Many small businesses need funding at some point. Equipment goes on the fritz, government funding falls through, or industry changes cause a drop in business. On the flip-side, you may need funds for positive reasons; you have opportunities to grow or you need to hire due to an upswing in business.
The Difficulty of Borrowing From Banks
If you’re like many small-business owners, you’ve probably tried applying for bank loans. According to the Small Business Administration, it’s the avenue of choice for 63 percent of us. Sadly, only 27 percent of those businesses receive the funding they need from banks. So, what are the alternatives?
Micro-Lending for Small Businesses
Fortunately, more quick-lending options exist than in past decades. Micro-lending is one such alternative. From the Small Business Association to non-profit associations like Kiva, Communities at Work Fund and Accion USA, loans are available in smaller amounts. While many banks won’t consider small loans for equipment, supplies, inventory and furniture, these organizations are committed to this purpose. They also lend to companies banks won’t help due to bad credit or little available cash. The groups often give preference to businesses located in under-served areas, and many have programs allocated to businesses run by veterans, women and other minorities, and those who operate in an environmentally sustainable manner.
Peer-to-Peer Business Lending
Kabbage is a peer-to-peer lending site offering funds to qualified businesses. If you’ve been in business for at least a year with annual revenue of at least $50,000, or $4200 monthly for the last three months, you can apply with no fee for a no-obligation loan. Unlike applying for a credit card, funds are available in one or two days instead of weeks. Business performance weighs more heavily in the lending decision at Kabbage, while credit is more important to credit card companies.
Loans for Newer Businesses
Street Shares is also a quick lending option that works for newer businesses with smaller-scale lending needs. Like Kabbage, the lender only requires a history of one year in business. Although a personal credit score of 600 is needed, Street Shares only requires $25,000 in yearly revenue. Similar to its competitor, funds are available in days and borrowers are not obligated to accept approved funds.
Whether you opt for a micro-loan, peer-to-peer lending or another alternative, funds are available for day-to-day operations and business growth. Try one of these options if you’ve had little success with traditional lending.