Small businesses were hit extremely hard in the severe economic downturn of 2008, because loan money from banks dried up significantly, and since then it has been much more difficult to secure funding for business growth, and sometimes for normal operations. To fill in that gap, the new industry of alternative financing has stepped in, and provided an array of new financial products that can help many small businesses recover from temporary downturns. Here are a few of the ways alternative financing might be able to help your small business.
Merchant cash advances
This kind of alternative financing works well for companies which have a high volume of credit card sales. In exchange for an upfront cash advance, the retail store or restaurant would pay a daily or weekly percentage of its credit card sales to the alternative lender to complete the transaction.
Purchase order financing
This is an alternative financing product similar to invoice factoring, except that it goes slightly beyond the factoring concept. An alternative lender would in this case pay a company’s suppliers for raw materials, so that the company could make finished goods and sell them to a customer. Once that customer makes a payment, the alternative lender receives its payback.
This form of alternative financing calls for the alternative lender to purchase some or all of a company’s invoices at a percentage of their face value, in exchange for upfront cash and a factoring fee. Then the factoring company collects the invoice amounts from customers to receive its payment for the transaction.
Hard money loans
This type of alternative financing transaction involves providing a loan to a company based on the value of assets owned by the borrower, and is not tied to the creditworthiness of the company borrowing the money. The term ‘hard money’ comes from the fact that the loan is strictly tied to the value of the assets, rather than the stability of the borrower.
Alternative financing with Black Wolf Capital Group
Securing loans from traditional lenders like banks can take months for approval – and the number of approvals less shorter all the time. If you’re looking for a better chance to be approved for funding, and in far less time than a bank would take, you should contact us at Black Wolf Capital Group. We’ll be glad to discuss some options with you.