There are moments in our lives (or in the life of business) where extra funds are needed to make both ends meet. Traditional loaning institutions such as banks are very strict that there’s a small chance of being approved especially if you lack the documents to prove your income.
When The Bank Turns You Down…
Banks and credit unions are usually the main sources of funding. This could be in the form of business loans, personal loans and other types of loans. This could also be in the form of an overdraft and lines of credit. Below are other sources to consider apart from banks and credit unions.
- Before looking for funding sources outside, it would be nice to look for funding sources within your circle of family and friends. If a family member or a friend decides to lend you the funds you need, make sure that everything is placed in writing to avoid possible conflicts in the future.
- Peer-to-peer loans are another source of funding. This is consistent with those who need the money and those who have the money to invest. Loaned funds must be paid with interest rates for a certain period of time. Interest rates can vary depending on the level of the risk of the borrower.
- A factoring company or debtor financing is also another way to get funding. Factoring refers to the sale of invoices or bonds to a third-party financial company or, in this case, to a factoring company. In this way, a company can get the necessary cash without waiting for payment from customers. Customer payments are credited directly to the factoring company. Fees associated with this service vary by company. Before deciding on a factory company and entering into a contract, it is important to compare the costs involved.
- Invoice financing is somehow similar to the factoring concept. The difference is that customer payments are paid directly to the business, not to the financer. In this case, the customer is not involved and does not know the agreement between the business owner and the finance firm.
- Retailers and suppliers can provide some kind of store credit. Some retailers provide an in house credit line but other retailers can also pass a store card through a financial company. Despite this, the interest rates on store cards are high, but some retailers offer free interest periods that any business can take advantage of.
- Pre-settlement loans. if you are a business and facing litigation due to personal injury, you have access to this type of loan. While this loan is not really a loan by its definition, it’s actually a cash advance from the court case settlement. This means funding is drawn against the expected amount you get from a pending case. This is also known as car accident loans, lawsuit loans, and litigation loans.
If the banks have turned you down, you have options to consider, you just have to know where to look. Talk to a financial advisor regarding your circumstance to provide you with alternatives that may suit your case.