Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    What's Hot

    11 Ytmp3 Alternatives for 2023 – Uplift Your Music Experience!

    March 25, 2023

    29 Imposer Alternatives for 2023: Discover the Best Design Software Solutions

    March 25, 2023

    13 Webtoon XYZ Alternatives For 2023- Noteworthy Choices!

    March 24, 2023
    Facebook Twitter Instagram
    • Home
    • About Us
    • Advertise
    • Write For Us
    • Contact Us
    Facebook Twitter
    Connection Cafe
    • Small Business
      • Biz Tech
      • Marketing
      • Sales
    • IoT
    • IT
      • Big Data
    • Security
    • Software
    • Internet
      • Web Apps
      • Social Media
    • Mobile
      • Android
      • iOS
    • Gaming
    • Other
      • Gadgets
      • Blogging
      • VOIP
    Connection Cafe
    Home»Business»What to Do When You Can’t Secure a Traditional Business Loan
    Business

    What to Do When You Can’t Secure a Traditional Business Loan

    RichardBy RichardApril 4, 2020Updated:February 8, 2021No Comments4 Mins Read

    Securing funding is an important step for your business venture. However, traditional business loans aren’t always easy to qualify for. Here are six other options to explore when you can’t secure a traditional business loan.

    Why Are Business Loans Difficult to Obtain?

    The truth is that financial institutions consider small businesses as too risky. A study found that banks deny 82% of loan applications for small businesses.

    Small businesses often have a limited credit history or a low credit score. Startup and small business owners usually don’t have an extensive personal credit history, and few assets they can use as collaterals.

    SBA Loans

    If you have an existing business with a proven track record, you can look into the different SBA loan programs. Business owners don’t borrow directly from the SBA. Instead, getting approved for one of these programs means that the government will back your loan.

    You can then obtain a loan through a lender, and you will benefit from lower fees since you won’t be considered as a high-risk customer thanks to the federal backing you get through the SBA.

    Business Credit Cards

    Business credit cards are a popular financing option because they’re easy to qualify for. It’s a flexible financing option that you can use to get cash advances and use them toward your working capital. You can also use your business credit card to purchase supplies or equipment.

    Using a business credit card allows you to build your business credit score, and you can find some cards with interesting rewards.

    The downside is that fees and interests tend to be higher than other financing options.

    Short-Term Loans

    A short-term loan is a type of business loan that is easier to obtain than a traditional business loan. Business owners typically borrow small amounts and pay off their balance within a year or less.

    The fees are higher when compared to traditional business loans, but the small average balance of these loans makes them an affordable option.

    Equipment Financing

    If you need capital to purchase machines or other types of equipment, you should consider an equipment loan.

    Business owners typically borrow enough to finance the purchase of an important piece of equipment and make monthly payments on that balance. The amount borrowed is smaller than the average balance for a traditional business loan, and you can keep fees and interests down by using the equipment as collateral.

    Crowdfunding

    Using crowdfunding platforms and social media allows you to connect with your audience early on in your business venture. A lot of startups have launched successful products through crowdfunding platforms.

    Customers can pay for a product in advance to help finance the initial run. You can offer additional rewards to encourage people to contribute more to your campaign.

    The downside of crowdfunding is that you need to invest time and resources to promote your campaign, and your campaign has to reach a financial goal for you to have the funds necessary to launch your project.

    Invoice Financing

    If you bill your customers with invoices, you can apply for invoice financing and borrow money from future invoices. You can get lower fees with this type of loan because lenders won’t consider you as a high-risk customer since the invoices are proof that you will get enough revenues to cover loan payments.

    You can also use invoice factoring to boost your cash flow. With invoice factoring, a service provider purchases your invoices and gives you an advance. It’s an easy way of accessing your money, and you won’t have any future payments to make.

    There are plenty of funding options available if you can’t qualify for a traditional business loan. Compare your different options and establish a strategy that makes sense for your business goals.

    Author Bio:

    Grey Idol

    Grey manages content and digital marketing initiatives for altLINE, a division of The Southern Bank Company. altLINE offers specialty commercial lending products to businesses nationwide. He has over 5 years’ experience in small business operations and content marketing.

    Richard
    • Website
    • Facebook
    • Twitter

    Related Posts

    Improving Your Strategy for Customer Engagement

    February 27, 2023

    Company Management: How Ambitious Entrepreneurs Get Ahead of the Competition

    February 24, 2023

    Strategies for Successful Recruitment: How to Attract Top Talent

    February 20, 2023
    Categories
    Editors Picks
    Top Reviews
    Cloud

    WHY Manufacturing SMEs Need Cloud Technology More Than Ever Before

    By Richard
    Tips & Tricks

    Starting A New Website? 5 Things You Should Keep in Mind

    By Richard
    Cloud

    The Cloud: A Key Step On The Road To Digital Transformation

    By Richard
    Facebook Twitter
    • Home
    • About Us
    • Advertise
    • Write For Us
    • Contact Us
    © 2023 Connection Cafe, All Rights Reserved

    Type above and press Enter to search. Press Esc to cancel.