8 Best Alternative Business Loans

Cody Cromwell
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8 Alternative Business Funding Options

We never like to ask for help, right? So why are we here, ready to ask for some? We can’t do it all at once. But the reality is, we’re not that good at getting our business off the ground. And we can’t afford to borrow a monetary value of a new business.

We can borrow a monetary value of a new car (SMILE and COME TO THE MONEY). They can often be owned without a large amount of money, but we may have issues with the way it is maintained.

You may have ever heard of the term Buy-here-pay-here (BHP) in the Car Repair world. BHP option is when the dealer finances the sale of the car, but the buyer will have to pay off the vehicle after a certain period of time. This means we are responsible for the repairs in the vehicle, but may not have spent the money to buy a car from a dealer.

We can borrow a monetary value of a new apartment (FOOD, FITNESS, and FUN (FOFF)). The most popular options are through FHA loans and Conventional loans.

Short-term Business Loans

Who a Short-term Business Loan Is Right For

Short-term Business Loan Rates & Terms

Short term business loans can finance a wide array of products and services. This includes everything from new tools and equipment, to working capital for a business expansion. Quick financing can help businesses get moving without a large down payment, as well as maintain a competitive edge.

Many businesses think that they need a business loan with a term of more than one year, however, many lenders offer loans as short as two months and sometimes as short as a few weeks. While these loans have limited or no collateral, they can help lower a business owner's credit and small business needs. And in some cases, they can reduce the business owner's cash flow.

Below, we’ve taken a look at eight of the best alternative business loans available today. This list is meant to give you a starting point to explore the potential short term business loans that may be right for you and your business. Every business owner and small business should know about these loans.

Short-term Business Loan Qualifications

In an effort to help small businesses grow, government agencies, foundations, and non-profit organizations fund for-profit ventures in a variety of ways. Depending on your industry and company’s type of business, you may qualify for the solution set of loan products which are tailored to your needs.

How to Apply for a Short-term Business Loan

This type of loan is perfect for business owners to use as a bridge. The funding is usually secured to your inventory and cash flow, and can be repaid as soon as your applications ready or are funded.

As a business owner, you credit score is dependent on your ability to repay your bills on time, so it’s crucial to build credit history. SBA loans are offered to both new and existing businesses and have a fixed and low interest rate.

There are many other alternative loans to the SBA, which aren’t considered for startup businesses because they require a larger down payment or the business owner must provide guarantors or assets.

Business Term Loans

Alternative Business Credit is available from a wide range of lenders. It includes everything from startup and expansion loans for established companies, to working capital loans and equipment loans for start-ups.

The types of loans available in the alternative loan market include General Business Loans, Real Estate Loans and Lease Finance which are all split into sub categories of Property Development, Property, Working Capital and Vehicle Loans.

Most General Business Loans include Equity Loans, Factoring Loans and Working Capital Loans or lines of credit.

For more information see Loans, factoring and asset-based credit, Business Resource Group.

Eligibility Requirements

The most important eligibility requirements for alternative business loans mean, you need to provide the lender with proof of solvency, adequate collateral and that you have sufficient experience and documentation to secure the loan.

You can do this by providing your own credit report. All good lenders will supply you with your credit report in some way or another, but in the case that they don't, the National Consumer Credit Registration Service will provide you with a credit report from Equifax, Experian or Callcredit.

What does a good business credit score look like? It varies from lender to lender and sector to sector. The following are the key results you should get if your report is up to date.

Who a Term Loan Is Right For

When you want to fund a new business or expansion opportunities, your first business loan options are standard commercial loans. At Kompass, we provide term loans for all industries.

A term loan is a loan that’s made for a specific amount of time, usually 3 to 5 years. Term loans are appropriate for businesses who need working capital (for example, inventory for resellers) or sometimes access to a larger, more flexible loan.

There are several advantages to using a term loan when obtaining a business loan. First, they’re more flexible because they don’t have to be paid back as quickly. Second, the interest rate is usually lower because term loans are usually more creditworthy. Since there’s more time to pay back the loan, terms loans usually have an LTV (loan to value) ratio of 75% or higher.

On the other hand, there are some cons, too. Term loans usually aren’t good for businesses that plan on making any significant capital improvements (these are usually purchased with an equipment loan). And because a term loan needs to be paid back over longer time, the repayment cycles can become staggered, which means that your alternative business loans payments may automatically roll off your monthly pay cycle until the loan has been paid back in full.

Term Loan Rates & Terms

Term loans are loans that are for a fixed term. They usually have higher interest rates because borrowers must have the money available before the loan terms end. Downpayments on term loans usually range from 25% to 75% of the loan value. Sometimes lenders will allow you to make smaller downpayments to apply more to the loan balance.

Term Loan Qualifications

To qualify for a term loan, you’ll need to have a clean credit record and a steady income.

The lender will also require that you have enough collateral to secure your loan, but there are some lenders who specialize in lending you a term loan even if you don’t have enough collateral.

When you’re looking for a term loan, it’s important that you vet the lender first. You don’t want to go through the term loan application process again, if there’s a problem with the first loan.

You can find out if it’s a good idea to give out a term loan by reading reviews online from other people who have experienced similar lenders. To find out more, check out my article on how to tell if a term loan is worth it.

How to Apply for a Term Loan

If you’re not satisfied with the traditional business loans, you may want to consider an alternative business loan. An alternative business loan is a short-term loan for a business purpose. It is a small, useful addition to the various types of credit that are available to small businesses.

There are lots of interesting alternatives for lenders. One such alternative is the Add-On Loan. Add-On loans are ideal for those business owners that are just starting their ventures. By making an addition on the business’s existing loan, lenders are able to give you the money you need to get the financing you need whether it’s for equipment or employees.

Before getting an Add-On loan, you have to complete your due diligence. In other words, make sure that you have all of your paperwork in place. If you’re already in business, look at your financial statements to see if you are eligible for an add on loan. If you are a new business, you have to submit a number of documents to determine the viability of your business plans. The documents vary from lender to lender, but usually include:

  • Business plan
  • Client list
  • Revenue projections
  • Contingency plans

Invoice Factoring

If you are a young business owner or are in an industry where the future is uncertain, it is important to expand your business now. Creditors will not give you a good interest rate on a short term loan. Instead, you will have to look at other forms of financing that will be more beneficial for your small business. One of these financing options is invoice financing.

Invoice financing for your small business means that you can sell your invoices (bills or checks) to a third party who has the right to buy and collect the amount owed to you for that invoice. So any profits received from your customers will be used to pay off the outstanding balance and interest owed on your invoices.

The third party that purchases your invoices will act as an escrow agent for your invoices. They will hold the money until you receive payment for your invoices. So you can focus on running your business without the worry of managing your invoices. The third party will also pay your taxes and pay for insurance.

Invoice financing business loans for young businesses is one of the many advantages this type of financing offers. These types of loans are perfect for new businesses who may not have any credit history because of their small amounts. Other advantages of invoice financing include the following:

Who Invoice Factoring Is Right For

Invoice factoring is an excellent business loan for businesses with exceptional credit or with very frequent sales. It is also a good option for businesses that frequently need capital and may not make that much money in a given month. With invoice factoring …as the term implies it…we’re simply buying your invoices.

Invoice Factoring Rates & Terms

Factoring invoice financing is the process by which an Invoice Factoring Business purchases the invoices from the customer. This is usually done with the goal of restructuring the invoices by decreasing their outstanding balance. This makes them an interest-free, term-free, and cash-based means of acquiring the invoices.

The buyer/factor has two options in dealing with the invoices:

They can either purchase the entire invoice and receive a lump sum of cash or payment for the invoice. If they choose the latter, the factor/buyer pays the invoice to the company that works on the customer’s behalf – this is typically done on a weekly basis until the invoice is paid in full.

Here’s how an invoice factoring business:

Purchases invoices from the customers who send the invoices to them. These invoices are normally endorsed over to the factor who works on behalf of another company. The factor/buyer buys the invoices with the goal of decreasing the customer’s outstanding balance. The factor then pays the invoices to the customer in a lump sum or via a weekly invoice until the balance is paid off.

Invoice Factoring Qualifications

Invoice factoring is a form of invoice discounting whereby a business can obtain cash on outstanding invoices. This form of financing is designed to help businesses that generate low sales and profits by paying their suppliers immediately to allow them to bring cash forward to further develop and grow their business.

The main aim of invoice discounting is to allow businesses cash flow that they need to pay their bills and other liabilities.

Invoice factoring is not suitable for all businesses, but it is generally be suitable for professional service and technology companies.

We went through the invoices for 24, 70 and 100% of invoices received by the company. Here’s how the calculations break down;

Total Purchases at Invoice Value

30 x x 0.8 x

Cumulative Payments at Invoice Value

X0.30 + x0.60

Best Factoring Company Financial Ratio

(Interest Ratio: Invoiced Cash Ratio)

How to Apply for Invoice Factoring

Invoice factoring is a service that finances the operating expenses businesses incur in order to do business. The funders, being the financial institution(s) that provide the loans, purchase the invoices or trade receivables of the businesses they lend to. In other words, the invoices themselves bear the risk of not being collected, while the factoring lenders bear the risk of the finance not being collected.

Invoice factoring is one of the top alternative business loans, as the entire process is much easier, faster and more straightforward than the process of getting a traditional business loan. In many cases, it’s all a matter of minutes for the application to progress to the final approval.

Factoring business loans are essential to small and medium-sized businesses that are unable to pay for items on time, and most instances, before the item has even been supplied by the supplier. This means that the business has to take out their own personal loan, which may prove to be expensive, lengthy and will usually be accompanied by a hefty interest rate.

It is for these exact reasons that businesses with immediate cash requirements often turn to providers of invoice factoring. But before getting into the finer details of the business process, the company that will be purchasing your invoices will need to be identified.

Online Inventory Financing

This type of business loan allows sellers add new stock to their online retail business either on Amazon, eBay or locally.

$ $

The loan allows sellers purchase inventory out of their own bank account and receive a loan from these third party lenders.

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When sellers do their accounting, they get paid for their inventory plus their profit for the month.

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Most sellers would rather have this money paid for their inventory and then less the restaurant owners set their margin as their credit limit.

Once the sellers receive their inventory, they can then place the order on Amazon or eBay and have the item shipped to them.

Items would take a month or two to be delivered.

When sellers return the inventory. They get to apply the money from the seller financing to their next purchase.

The original amount of the loan plus a 10-20% fee.

We had great success borrowing over 500% for an inventory order on Amazon.

When sellers return the inventory, they are still able to make some money.

$$$$

If the seller was able to sell the items on eBay, then they would also receive the shipping money from the buyers for that time period.

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This could be used for other monthly expenses.

Who Online Inventory Financing Is Right For

Online inventory financing is ideal for merchants who sell goods over the Internet or within the home, and it’s especially suitable for a small business that goes through frequent fluctuations in their inventory levels. One of the biggest benefits of online inventory financing is that these short term loans can be approved quickly. Since most customers have already made a substantial purchasing decision by the time they visit the seller’s site, it’s generally easier to secure a loan than it is to convince them to make a purchase.

Generally, loans are approved for inventory within 24 to 48 hours, but the typical approval time can be as little as 4 hours.

As a result of the instant funding, online inventory financing can also help reduce the amount of cash in the seller’s business by keeping the sales in inventory. With short term loans, merchants can access a line of credit almost immediately, and this can be very helpful for a small business on a shoestring budget.

Shipments are accepted and processed on the business day after approval, but items can also be shipped the very next business day.

Online Inventory Financing Rates & Terms

Stocks, bonds, and other assets can’t be disposed of immediately unless you eat a significant portion of their value in the process. Cash is more liquid. This means that you can cash it in pretty quickly for your particular business, and it’s also the reason it’s the most popular source of money for small businesses. Unfortunately, cash is also the most expensive source of business funding.

If you’re a small business owner, cash is king, but it’s necessary to have an emergency contingency and working capital. So, what’s the most efficient and cost-effective way to hold and secure cash for your business?

There are numerous different ways to borrow money for your business, and what works best for your business will depend on several factors, including your business type and credit history. Some businesses are more suited to working with an institution like a bank, while others, like many service-based businesses, may be better off working with an online lender who leverages a network of investors. The following alternative business loans include:

  • Health Care Operating Loans
  • Inventory Financing
  • Property Assessed Clean Energy Loans
  • Hotel Financing
  • Loan Re-Evaluations
  • Conventional Bank & Mortgage Lending
  • Factoring Loans
  • Non-Profit Loans

Online Inventory Financing Qualifications

Alternative business loans are highly flexible – you have the ability to choose the customer, you may assist in manufacturing and distribute the product, and you can even advertise the product.

Another great benefit to these types of loans is that you will not have to reach the initial sales requirements needed for a revolving loan.

How to Apply for Online Inventory Financing

Apply for inventory financing with trusted companies who want your business. Among the many factors to consider when attempting a business loan application, the simplest application you can take is online inventory financing.

Inventory loans are a popular form of financing that allow a business to obtain money to purchase inventory. This inventory can be purchases from a manufacturer, distributor, or other supplier, called the seller. Another method for obtaining these types of loans is through a distributor who will underwrite the loan or provide the funding.

Commercial inventory financing loans allow a business to purchase this inventory from a seller and pay it off through an installment agreement. These types of loans have been available for a long time since the beginning of online businesses.

How do you apply for the best inventory financing?

Inventory financing companies look for the same information in all loan applications. This includes current financial information such as a balance sheet, income statement and tax returns.

Next, the loan provider will also want to see the projected next two to five years of income from the current inventory. They also require information on how the inventory will be used as well as how much of the inventory is currently for sale.

Other requirements include a supplier that will allow the selling of the inventory, as well as the shipping and inventory receiving procedures.

Merchant Cash Advances

(MCA) to Improve Cash Flow
As an online entrepreneur, you have probably shopped around for merchant cash advances. Many of you probably didn’t know how to get one. That’s because many banks and lending institutions exclude small businesses from receiving merchant cash advances or shop around for the lowest rates.

Here, we provide step-by-step instructions on how you can get your merchant cash advance and keep your business afloat. Merchant cash advances are special types of loans that many banks and lending institutions offer specifically to help businesses improve cash flow. They allow you to accept payments and receive money before you actually received payment.

When you successfully receive a merchant cash advance, you can now accept payments ahead of time. This is as opposed to waiting for payment until you typically receive it, which is known as receivables financing. Receivables financing seems inferior to merchant cash advances since you then have to wait to receive payment for payment. But using a merchant cash advance allows you to give the customer a better service and an added advantage to your business.

Who Merchant Cash Advances Are Right For

In today’s market, credit (debt) is king and many business owners are focused on creating a credit history to build a customer base. Unfortunately, they are met with obstacles if they want to expand their businesses:

  • They don’t have a big enough credit history (with no long credit history)
  • They’re not sure if they will be able to find the business credit they need

As with all loans, these loans have variable rates, fees, collateral and terms. This post will detail who merchant cash advances are best for and how easily they can be obtained. Some options have flexible application processes and can usually be acquired within the same day.

Due to the costs associated with merchant cash advances, these loans are generally aimed at small businesses. Businesses such as antique dealers, a baker who sells his wares at farmers’ markets, beauty salons and technology companies that are growing rate the highest for merchant cash advances.

With the help of technology and mobile apps, these loans can be obtained in as little as a few minutes by completing a few simple steps.

Merchant Cash Advance Rates & Terms

Merchant cash advance (MCA) programs from lenders typically offer faster settlement and funding terms compared with a typical merchant account. Typical merchant account billing terms are typically 30, 60, or 90 days. With an MCA program, funds will typically available for you immediately, although there are some lenders with MCA programs that require a set period of time to fund.

Borrowers can typically fund their MCA programs through their checking accounts or their own personal credit cards, but lenders often allow for a combination of funding sources, such as a personal checking account and a credit card.

For more information about merchant cash advance factors to consider as you compare current offers, including a summary of the best peer-to-peer lending (P2P lending) programs, visit this page.

Merchant Cash Advance Qualifications

How to Apply for a Merchant Cash Advance

A merchant cash advance, or MCA, is a loan that merchants can apply for to generate quick cash flow. The most common use of MCA is to get quick cash to fill the gap between daily sales and daily cash.

A typical business uses daily cash to pay payroll, buy inventory, pay the utility bill, and make other day-to-day expenses. Merchants usually have some cash on hand but the rest of the money they need needs to be generated in the business.

If you operate a retail store, MCA can be a tool to bridge the gap between daily sales and the daily cash need. For example, most retailers don’t sell as much in January as they do in December.

A merchant cash advance can be a way for you to generate additional money when sales are lower than cash needs.

Merchant cash advances are extensions of credit, but unlike traditional credit, these loans get paid off as soon as they’re due. This means that you’re not saddled with an unsecured loan that will start to accrue interest right away.

Unlike a car loan or a credit card, there’s no long-term monthly repayment obligation. Merchants can rest assured that they’re not secretly stuck with a loan payment, whereas customers know exactly what they’re paying for.

Revenue-based Financing

Revenue-based financing is a form of business financing that includes certain requirements to generate revenue. The online loan company will evaluate your financial history and require you to maintain a certain level of sales in order to receive your loan.

The benefit of these loans is that the company is more likely to approve you if you already have a business history.

Another advantage of revenue-based financing is that you are not required to show the lender the complete financial picture of your business. You only need to show that you are already profitable.

The disadvantages of revenue-based financing is that you must maintain a certain level of sales, and that in order to receive the loan, you must have a business history.

Revenue-based financing is a good financing option for people who are looking for quick cash and are already profitable, however, it may not be the best option if you are looking for a larger amount of money.

Who Revenue-based Financing Is Right For

Revenue-based financing (also known as Cost-plus-based financing or FOBs) is a financing option that allows companies of all sizes to leverage an established credit relationship with a bank or another financing fund to get an early access to capital.

While not exclusively designed for startups and small businesses, this financing option caters better to businesses that are new to the market and where building up credit history is challenging. Typically, this financing works best for:

Existing businesses that want to transform into a different business model or industry and need capital for expansion.

Startups that don’t yet have customers that can act as references.

Businesses that have existing revenue but are not yet at the point where they need to buy inventory or commercial equipment.

This financing option is usually shorter term and has fewer conditions besides increased repayment risk than other options, and it offers banks and financing funds an opportunity to make a return on the capital they provide.

Revenue-based Financing Rates & Terms

Like any other business, real estate investors usually turn to small business loan providers to cover their investment property loans and any other business expenses. Unfortunately, these aren’t always the best loans to turn to for many reasons. Financing rates for revenue-based real estate investments can vary significantly for numerous reasons such as, your down payment amount, your credit score, and even your property type. The calculation formula to determine the revenue-based financing rates can also vary from lender to lender. In the end, it’s always important for an investor to understand how the revenue-based financing works and what the costs and benefits are in case they do choose to go this route with their acquisition loan. Below you’ll see a few more areas of mandatory revenue-based financing rates and terms.

Revenue-based Financing Qualifications

A revenue-based financing (RBF) is also known as a receivables factoring loan or a revolving factoring loan. These types of loans are very similar to asset-based financings in that both types of loans use the receivables of established/successful businesses to fund their start-up (or refinancing for a larger loan).

However, whereas asset-based financings typically issue their loans to relatively smaller businesses, revenue-based financings typically issue their loans to established businesses.

So if a company has been around for some time (3+ years), and it has a large amount of receivables … maybe thousands of dollars … then it makes sense to seek a revenue-based financing.

Here’s how it works:

Revenue-based financings allow companies to leverage their receivables (as collateral). You’re basically lending the company to provide the capital they need to generate the revenues they already have.

Debtors borrow in order to operate, grow, or retire their assets. As the creditor, the revenue provider receives the full benefit of the revenues, but doesn’t bear the risk. From an inventory perspective, a receivables-based financier acts as a pooling agent that can purchase invoices from many different business customers.

How to Apply for Revenue-based Financing

Revenue-based financing is one of the most common and popular forms of alternative financing. Also known as revenue-based lending or value-based lending, it is a cash-flow lending program that helps businesses grow by providing financing based on the company’s financial situation and performance.

The loan is usually structured as a line of credit with a maximum amount available. This allows the company to easily manage its funds and use its capital for business expansion, working capital or purchasing new equipment.

Revenue-based financing has become increasingly popular in the last few years. The reason it has become more popular stems from the lending regulations that have begun to take effect around 2008 that were intended to strengthen the industry.

With the recent economic downturn and its impact on businesses, these regulations helped ensure that all companies are financially stable. This means that they must have both healthy financials and financial prospects. With revenue-based financing, all criteria needed is based on the company’s actual profitability. The money for the loans comes from Capital One bank, Bank of America, Chase, and Wells Fargo.

Equipment Financing

For those who need significant capital in order to purchase equipment, there are several financing options to consider. Credit unions are well-known for offering financing options to their members. You don’t need to accept membership in order to apply for a loan from a credit union. However, if you have the option of joining a credit union, this may be the easiest way to secure the financing.

Government loans are designed to help those who are not members of a credit union gain access to the capital they need, while still ensuring that the government can reap a portion of the benefit. But government loans can run into a bit of trouble if you don’t meet the qualifications, so it’s important that you do your research before applying.

Many startups and small businesses address equipment financing by taking out a business loan. Equipment purchases should be considered a capital expense, so smaller loans are typically available. Interest rates are greatly impacted by the amount of debt that you take out, so plan on the fact that if you come out on the lower end of the spectrum, you’ll have a much lower interest rate as a result. But if your business or startup requires greater levels of equipment, you may need to look elsewhere for financing.

Who Equipment Financing Is Right For

If you're a small-business owner, financing your equipment purchases makes good sense. That's because while big purchases, after all, are a big deal, many smaller purchases add up to make a big deal.

Then there's the matter of financing equipment purchases. While some people hold onto credit cards for their business use, it's not advisable. Credit cards are great for retail purchases. But for the reliable income stream that equipment financing can give you, you need a more structured and long-term approach. That way, you can have absolutely zero issues with your equipment purchases (and your business) when it comes to finances.

To help you choose the best option for financing your equipment, here are some of the different, most common equipment purchase loan options.

Equipment Financing Rates & Terms

Equipment can be a major investment for a small business. You may have plans to expand and start producing more, which means that you’ll probably need more manufacturing equipment. But sometimes, you might already be in the middle of producing or manufacturing and you don’t have sufficient capital. So what do you do if are running short of cash? Below is the list of the best alternative business loans for new and existing small businesses.

Equipment Financing Qualifications

Many businesses may not be aware that there are many alternative business loans available for them to take advantage of. One type of loan that is often overlooked is a loan to purchase or lease equipment. And since many businesses may not be qualified for a loan through a traditional lending institution, they might end up falling through the cracks and not acquiring the equipment they need to keep their business afloat.

The good news is that there are a lot of different credit options available for businesses to acquire equipment and other assets that help keep their operations running smoothly. One of the more common routes that businesses can take to acquire financing for equipment is to petition the Small Business Administration (SBA).

The SBA is a government agency that works through a partnership with local banks, finance companies and others to provide support for businesses. If you are a small business owner and you qualify for this type of financing, you’ll most likely be able to acquire a much larger loan amount than those typically approved for loans through traditional lenders.

If you are thinking about purchasing additional equipment to help handle your workload, qualifying for this type of financing will help make it easier for you to acquire the type of equipment you need. And if you do not qualify for SBA financing, don’t you worry … there are still other options to help you get access to the type of capital you’ll need to succeed.

How to Apply for Equipment Financing

Hard Money Loans for Small Businesses

One of the reasons that business owners can’t get a traditional bank loan is because they don’t have enough collateral to offer the bank. Because of this, business owners must turn to alternative markets to finance their business. The first type of alternative lending market is hard money loans.

Hard money lenders are attracted to businesses that fall into the category of ‘mid-market companies’. Their businesses are a mix between the large scale established company and the small business. Companies with the potential to grow quicker than a typical small business are ideal candidates for hard money lending.

Because of this, these companies are also near the end of the venture capital cycle. However, their growth potential is high. Small businesses can become large.

But if you are a business owner with a chance to grow, then here are eight alternative business loans that you can take advantage of to grow your company.

Who Hard Money Loans Are Right For

An alternative business loan (ABL) is a financial product designed to assist real estate and other small and medium sized business owned by first time entrepreneurs who need money but do not meet the traditional lending criteria required by most lenders. With all the talk on the economy and the financial crisis in 2008, real estate lenders have been very hesitant to loan money to individuals, and many lenders have even closed their doors to startups.

Those without a great credit history and bad credit records, especially business owners, often end up turning to alternative lenders. Fortunately, there are lenders willing to help. However, co-signers, guarantors and sometimes personal guarantees are required.

The Bottom Line Is This…

Many entrepreneurs have found great success by using alternative businesses loans to fund their companies. However, not all businesses are the same and not all entrepreneurs have similar credit profiles. Those who have been turned down by traditional lenders, but still need money to grow their business, should qualify for a small business loan from a non-traditional lender.

Hard Money Loan Rates & Terms

Whether you have a small business with limited or no collateral or you are a seasoned entrepreneur who has built your business with assets, an alternative business loan can help you fund your business at a better rate than the bank. Even if you already have a business, an option loan can provide a flexible capital source that you can use when you need it.

There is considerable variety among alternative business loans (AB loans). From owner-occupied commercial real estate to nascent technology companies, business models, and even business ideas, this means that you can secure financing for nearly any business idea with an AB loan. The loans are generally unsecured and have a variable interest rate with flexible repayment terms.

That said, there are differences among alternative market lenders, so it’s best to shop around for the best rate and terms. Small business owners generally use them to leverage Uncle Sam’s tax benefits such as depreciation/depletion and tax credits.

Line of Credit (LOC)

A line of credit is a short-term credit facility with flexible loan terms and payment options. Eligibility typically requires good credit history and an established business. Typically, you’ll need collateral to secure a LOC and will also be subject to credit limits.

Equipment Lease

Hard Money Loan Qualifications

Hard money loans are used as a bridge between when you first apply for a loan and when you get approved for the loan. Hard money loans can be unsecured or secured.

Ideally, you want to get a hard money loan before you go through the formal application process because it can delay and add extra costs to your loan.

Most hard money loans are unsecured and means they are used as a shortcut for getting cash. There are really no assets or property that you have to pledge to secure the loan, other than what you have for collateral.

There are several lenders that lend hard money and the most popular are hard money lenders in Las Vegas, Hard Money Lenders in LA, hard money lenders in San Diego and Hard Money Lenders in San Francisco.

Hard Money vs. Term Loans

Hard money lender loans are short term by nature. They are unsecured loans and used for bridge loans between a shorter term loan at a bank and more expensive loans.

In comparison, term loans are not short term loans. They are long term loans that are usually used over a number of months or years.

From a person that has been in the business for a while, a hard money loan is a lot easier to get approved. They are usually lower in interest than traditional loans. And compared to a hard money loan, a term loan has a few more hoops to jump through in order to get approved.

How to Apply for a Hard Money Loan

For the person who has made a lot of money in real estate, or those who have made some money from the stock market, you really have to be careful with your cash. Avoiding the bad habits of bad credit and living beyond your means can save you from the housing bubble and the financial crisis.

Some people think that a hard money loan is way too expensive for their situation. Well, that is true if your situation is bad enough to make you fall into the category of needing a hard money loan in the first place.

But if your situation is good enough, let’s say that you have been following the rules of a solid money management plan and you are not carrying any excessive debt, then a hard money loan, especially one with a private loan banker, may be the best solution for your problem.

A hard money loan from a private bank is best because, first of all, they don’t care about your poor credit history. Secondly, the rate can be much higher than some of the other options out there and because you’re dealing with the private lender directly you can not only get the money, but you can negotiate the rate of the hard money loan.

Bottom Line

Alternative Business Loans

Something has to be done in the short term because not one single person wants to get a loan for three years. So, banks have improved and improved their services. These improvements have been done by them even today. If you are a business owner, you still need a loan, but there are so many people who refuse to get them. Another thing is that banks have gotten into many problems. If you are a home owner, you might have heard about them. You might have an idea about the creation of mortgage backed securities.

In the next few years, loans will overtake investment as the investment of choice. Today, you are being forced to a choice. Your two options are banks or non traditional lending services. However, before going the right direction, you should check out the same type of services you need for your business.

In the next section, we give you another choice. This is the choice of alternative business loans. You can also check that out before you go for any other services. Advantages and disadvantages are the factors here. The smaller time periods of a year or two in the long term business loans are really amazing. You will be getting some fantastic interest rates on the loans.