How to Get a Business Loan… Without a Bank
It may not be easy to get a loan with your local bank, especially if you have bad credit. However, if you need money to start a business or grow it bigger, there are lenders out there willing to help you with funding.
What to Look For
When shopping for unsecured loans, look for programs that do not have pre-payment penalties or lots of fees. The lower the interest rate, the better.
Many people are surprised to find that small business loan rates are lower than they expected when looking outside a bank.
Just like with traditional loans, applicants can improve the rate they receive by checking their credit reports in advance to make sure there are no weak spots are repair what is fixable.
Alternative Lenders with Low-Interest Loans
Companies like Lendio and ForwardLine are helping small businesses secure financing – even if they are home-based. They focus on a business’ credit card sales and longevity rather than assets or personal credit which is how they can fund more small businesses.
ForwardLine is a direct lender, which basically means that they can also eliminate much of the fees and costs associated with traditional loans.
They offer free quotes online, which is great news to entrepreneurs who don’t have a lot of time to haggle back and forth – they simply want an answer.
Entrepreneurs can get between $5,000 and $150,000 in financing, which for many small and home based business is more than enough to get them off the ground. (Companies already operating for one year processing $3,000 per month are already pre-qualified.)
Prosper.com is another lending resource, offering fixed-rate loans up to $35,000 with an interest rate as low as 6.73% APR. Prosper Funding is a peer-to-peer marketplace where individual and institutional investors help finance entrepreneurs and their start-ups.
Crowdsourced funding is also a means of getting the money you need to start your business. Several websites like KickStarter, Community Leader and Indie Go Go have platforms that connect entrepreneurs with investors so they can obtain the financing that they might otherwise not be able to get. Get more information here.
Crowdsourced funding sites often provide fundraising assistance, including creating a pitch, terms of the offer, managing fund collections, obtaining signatures and more.
Small Business Grants
Do you want to get a grant for your business? Grants can be hard to come by, and there are many “government grant” scams out there. That said, there is money available.
Why Does the Government Offer Grants?
Small businesses help the economy thrive: they hire and pay workers, they pay taxes to the government and they provide products and services to the community. It’s in the government’s interest to help small businesses get started and be successful. However, government grant money is not widely advertised.
In addition, state and local groups offer grants, as well as non-profits and other organizations. There are grants offered in certain industries or for special purposes. Sometimes a business grant may need to be combined with other financing or funds matched. The task can become overwhelming without expert help.
If you need to find a grant writer, AlliedGrantWriters.com is a Better Business Bureau accredited company that offers business grant writing, non profit grant writing and federal grant writing services. They also write mini grant proposals and offer several other grant related services.
New York Times Bestselling Author Matthew Lesko runs a website dedicated to helping people find available grant money – especially entrepreneurs. He lists 10 Free Government Programs that are available to help small businesses increase their sales.
Lesko also has posted over 150 videos on his site that visitors can watch for free. Videos cover all aspects of obtaining money and grants from the government, including local business grants, help for struggling entrepreneurs, green business grants, grants for non-profits, how to secure government contracts and more. He helps people find and apply for business grants through his Government Money Club.
Microfinance and Micro Loans
Another alternative to getting a small business loan is to get a micro loan. Micro loans can provide start-ups with needed capital, and they can also be used by existing businesses to grow operations. Micro loans can sometimes provide solutions for entrepreneurs with poor credit, those without collateral and people who don’t have a stable income or are unemployed.
Microfinancing can be easier to obtain than the traditional bank loan and can be used for a variety of purposes. However, borrowers may be required to go through business management training in order to qualify. If your business provides employment for others and/or improves the quality of life for those in low-income areas, you may also have a better chance of getting a micro loan.
Small Business Administration Loans: The SBA is a government organization that helps small businesses unable to get loans through normal lending channels (including special interest loans, micro-loans and secondary market programs). To find a non-profit lender in your area, contact the Association for Enterprise Opportunity at 202.650.5580.
If you are a start-up business, you can apply for unsecured loans online with America One Unsecured. If you are located outside the USA, Accion specializes in microfinance worldwide, and they can be reached by calling 866-245-0783.
A limited number of credit unions offer small business loans and can be an additional resource. As long as you are a member, you can apply. Be well-prepared. Since credit unions are owned by their members, they obviously want to minimize risk and carefully review loan applicants.
More Tools & Creative Ways to Obtain Financing
Tip: Put together a business plan to make it easier to get financing (see sample plans). When investors (even peer investors) see that you have a well-thought out plan, they are more likely to invest in you. The key is to demonstrate to them that your business concept will be profitable – before they invest with you.
Small businesses that have been operating for at least two years can find capital through the ReceivablesExchange.com, a global institute of international investors to whom small business owners can sell their receivables in exchange for working capital to grow their companies.
Dun & Bradstreet has been helping businesses for decades to improve, monitor and manage their business credit. Through their site, you can start building your business credit.