Having adequate funding can easily be described as providing the lifeblood for businesses. But sometimes, businesses can’t get the funding they need from banks or traditional financial institutions to sustain their growth and meet their goals. A great solution is alternative financing. 

Alternative Financing Explained 

Alternative financing refers to financing options that come from outside traditional loans that are generally offered by banks and credit unions. “Alternative lenders” are organizations that provide alternative small business loans, and they provide funds in the following types of ways. 

Short-term loans. These loans are usually paid back within a year and are typically not offered by banks. 

Microloans. These are loans, typically $50,000 or less, that alternative lenders offer because banks typically don’t consider low-value business loans. 

Lines of credit. A line of credit is a specific amount of money that an alternative lender offers to a borrower. The funds provided can be drawn on, and interest is charged only on the amount used. 

Merchant cash advances. A merchant cash advance provides upfront cash in exchange for the future credit card sales of a business. These can provide funds quickly, as fast as within one day, and the funds borrowed are paid back based on a specific percentage of the business’s credit card volume. 

Installment loans. Installment loans provide the borrower with a specific lump sum, which will need to be repaid on a defined schedule, plus interest until the loan is paid off. 

Bridge loans. A bridge loan is a short-term loan that is backed by an asset as collateral for the loan. 

Invoice factoring. Invoice factoring is a financing approach where a business sells its outstanding accounts to a third party at a discount. 

Equipment financing. When purchasing equipment for a business, the equipment itself is used as collateral for the loan. 

The Advantages of Alternative Financing 

The advantages of alternative financing include a quicker application process and thus faster funding because alternative lenders are less stringent than traditional bank loans. Typically, the application process is simpler with less paperwork involved. The borrower may be able to get lower rates and longer repayment terms compared to traditional loans. And there is usually no minimum credit score required. 

Alternative Financing Mistakes to Avoid 

Avoid these mistakes when securing alternative financing: 

Get Expert Alternative Financing Assistance 

Contact Multiple Financial Solutions, with offices in Jacksonville, FL, and Houston, TX. We offer a portfolio of alternative funding solutions for companies that can’t get funding from banks including business lines of credit, merchant cash advances, and commercial real estate funding. We focus on businesses that have been active for 2+ years and are looking to grow to the next level. If you are facing a funding deficit, we are ready to help you.