It is not easy for small businesses and startups to get access to the funds required for their business. If they get access, it comes up with high-interest rates, insufficient collateral, and much more. Keeping in view, the trouble faced by small businesses we came up with alternative financing ways that are easily accessible and require no collateral.
Alternative Financing
Alternative finance is an underrated source for businesses to grow and expand. It is the small world outside the traditional bank loans for raising funds. Generally, small businesses do not carry good creditability scores which creates a lot of trouble in acquiring funds through banks and big money lenders. Businesses need to analyze which source is best suited for them.
Venture Capitalist –
These are the individuals/companies that are known for funding startups and small enterprises with growth potential. They provide funds with no interest rates but a share in your business. They generally provide funding to businesses that have exit or growth plans to secure their investment.
Joint Financing –
Joint Financing means financing through pooling. It involves raising funds from registered and unregistered investors, friends, and financial lenders that have faith in your startup, which in return get a share of your business. It is time-consuming, yet can be effective for your business. It is best suited for businesses with social responsibility and has a large number of supporters.
Buy Now, Pay Later (BNPL Financing)-
What if somebody says to purchase your favorite product now and pay for it later?? Here is BNPL financing that offers the same deal. It is a type of short-term financing that offers short-term loans with fixed payments and no interest charge. According to this, the customer is provided with the funds, that it requires and then pays fixed installments as per the terms and conditions.
Venture Grants-
It is a non-refundable type of financing offered by institutions or government bodies to boost and expand small businesses or startups. They are free money that can be used in business without the worry of return. There are several government schemes such as Startup India to benefit startups with funding and guidance.
To avail the benefits of grants, find out the details and criteria for upcoming grants that you and your business qualify for.
Online lenders – Revenue Based Financing
Online lenders like Vedfin are considered the best alternative financing providers for small businesses. These types of funding are easy to raise compared to traditional bank loans. It involves an easy application process and minimal paperwork. It provides you an ease of pay back loans in small percentage of your income. It helps you to get loan without paying hefty fixed instalments, collaterals or a large bank statements. If you are having a good business plan that reflects beautiful future income and opportunities of profits, you can apply and avail benefits.
Business Credit Cards-
Credit cards not only provide financial assistance but also offer rewards and benefits to businesses. It is a kind of short-term loan for businesses. It provides the amount of money the credit card allows you to pay bills and make purchases above the balance that your account holds.
Recently, credit cards offered the service of converting huge purchases and entire bills into EMI payments, simplifying for small businesses to grow.
Fintech Lenders-
Fintech lending refers to the use of financial technology, including APIs to help lenders make quick and informed decisions. It generally encourages traditionally underserved P2P and small business borrowers by assisting with an alternative means of funding and enhancing their financial health. These lenders provide smaller loans, credit options, and functions mainly online. It is a convenient option for those who need quick funds without going through the hassle of a traditional bank.
With fintech, many companies benefit from expanding their finance alternative.
Conclusion
Alternative funding options can help you save time and rejections as compared to traditional funding methods. There is a wide range of alternative options available for small ventures to grow. No matter the funding option you choose, your business needs to back itself in acquiring funds.