“Small, emerging, growing businesses have few traditional sources to turn to. You have to get a little creative...” Some creative alternatives have been around forever; others emerged during the crisis. Almost all are substantially more expensive than traditional bank loans, which is why they have been sources of last resort. But as demand for alternative options has increased, some prices have come down.
- Asset-Based Lending: Companies sell their receivables, or invoices, to a factoring company, which gives the companies 80 to 90 percent of the value upfront
- Lease-Back: Healthy companies with warehouses, manufacturing locations or other properties that hold value that could be put to use elsewhere.
- Cash Advances: A business receives a lump sum from a lender, which then takes a percentage of the business’s daily card receipts until the loan, plus a predetermined fee, is paid.
- Nonbank Loans: Seasonal businesses, microbusinesses and other businesses that cannot meet bank requirements.
Via Ashok Ramachandran