Can Alternative Lending Help Your Business?

Successful business owners stay ahead of the curve, especially when it comes to finances. In the event of a cash short-fall, do you know your options? The quick solution is to visit your local bank. If you are a small business owner, have a short track record or limited collateral, a bank loan may not be your best option. Alternative lending strategies can give your business the boost it needs to keep growing.

Put Your Equipment to Work

If you own valuable equipment, you may be able to use it to secure a loan. A sale-leaseback allows you to sell your equipment to a lender and then lease it back over a period of years. This alternative lending strategy does not depend on a perfect credit score or other more traditional criteria. You might even be able to take a tax write-off on the payments that you make to the lender. Longer terms, lower rates and lower payments than other lending options may be added benefits. However, if you take this route, the equipment is no longer your asset. It now belongs to the lender.

Use Purchase Orders As Collateral

Landing a big sale is a mixed blessing, if you don’t enough cash to fulfill the order. Alternative lending can also be an option in this situation. You may be able to get a loan based on the value of a signed purchase order. Purchase order financing works well for businesses that must pay cash up front for manufacturing costs but may wait 60, 30 or 90 days to be paid by their customers. It’s important to remember that a percentage of your profit will be paid to the lender.

Cash In on Your Receivables

If cash flow is a challenge, factoring may be a solution. When you sell your receivables to a factor, you get immediate cash based on the amount that you are owed. The factor takes a percentage of sales, but you no longer have to wait for extended periods to be paid. Your credit history and track record are not important in this lending approach.

You may also be able to sell your receivables at auction. There are online exchanges that handle these transactions. Similar to other online sites, you control the price as well as some of the other features of your sale.

Some lenders will even provide a loan based on your future receivables. If you have a reliable history of collections, a merchant cash advance on your future credit card sales can put money in your pocket now.

Borrowing money is not a one-size fits all process. There is an alternative lending program designed to accommodate most circumstances.


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