Getting financing for a new business venture or a new product is always a challenge for the small business owners.
According to the U.S. Small Business Administration (SBA), about half to two-thirds of small businesses seek financing from a number of sources, including non-banking institutions.
In recent years, a number of alternative lending options have become popular for small businesses interested in accessing extra capital. Check out this list of cash advance small business loan sources.
Small Business Capital Options
Kabbage: Lines of Credit
Kabbage provides working capital online. It offers working capital or small loans payable over six months. The average line of credit is between $2000 and $100,000. Unlike traditional lenders, Kabbage approves loans by looking at real-life data, not just the credit score. It’s worth mentioning that the approval process is quite transparent and takes only a few minutes.
On the flip side, however, you need to pay back your loans within six months.
To be eligible, you need to be in business for one year or more, and make over $50,000 a year in revenue. To date, Kabbage has funded over $1 billion to help small businesses grow.
OnDeck: Short- and Long-Term Loans
Launched in 2007, OnDeck offers short-term loans of up to $250,000 and long-term loans of up to $500,000. The company also provides lines of up to $100,000 in flexible cash.
OnDeck doesn’t require high credit scores and its application process can be completed in about 10 minutes. More importantly, you can receive funding in just 24 hours. Another big plus is the transparency of the loan terms.
On the flipside, however, OnDeck doesn’t offer unsecured loans. So, when a business takes a term loan from OnDeck, a general lien is placed on the business’ assets until the loan is paid off. The business owner also needs to give a personal guarantee for the loan.
To qualify, you must be in business for at least a year, have a 500+ credit score, and annual revenue of more than $100,000 in the past 12 months.
SnapCap: Unsecured Business Loans
SnapCap offers unsecured loans of between $5,000 and $600,000 to small businesses. Unlike traditional lending that requires collateral to obtain financing, an unsecured loan — also known as a merchant loan — uses other factors to judge a loan application. These may include your credit score and sales performance.
SnapCap has a simplified lending process and a turnaround time of 48 hours. The company also offers some of the most competitive short-term loan options available today.
To qualify, you will have to share some information about you and your business. Some of the questions that you should expect to answer include:
• When did you start your business?
• What industry are you in?
• How much revenue did the business generate last year?
Fundation: Working Capital Loans
Fundation offers conventional business loans of up to $500,000. The online application process takes about 10 minutes, followed by an immediate initial credit analysis. The analysis ascertains whether or not you are a good fit for the loan. Once your application is approved, it takes three business days for the funds to reach your account.
The biggest challenge with Fundation is its eligibility criteria. If your business has not been operational for at least two years and doesn’t generate at least $100,000 a year, your application will be automatically rejected.
Your financials will play a major role in determining whether or not your application is approved. In addition to other criteria mentioned above, you should have at least three employees and good personal credit.
RapidAdvance: Merchant Cash Advance
RapidAdvance offers a merchant cash advance program best-suited for businesses that may not want, or cannot qualify for a traditional loan. The funds can be used to expand, renovate or reduce debt.
The company has a simple and short application process. Once you contact them, you will be required to provide some basic information about your business. Based on your inputs, you will receive a preliminary funding amount. If you are fine with the estimate, you will be required to provide more details about your business. The approval process takes about 24 hours and funds are made available within just three days.
The biggest limitation is that RapidAdvance does not work with online businesses. Moreover, it doesn’t offer prepayment discounts, unlike other lenders.
To qualify, your business should have a physical location. You must also be in business for at least three months and process at least $2,500 a month in Visa and MasterCard receivables. It is necessary to have at least one year left on your lease.
Accion: Microloans
Accion has been in the business of lending funds to small business for over 20 years. For businesses that need funds to grow, Accion offers loans in the range of $500-$100,000. The microloans can be used to purchase inventory, upgrade equipment or as operating capital.
It takes about 15 minutes to apply for the small business loan. You just need to provide basic information about your business to get started.
The biggest downside is that you need to provide collateral and equity to be eligible for the loan. Collateral could include real estate, if free and clear.
To qualify, you have to show your ability to repay the debt as well as proof of your income and revenue. You should also be in good standing with creditors and have a credit score of 500 or higher.
Biz2Credit: Online Loan
Biz2Credit is an online marketplace for small business funding. Its proprietary platform, serving more than 1.6 million users, connects borrowers to sources of capital based on each company’s unique profile.
Biz2Credit enables businesses to secure loans from $5,000 to $1 million. The application process is fairly simple. You have to complete a single application to get the best financing options available for your business.
A key highlight of the Biz2Credit platform is that it provides customizable financing programs for businesses that do not have a great credit score.
The only downside is that the funding process may take up to four weeks.
To be eligible, you should be in business for at least two years, be profitable and have a solid credit history. Startup loans are also available to entrepreneurs who are in the early stages of their ventures.
Image: Kabbage
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