A Look at the Alternatives to the Traditional Business Loan

Starting a business is a bit like juggling. You have to concentrate on each of the aspects of the business to ensure none of them fall. You’ll need to worry about staffing, office space, inventory, IT systems and many other things. Business financing is likely one of the first hurdles you’ll encounter when you’re looking to kick off your new business. Traditional business loans require solid and comprehensive business plans, but this isn’t the only way to fund your fledgling empire. Here are four other alternatives to the traditional bank loan.

Business Cash Advance

A business cash advance, or merchant cash advance, is a way of securing funding by selling future credit card or business sales. You’ll receive a lump sum of money paid out to your business and in return, a percentage of your credit card or other income will be deducted to pay back this loan. It’s a quick and effective way of getting a lump sum cash injection should you need it with a repayment method that won’t break the bank. You can get a business cash advance, as well as other financing options from https://advancepointcap.com.

Invoice Factoring

Invoice factoring is a newer type of business loan. If your business invoices on terms and has a lot of income outstanding, then this might be a good option for you. Essentially, you’re selling your unpaid invoices to a third-party company who will give you a percentage of their value upfront, and then collect the payment from your customer. This way you get cash up front, albeit a smaller amount, and the financing company recovers their costs through your customer’s payments.


A rather new entrant into the funding ecosystem is the idea of crowdfunding. This works most effectively when you’re bringing a new or innovative product to market and can offer those backing your company or product something in return. Instead of pitching your idea to a bank loan officer or investor, you are essentially pitching it to many, many online users. By creating an interesting and appealing presentation video or images, you can show your idea to everyday people that will each fund small amounts if they like your idea, usually in return for the product you’re going to be making.

Friends and Family

An unlikely source of business funding that many entrepreneurs overlook is offering the chance for friends and family to contribute to the start of your business. Of course, there are personal relationships at play here so a solid legal agreement should be a prerequisite. You can either structure this as a loan or you can offer them shares or a percentage of profit for a set amount of time or even the lifetime of your company. A particularly big investor might get offered partnership.

Business financing can be a challenge but it’s one all entrepreneurs need to overcome when starting out. Leveraging the different funding sources will mean that your business can get the start-up capital it needs to be successful in the market.