Alternative financing is a resource for small businesses that need operating capital right away. This type of funding has its pros and cons, just like any loan. The application process is less stringent and those with poor credit have a good chance of approval, but the interest rates can run higher than traditional bank loans. This is just one of the many truths about alternative funding.
The Good Truths
Truth be told, this type of funding provides cash when businesses need it most. Successful ventures only become that way because they took advantages of opportunities when they arose. For example, a business owner has an opportunity to expand by opening a new store in a desirable location, but he or she doesn’t have the cash to purchase the location outright. Alternative funding can provide that cash.
Other instances include the need to fund the manufacturing of a new product or to take advantage of discounted inventory prices. Raw materials, new equipment, additional supplies to meet holiday demands, all of these things are opportunities for businesses to seek alternative financing and save money in the long run.
The Bad Truths
Businesses also face hard times, and they may need to secure financing to stay afloat. In these instances, some might consider alternative funding bad, simply because the business is in dire straits and must take on a financial burden that it normally would not have to. Many banks are reticent to issue emergency loans, so companies turn to alternative options instead.
Unexpected closures, such as inclement weather that ceases operations for days on end, will negatively affect the company’s bottom line. As many people learned, economic crash changes how consumers spend their money, and sales might go down. Equipment failure, supply and demand, vendor closure can also wreak havoc on a business’ ability to earn a profit.
When one considers the need for money, whether good or bad, one understands the truth about alternative funding. This option provides owners a chance to expand his or her business when opportunity arises or stay afloat when opportunity is fleeting. The unexpected is inevitable, and an owner must be prepared for it.
The undeniable truth is every entrepreneur will experience times when he or she needs cash, and alternative financing is a viable solution. The loans are approved quickly and the cash disbursed within two days. Payment plans are flexible, and the business owner will find the lender to be more willing to work with him or her. This is why this type of funding is so appealing.