When is Alternative Financing The Right Path For Small Businesses?

Navigating the small business landscape isn’t a hobby – it’s a lifestyle. Deciding to pursue a small business path, either as an entrepreneur or an investor requires just as much attention to detail as it does passion for a company or product.

And the other major element it requires?

Money. Capital. Financing.

Often the difference between life and death for a small business comes in the form of a cheque. The source of the income can vary, but when a company needs production costs covered or support to hire staff to make production possible in the first place, a healthy investment is the lifeblood of success.


Alternative financing is gaining steam in the small business sector. Here’s why:


When Flexibility is Required

“One of the most obvious and common answers is that businesses seek financing when they’re faced with an unexpected opportunity or challenge that requires quick capital.”

That’s David Sederholt over at entrepreneur.com. Sederholt says that alternative financing can kickstart a company with the capital necessary to join the market place.

Alternative financing also allows business owners the opportunity to hand-select their investors. Meeting potential lenders and coming to a common ground on the purpose of the business and how the business will pay dividends for everyone involved is an important step in building confidence on both sides of the fence.


Time-Sensitive Opportunities

Imagine your business was starting to pick up steam. You’re gaining traction with new clients, your products are received well and income is steady. Now imagine and an opportunity came across your desk to take the next step, a step that would give your business a significant boost. Imagine you had the opportunity to purchase a new location or a new piece of equipment that would instantly help the company sell more product.

The only problem? You don’t have the capital.

It’s in times like these that the automated process of borrowing money from a bank leaves business owners without a viable solution. With a rock-solid business plan and a willing investor who’s seen evidence of a company’s potential, alternative financing can be the final step toward pushing a company over the top.


When Theres Motivation to Grow

An alternatively financed loan can be the right step for any small business who has the ability, the knowledge and the core assets to take the next step. Alternative financing for small businesses is different from securing a mortgage because it exists as one key cog in a greater overall picture. It’s part of a business plan predicated on a useful product or service.

Alternative finance buys time for the borrower. Steven Uster at the Huffington Post owns Zillidy, a company that loans money based on a company’s collateral rather than their credit score.

A bank is able to charge a lower interest rate because they are highly selective in who they will lend to and have dominion over cash.” Steven Uster, Huffington Post


A private lender might charge a greater interest rate, but if it’s a loan that will push your business over the top and lead to greater success down the road, then it’s a calculated manoeuvre that will pay dividends in the future.