5 Loan Alternatives for Working Capital

Capital is important to every business. You need to have working capital available to ensure that your business can operate. However, it isn’t always easy to come up with the capital you need. Many business owners decide to get a loan. However, loans aren’t always the easiest to get or the best option. Here are five loan alternatives that you might want to consider.

 

  1. Factoring

 

This method of financing involves selling the invoices customers have yet to pay for a percentage of their value. The company that buys them will then collect on them. You get money that is already owed to you in advance without having to wait for them to become due.

 

  1. Credit Cards

 

Credit cards are a common option for business owners who are looking for capital. They are an easy option that can provide you with quick money, and because you already have the card, you don’t have to go through the application process. However, they can be costly, so it is important to pay off balances quickly and never charge more than you can afford.

 

  1. Micro-lending

 

Micro-lending is done mainly through non-profit organizations. They are offered in conjunction with the Small Business Administration. Eligibility standards vary, but most small businesses can qualify. Loans are often made for an average of $13,000 but can be given for as much as $150,000.

 

  1. Peer-to-peer Lending

 

Of all the loan alternatives, peer-to-peer lending is probably the newest. It also has some if the greatest potential. You can be matched with lenders who are usually investors. The lending site you work with will handle all the details. All you have to do is agree to the terms of the loan and find a lender who agrees to pair up with you.

 

  1. Merchant Cash Advance

 

A merchant cash advance involves a merchant offering you a cash advance for your intended credit sales in the future. Payments on the advance are made automatically as you take in charges, so be aware that you will have a reduction in cash flow due to this.

 

Many of these loan alternatives can get you the capital you need much quicker than a loan. In addition, they often involve far less paperwork and the whole application process is easier. In addition, they are usually less expensive and have shorter terms. If you are looking for capital, it can help to consider some of these alternative options instead of going straight to get a loan.

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