Traditional bank loans can be time-consuming to obtain, and you’re not ever guaranteed that your business will get approved. Most banks want to deal with large corporations, not small-to-mid-size businesses. Alternative lending is becoming a popular way for smaller businesses to find funding without taking on more debt and obtaining capital quickly. Here are some things you should know about alternative lending.

Asset-Based Financing

Factoring, AKA accounts receivable financing, merchant cash advances and purchase order financing are based on assets you own. With factoring and purchase order financing, you use the invoice or PO to get working capital. Essentially, you’re selling an asset to a lender. A merchant cash advance is based on future credit card sales. You get an influx of cash based on your sales. Your business pays that money back out of your daily credit card receipts. These programs can be quite helpful when you need quick cash, but you should check the interest rates to make sure you’re getting the best deal.

Crowdfunding

Crowdfunding has helped many businesses raise the funds they need without giving up equity in the business. Instead, your business promises a specific item for a person’s financial support. You might give out a free sample. In some crowdfunding models, investors might receive a portion of your future revenues.

Peer-to-Peer Lending

Another popular alternative lending method is when two people come together in a financial arrangement privately, without involving a financial institution. For this to work effectively, you need clear and precise documentation. One example of this is Lending Club. Be sure to read the contract carefully to know what you’re giving up if you default. Loan terms are generally short, and loan amounts are small.

JNI Lending has many different types of lending for your business. Call our team of financial specialists to get more information.