Getting a loan for a small business from traditional banks is not easy. Bank loans mostly require stellar credit and experience in business. Even then, many borrowers are not able to qualify for a bank loan. Fortunately, there are several alternative financing options available for borrowers that can’t qualify for a bank loan. In this post, we’ll discuss those options.

1. Term Loans

Term loans allow business owners to borrow a sum of money that they are required to pay back over an agreed period of time with interest. Online lenders offer term loans and borrowers are usually required to pay them back in two to five years.

Although qualification criteria of term loans are lenient than bank loans, they are a more expensive loan option. Term loan application is processed quickly, but there are only a few lenders offering this loan.

2. Equipment Loans

Equipment loan is an option available to borrowers who require money for buying business equipment. With this loan, lender advances 100 percent of the total value of the equipment. The equipment purchased by the borrower serves as collateral. The lender may acquire the equipment and sell it if the borrower isn’t able to repay the loan. The purchase of equipment must be audited by the lender which means that the loan application process can be lengthy.

3. Short-Term Loans

Short-term loans are similar to term loans as the borrower is given a particular amount of money that they must pay back over a period of time. However, the repayment terms of these loans are shorter than term loans. Typically, they must be paid between 3 and 18 months. Short-term loans can be processed very quickly and the borrower can get the funding within days. But, these loans are more expensive than term loans.

4. Invoice Financing

This is an excellent financing option for business owners who have late-paying clients. With invoice financing, borrowers can get a sum of money equivalent to about 50 to 90 percent of their outstanding invoice.  Bad credit won’t affect invoice financing and borrowers can get it even if they don’t have a lot of experience in business.

5. Merchant Cash Advances

With merchant cash advance, a financing company gives a cash advance to a borrower that they must pay with their daily credit card sales. The good thing about merchant cash advance is that a financing company doesn’t consider the credit score and experience of the borrower. They only check the daily credit card sales of the borrower to determine whether they can pay back the loan. However, merchant cash advance should only be taken when borrowers cannot qualify for other loans as it is the most expensive loan option on the market.

In addition to the financing options highlighted above, there are several other options business owners can consider for getting a loan. Make sure to check them out at KLB Business Funding.