There are more options than ever before when it comes to obtaining financing as a small business owner or entrepreneur. It can be difficult to meet all the standards a traditional bank requires and many entrepreneurs are turning to alternative financing options because it provides access to quick cash and provides greater flexibility. Here are some reasons to consider equipment sale-leaseback, factoring, purchase order financing and other lending options.
Access To Quick Cash
When entrepreneurs find themselves in a jam and need quick cash, it is not always feasible to approach a bank and go through the extensive process of being approved for a loan. Alternative finance options can provide greater flexibility and may be the difference between staying in business or being forced to shut down.
Equipment Sale-Leaseback and Factoring
One of the options to consider is an equipment sale-leaseback. If you need capital, and have expensive equipment, you can take advantage of this option. You can find a lender to buy your equipment and lease it back to you. Another alternative financing option to consider is factoring. The main benefit to factoring is the quick cash it provides you. When you decide to take advantage of factoring, a factor buys your invoices at a discount and then collects from the customers when they pay their invoices. This can be advantageous if you have a lot of unpaid invoices.
Purchase Order Financing
Another alternative lending option that entrepreneurs are taking advantage of is purchase order financing. If your business’s credit is not the best or if you are starting out with a blank slate, purchase order financing is advantageous because is depends on the customer’s credit. It involves a financing agent advancing you money if you are not able to fill a customer’s order.
Which Is Right For You
It can be difficult to choose which type of lending is best for your business but two factors to consider before choosing include timing and what you need funding for. You also compare the rates of alternative financing options and determine how much risk you are willing to accept. Managing and owning a small business can be unpredictable and even if you do not see yourself needing capital today, it is important to keep your options open and consider various lending options.
Entrepreneurs are taking advantage of all the alternative financing options available. It is not always possible to obtain a loan from a bank, and if you need quick cash you can consider equipment sale-leasebacks, factoring, purchase order financing or other alternative options. These alternatives can offer you greater flexibility and provide you the necessary capital to continue to grow your business.