Small Business Finance Alternatives
It is interesting to see how alternative ways of getting financing are popping up on the market.
An article on the SFGate site explains that there are fewer SBA loans backed by the government available at the moment as well as pressure on regular banks — all giving fuel and opportunity for alternative financing.
It is a positive sign (even in the midst of a slow economy) that small businesses still find a way — they find ways of receiving money to finance the startup and expansion of their businesses. Here is an excerpt from the article:
These days, small business owners like Metzger have to be creative about getting the money to start and expand their companies. Many are turning to non-traditional sources, such as credit unions. Increasing numbers are going to online lending Web sites that cut out the traditional bank middleman and to factoring companies, which buy companies’ future revenues.
Factoring is enjoying a cyclical upturn that it often sees during economic downturns, while credit unions and online social lenders hope the uptick in their small-business lending volume survives even after banks’ lending returns to normal. …
The article makes some sweeping assumptions about factoring and assumes that all factors operate the same. However, even so, the basic point of the article is a good one: small business owners like you have more sources for getting funding for your business than the traditional SBA loan or bank loan.
Just because the Small Business Administration is giving fewer loans under their main loan program doesn’t mean funding is drying up across the board. (According to the online lending auction site Prosper.com, Small Business Administration gave out 17.6% fewer loans compared with the same period last year.)
