- Venture capitalists can provide funding, networking and professional guidance to launch your business rapidly.
- Generally, angel investors don’t ask for any company shares or claim to be stakeholders of your business.
- Businesses focused on science or research may receive grants from the government.
- This article is for small business owners who need information on alternatives to traditional bank loans.
Starting your own company can be a daunting but rewarding process. While a great business plan is crucial for founders, financing is one of the most important elements a company needs to succeed.
However, financing a startup or small business can be a difficult, drawn-out process, especially for those with poor credit. While there is no minimum credit score you must have to get a business loan, traditional lenders have a range they usually consider acceptable.
If you have a low credit score and no collateral to offer, consider an alternative loan. In this article, we break down 11 small business funding options, examine the benefits of alternative lending and provide tips on how to finance your business.
Why is it difficult for small businesses to get loans from banks?
Capital is difficult for small businesses to access for several reasons. It’s not that banks are against lending to small businesses – they want to – but traditional financial institutions have an outdated, labor-intensive lending process and regulations that are unfavorable to local shops and small organizations.
The difficulty of accessing capital is exacerbated because many small businesses applying for loans are new, and banks typically want to see at least a five-year profile of a healthy business (for instance, five years of tax data) before extending an offer.
What is alternative financing?
Alternative financing is any method through which business owners can acquire capital without the assistance of traditional banks.