Traditional bank loan methods are often unattractive for new business people, especially since the Great Recession has left such a terrible, lasting impression. Afraid to take on more than they can handle, many people with amazing business ideas seek innovative alternative financing options to work with their modern perspective.
Equipment loans are funds generated to help business owners afford the machinery they need to keep their work flowing steadily. With the equipment acting as collateral for the funds that purchased it, the opportunity for tremendous loss is greatly diminished. Furthermore, with dedicated funds available for equipment purchase, other money can be applied to satisfy various necessities.
Invoice factoring helps to put accounts receivables to work even when they are likely to be slow pay affairs. Selling your debt to generate cash flow can be a very good idea as it decreases the amount of time and effort normally required to make sure client bills are paid. Furthermore, with no-headache accounts receivable, you have the luxury of maintaining excellent relations with clients, regardless of their ability to pay. However, consistently poor payers can affect your relationship with the invoice factoring purchaser.
Purchase Order Financing
Purchase order financing works in a similar way as invoice factoring, but you actually receive funds against expected sales. When you have a firm contract with a client who is purchasing a product from you, purchase order financing can be used to fill the order. This treats the ordered product as collateral. As long as the funds from the client are sure things, you should be in the clear for fulfilling your end of the deal.
Merchant Cash Advances
If your credit score is less than stellar and your business does not yet have a firm enough reputation to establish a line of credit or similar loan with a bank, merchant cash advances may be just what you need to increase your cash flow. This type of loan is extended based on the amount of credit card sales you make each month. In many cases, merchant cash advances can be offered to companies that have only been in business for three months, so long as three consistent months of credit card sales can be averaged to prove their value to the lender.
Whatever your needs, you should be able to find alternative financing for your new business to establish a reputation as a high-quality credit risk. Once you have established your financing options, be sure to maintain your payments consistently and efficiently.