The phrase alternative business funding includes a large array of options for loans to be had by small business proprietors outside conventional bank loans. It takes in the whole lot, ranging from long-term business real estate cash advances to short-term business capital loans.
Such alternative funding typically contains extremely easy going credit requirements compared to conventional bank loans. Additionally, it provides easier applications and lesser time period to acquire the necessary funds. There are varied options to choose from nowadays. It would depend on you to select which plan suits you best.
Types of alternative business funding:
- Merchant Cash Advance: MCA is the most go-to source of alternative business funding. It does not technically have a set repaying period or interest rates. In its place, the merchant cash advance lender recovers the profit and principal by taking out a credit sales percentage day after day till you have paid back the fee and balance agreed upon in the agreement.
- Medium Term Business Loans: These loans are by and large good for businesses, which needs working capital along with higher repayment terms.
- Short-Term Business Loans: Such loans are usually fit for business initiatives that need working capital right away and are ready to repay the loan amount within a period of three to thirty-six months.
- Invoice Financing: This is apt for those businesses that make payments on B2C, B2B, or B2G, customers and wish to have a loan in spite of their unpaid invoices.
- Revenue Based Financing: This type of loan is a good bet for those businesses seeking growth funding with revenue based and flexible repayment terms and without quitting on equity. This is apt for subscription-based income models with high margin.
- Online Inventory Financing: This loan can be used as a cheaper alternative for making specific inventory purchases.
- Equipment Financing: This loan can be taken up for any equipment financing, be it a lease or a purchase of particular vehicles, machinery, or essential equipment.
Merchant cash advance boons and banes
Among all these, the merchant cash advance is at present, the most sought-after loan type by many businesses. In the tightening credit market of present times, merchant cash advances have come out as the best and only substitute for most businesses for solving their cash flow issues or getting out the capital need to expand their business initiatives.
Hence, these are some kinds of alternative business funding, which are currently most used in financial dealings. Such alternative sources of funding are varied, and you can easily select the best source to meet your business capital requirements with a little bit of due research. Amongst these, Merchant Cash Advance is the most used and viable option, owing to its speedy processes and low-interest rates on business loans. Plus, it has almost second to none eligibility requirements, which every business owner can easily meet without any constraints.