Roughly 80% of all small business owners get denied bank loans for one reason or another, so it’s impossible to say what options are available “for you” without knowing anything about your situation. Industry, time in business, cash flow ratios, debt ratios, loan purpose, collateral, etc. There are many factors that need to be considered to determine why you were denied a bank loan in the first place, and which path to take moving forward. With that being said, you have everything from crowdfunding, VC, private equity, equipment financing, alternative lending, P2P, micro-loans, grants, etc. This list here is endless. Not knowing anything about your business, and/or why you were declined by your bank, it’s tough to pinpoint an answer. However, here are some non-bank small business loans options to consider:
Small Business Cash Flow Loans
Even if your small business is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of small businesses throughout all industries. In a perfect world, you’d walk into your local bank and walk out with a business loan long before you wound up in a cash crunch. Well, those days are long gone! If you haven’t been in business at least two years, or lack good credit and collateral, chances are a traditional bank loan is never going to happen.
In order to deal with this shortfall, a cash flow loan may be your best option. For this type of business financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will usually be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of a cash flow loan, as funding usually takes place in a matter of days.
A cash flow loan may be used for any business expense, but some common uses are:
High ROI short-term opportunities
Purchasing highly-discounted inventory
Short-term cash flow loans are best used for short-term projects that would divert money from day-to-day expenses but ultimately grow your business, like taking on a big contract with a major company or adding extra seating in your restaurant. If you need cash fast, a cash flow loan may be your lifeline.
Small Business Revenue Based Loan
There’s never been a better time or more choices for small and medium-sized businesses that need capital. And what business doesn't? Expanding, purchasing equipment, and evening out cash flow can all be managed with business financing. But business loans from traditional financial institutions are not the way to go for today’s businesses on the grow.
Today’s business owner is constantly on the lookout for growth opportunities and must move quickly to take advantage of them. An opportunity for an acquisition or expansion can arise suddenly and needs an immediate response and immediate cash. There’s also the need to purchase equipment or inventory. And of course, there will always be emergencies and cash flow gaps that need to be quickly managed with working capital.
That’s why revenue based financing & cash flow loans from LVRG are the fastest growing working capital solutions among small and medium-sized businesses. They’re the most prudent option for business owners needing capital to fuel or accelerate their businesses’ growth.
Traditional bank loans are often made for as long as 25 years and require mountains of documentation and financial statements. And then there’s the waiting period, for both an approval and for funding, which can be weeks or months. Don't forget the collateral you'll need for a bank loan, including your home, life insurance policies and up to 30% of the loan amount in cash. Additionally, among banking institutions, the credit turn-down rate for small businesses is rather high (roughly 80%) and doesn't show signs of improving significantly.
Revenue based financing and cash flow loans offer them distinct advantages:
They’re made for shorter terms, usually 6 to 18 months.
They require relatively little paperwork and a simple application to start.
The underwriting and approval process are designed to provide business owners quick answers.
Once approved, business owners have their funds in as little as 24 hours.
Payments based on a fixed percentage of sales.
Repayment terms are favorable.
Poor credit is not a deal breaker.
Financing that doesn’t require any equity.
Easy qualification process with no personal collateral required
Revenue based financing and small business loans can be used for any legitimate business expense, from remodeling or business expansion to buying equipment to launching a new marketing effort. The key here is growth and our business funding options are the perfect solution for business owners looking to take advantage of growth opportunities. These short-term loans for business are popular across every industry and in every state in the U.S. From manufacturing and transportation companies to restaurants and retail stores; short-term business loans are an efficient and cost-effective source of capital, when you need it.
Short-term financing can help businesses build or accelerate revenue in ways they couldn't otherwise. And at the same time, working capital solutions can help business owners negotiate better discounts or terms with vendors and avoid longer-term charges and fees, saving money in the long run. There’s no question why revenue based loans and cash flow financing are catching fire. They’re the ultimate financial win-win for small and medium-sized businesses.
Small Business Working Capital Loan
Nobody faces more challenges on a daily basis than business owners. In fact, for owners of small and medium sized businesses, handling many different challenges is the source of great satisfaction and some headaches, too.
But when business owners are asked to name their greatest challenge, one thing tends to top the list most often; accessing working capital to manage cash flow. In other words, making sure there is enough capital flowing in to cover everything that needs to flow out.
There are a variety of reasons why cash flow can be a steep challenge for small business owners. Needs can precede revenue. Or perhaps you’re getting paid more slowly than you’d like. Or if you’re a seasonal business, a garden center, for example, or specialize in hardy, cold weather clothing and you have peak sales months which require that revenue to stretch across your off-season months.
Often, business owners can optimize cash flow by negotiating longer payment cycles with creditors and encouraging debtors to pay in shorter time periods. But there are other solutions that can help you sail through the lean months with plenty of working capital on hand: a short term business loan or merchant cash advance.
You can put a small business loan “to work” immediately for your business, whether it means meeting payroll for a few months, negotiating a great deal on inventory for paying in cash or hiring and training those new employees you need. Our business financing solutions for working capital can help you operate without missing a beat or even take advantage of an unexpected or one time business opportunity.
ACH Small Business Loans
For starters, an ACH small business loan can also be referred to as a small business cash flow loan, small business revenue based loan or a small business merchant cash advance. The ACH designation really applies to how the lender is paid. ACH or Automated Clearing House, refers to the lenders ability to withdraw an agreed upon amount directly from your checking account at agreed upon intervals, typically daily or weekly. This is different from factoring your accounts receivable (A/R), because instead of billing your customers and collecting from them, they directly access your checking account in much the same way automated payments might go to you mortgage lender or a utility company from your personal checking account.
An ACH small business loan, much like factoring or an MCA loan, should be considered a small business short-term financing option. The cost of the capital is more expensive, in other words you’ll pay a higher interest rate, but you’ll be able to access that capital much quicker than a traditional term loan from the bank or other financial institution.
Because a small business ACH loan lender will be able to pull your payment directly from your checking account, it reduces risk to the lender making it possible for small business owners with a healthy checking account but less-than-perfect credit to get a loan.
Merchant Cash Advance (MCA)
MCA's or business cash advances can provide business borrowers with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, weekly or monthly basis until the obligation has been met. An MCA is not technically a small business loan and as such MCA's are not limited in what rates they charge or what terms they establish and therefore often have high interest rates. For this reason it is very important for a business owner to be completely aware of how the MCA product works and how it could affect their business. MCA's are good options for small business owners who may not have strong credit but have lots of credit card activity and need financing quickly.
There are several financing options available to help your small business navigate short-term cash flow shortfalls and make bigger capital-intensive investments. However, make sure you're getting the right loan or credit option that suits your business's needs. Ideally, a small business loan or line of credit should help you maintain your daily business operations—and set up your company for future growth.
And then there are those costs that no business owner sees coming. The sudden need to replace an important piece of equipment or the need to upgrade technology to improve efficiency and save money in the long run. Repairs, sprucing up the exterior, landscaping, even marketing and advertising can all be critical elements to your brand and your ability to growth the business. In today’s super competitive environment, this is no time to skimp, especially when applying for business funding.