Why Taking a Loan Could Be Your Key to Success

Starting your own company can be challenging but rewarding. While a good business plan is critical for founders, funding is one of the most important elements a company needs to be successful. Fast cash is considered a viable option, especially if you are borrowing from online financial institutions. However, funding a startup or small business can be a difficult and time-consuming process, especially for people with poor credit who still rely on fast cash. 

While there is no standard minimum credit rating required to obtain a business loan, traditional lenders have a range that they consider acceptable and use fast cash. If you have a low credit rating and no collateral, consider alternative loans or payday loans 24/7 options. In this article, we break down why taking out a fast cash loan can be successful for small business financing. We also explore the benefits of fast cash and provide tips on how to fund your business. 

Business Financing Options Without a Traditional Bank

If your small business needs capital but does not meet the requirements for traditional banking with a help of fast cash, there are several alternative financing methods and lenders that can meet your needs by offering fast cash online or doing peer to peer lending. Here are some of the best funding options for startups and small businesses:

1. Community Development Financing Institutions

According to Jennifer Sporzinski, senior vice president of business and human development at Coastal Enterprises Inc. (CEI), there are thousands of Community Development Finance (CDFI) non-profit organizations across the country that provide capital to small and micro-business owners on reasonable terms offering smart distribution of fast cash.

A large number of loan applications come in every week many of which come from ambitious startups. As a mission-driven non-bank lender, we know from experience that many viable small businesses have a hard time accessing the capital they need to get started, thrive, and grow with small fast cash.

Lenders like CEI differ in different ways from banks. First, many lenders look for a specific credit rating which precludes creating many startups while getting fast cash. If banks see “bad creditworthiness,” this business almost always ends up in a bunch of “no’s”. Lenders also look at credit ratings but in a different way.

Affiliate Financing Offering Fast Cash Online

Through strategic partner funding, another player in your industry is funding growth in exchange for special access to your product, staff, distribution rights, final sale, or some combination of these elements through fast cash.

Strategic funding acts like venture capital in the sense that it is usually a sale of shares (not a loan), although it can sometimes be royalty-based where a partner receives a portion of each sale of a product.

Affiliate funding with fast cash is a good alternative because the company you partner with will usually be a big business and might even be in a similar industry or industry with an interest in your business.

A larger company usually has relevant customers, salespeople and marketing programs that you can tap into right away provided that your product or service is compatible with what they already offer which will no doubt have any incentive for them to invest.

Business Angels

Many people think that business angels and venture capitalists are the same thing. But there is one significant difference. While venture capitalists are companies (usually large and reputable) that invest in your business, thereby offering you a quick cash exchange by exchanging equity for capital. A business angel is an individual who is more likely to invest in a startup or early-stage business who may not have the obvious growth that venture capitalists have.

Finding an angel investor can also be a rewarding way similar to getting venture capital funding with fast cash purchased online albeit on a more personal level. They will not only provide funds but will also guide and help you along the way. Remember, there is no point in borrowing money and then losing it. These savvy businessmen can save you much money in the long run.

Invoice Financing or Factoring

In invoice financing with quick cash from an MFI also known as “factoring”, the service provider provides you with money on your outstanding receivables which you pay after the client has paid the invoice. This way, your business will have the cash flow it needs to keep going while you wait for customers to pay unpaid bills.

Eyal Shinar, CEO of small business cash flow management firm Fundbox, said these advances are allowing companies to narrow the pay gap between work billed and payments to suppliers and contractors.

Peer-to-Peer or Market Lending With Fast Cash

Peer-to-peer (P2P) lending is an alternative capital-raising option that introduces borrowers to lenders through various websites. In its simplest form, a borrower creates an account on a peer-to-peer website that maintains records, transfers funds, and links borrowers to lenders. The key difference lies in the risk assessment of the borrower.

According to the SBA, the latest data shows that P2P lending can be a finance alternative for small businesses, especially given the post-crisis lending market. One of the drawbacks of this solution is that P2P lending through fast cash is only available to investors in certain states. This form of lending made possible by the Internet is a hybrid of crowdfunding and market lending. When platform lending first hit the market, it allowed people with little working capital to lend to others.

Over the years, large corporations and banks began to crowd out true P2P lenders with their increased activity. In countries with more advanced financial industries, the term “market lending” is more commonly used.

Cash Merchant Advances

A cash advance for merchants is the opposite of a small business loan in terms of affordability and structure. While this is a quick way to get capital, cash advances should be the last resort due to their high costs. A fast merchant cash advance is when a financial service provider provides a lump sum of funding and then buys the rights to a portion of your credit and debit card sales.

Each time a merchant processes a credit or debit card sale, the vendor takes a small fraction of the sale until the advance is returned. Online cash advances can be very expensive and problematic for your company’s cash flow.

If you cannot qualify for a small business loan or any of the above options, only then you should consider this option. Just be aware that you may end up wanting to get out of it.

About guest author Frank Glemstone

Frank is a graduate of the Master’s program in Economics Sciences. He has written numerous articles about personal finances and wealth. Working as the main author for MoneyZap he is now with clients across the country, helping them achieve their financial and life goals.

Jeff Campbell