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Working Capital Small Business Options

working capital small business options

Small businesses account for two-thirds of the jobs in the U.S., and our economy greatly relies on the passion and ingenuity of hardworking entrepreneurs.

Unfortunately, it can be challenging for many businesses to secure the needed funding to excel in their company, as many banks view small businesses as a risky financial investment.

Alternative lenders are striving to solve this issue by investing in small businesses that have been denied commercial loans.

Government-Backed Lending

Recognizing the significant role that small businesses play in economic development, the U.S. Government partially secures loans for new entrepreneurs, enabling a wider demographic of business people to obtain the financing they need. The U.S. Small Business Administration (SBA) is the largest provider of government-backed loans in the U.S.

While their loans often entail heaps of paperwork and red tape, they strive to make their loans accessible to people from different financial backgrounds and levels of experience. They also offer loan options that cater specifically to women and minorities.

In addition to business loans, they have equipment and property loans available, enabling business owners to access the funding needed to cover all necessary work expenses.

Alternative Lenders

Alternative lenders are making their mark in the business world by providing new and established businesses with large loan options that are easy to qualify for. While bad credit and no collateral aren’t deal breakers, it’s important to note that alternative lending often entails higher interest rates to compensate for the elevated risk they take on borrowers.

Given the convenience and versatility these loans provide, many business owners consider the elevated interest rates to be a small price to pay. Repayment terms are typically negotiated on a case-by-case basis, but they are determined based on the size of the loan and your individual finances.

Generally, alternative lenders seek a negotiated percent of daily or weekly sales that is automatically deducted from your account until the repayment agreement has been met.

Private Equity Investments

Private equity investors are willing to offer large loans to new and established businesses. While credit and financials aren’t a primary consideration, investors will need to see a sound business proposal that outlines your definitive plans for company growth. The stronger your business plan, the more likely you are to secure significant investment funds.

With private equity investing, you are essentially signing over a portion of your company to the investor in exchange for the loan. This gives the investor a negotiated percentage of all future profits.

While this could end up costing you more down the line, it provides new entrepreneurs a reliable way of accessing ample startup and investment capital to launch their successful business venture.

As a small business owner, routine access to funding is imperative to the future of your business. While banks are becoming more stringent in supplying loans to small businesses, many alternative lending options are becoming available, specifically geared toward catering to individuals ineligible for commercial bank loans.

Working capital small business loans enable companies to invest in the future of their business, which improves their success rate, while strengthening the economy.

For modern business funding solutions, contact Credibly. To get started, complete our online pre-qualification request form