured after lenders inspect a company’s cash flow and confirm it is consistent with positive growth. Moreover, future credit card transactions secure the funding, representing a viable alternative to traditional loans for businesses, especially for those without credit scores or collateral to secure bank loans.
Looking for Cash to Fund Your Business?
At POM (Peace of Mind) Capital & Funding Services, we offer our clients in New York a variety of funding options to start or grow their business. Call us at 631-354-9290 or write to us at [email protected] to find out which funding options will work best for your business. We also help businesses with bad credit history. Our commercial finance loan attorneys are here to help you with your application today.
POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.