9 Unorthodox Borrowing Sources For Your Business
On 10/28/2015 the federal reserve made it clear they are seriously considering a rate hike in December, so you ask...how does this potential rate hike affect you the owner of a Small/large business?
If you foresee needing a loan now is a good time to act, to postpone this for a later time would surely mean a more unpleasant experience as lender as sure to apply more stress test to their loan. Bankers will not only take into account your current financial situation, they will also look into the stress this an future rate hikes can impact you and your situation in the future as interest rates inevitably increase.
Due to these changes taking place. Now is a the perfect time to explore other lending options outside the traditional "brick and Mortar"bank loans.
These are some options that may suit help in time of need, each with it's own pitfall none the less these are strong alternatives that could help in time of need.
1) Credit Cards
The Small Business Administration reported that over 10 percent of small business financing for businesses comes from personal and business credit card debt.
"A word of caution. While there are federally mandated protections to personal credit card holders from sudden interest rates hikes, business credit cards are generally exempted from this protection. Just as with personal finances, look at credit cards as an expensive, but handy credit source for short-term business liquidity."
2) Life Insurance
Often overlooked and undermined source of liquidity is the "equity in a cash value life insurance policy". Typically these manageable Interest Rates, and in most cases the borrower sets the repay period.
3) Startup and New Ventures
Explore lending opportunities for startups. Entrepreneurs will look and consider beyond bank loans.
4) Legal Expense Deferred Compensation
Big expenses for small companies come from legal cost that come hand in hand with getting started.
Called “deferred compensation,” some attorneys can work it out to where you pay nothing until you start to get money in your business, the details are to be worked out with the law firms but in most cases they will be willing to work with you.
Ask for donations from various sources to secure funding.
6) Peer-to-Peer Lending
peer-to-peer lending. These loans are provided by private organizations like the Lending Club.
The difference between Peer to Peer and crowdfunding is that you don’t give up equity . Interest rate will only be collected on the amount of money borrowed
Businesses have needs for lending in order to maintain sometimes unexpected costs of operations. Lines of credit from a banking institutions is an optional way to secure funding in case of need.
8) Factoring Receivables
Factoring means business selling its accounts receivable to a third-party financial company These financial companies known as a “factor.”
9) Supply-Chain Financing
Supply-chain financing means the bank financing is mapped in another way. it's structures to counter business deal with small sums of payments from the their clients.