Alternative Funding Options For Your Small Business

As a small business entrepreneur, it’s essential to note that there are several financing avenues. Thus, you can opt for alternative funding options outside of traditional loans if you’re stuck or lack adequate finances to run your business. They can also save the day if you have a poor credit score or aren’t sure of how much you need. 

That said, here are some of the alternative funding options for your small business:

  • 1. Merchant Cash Advances

One primary concern for small businesses is how to pay for daily operations, such as inventory bills. Thus, a fast loan would come in handy. With a merchant cash advance, you can cater to such costs and continue your business operations.

Merchant Cash Advance advantages include faster approval, often within 24 hours. When applying for one, the lender would require you to have daily credit transactions from customers. Proof of at least three to four months of processing credit cards is an added advantage. 

However, note that there are different types of merchant cash advances. These are: 

  • Prequalification: You must apply online and fill out an appraisal form for this type of loan to get approval.
  • Instant approval: You won’t need to fill out an appraisal form to get this loan. 

Getting a Merchant Cash Advance is one of the fastest ways to finance your business, although its high rates make it one of the most expensive funding options. Remember to discuss the payback terms with your lender. If you’re tight on cash, you can negotiate advance payment before they release the whole amount to your bank account. Once the amount is deposited, you should set a daily rate of paying the lender back. Note that you’ll also need to pay some interest.

  • 2. Venture Capital

This option involves an exchange of cash for investments, such as shares. The funds can come from an individual investor or an organization. This can be your best funding option if your business has high growth potential. However, you’re no longer the sole decision-maker once you invite a venture capitalist. They can take on board positions or managerial roles. You need a unique business plan and a vibrant pitch to qualify for this. This way, you’ll attract investors and be set to start before long. 

  • 3. Crowdfunding

Financial services such as crowdfunding are an excellent way to boost your small business. This option works best for newly launched ventures. It can also be a great way to market your brand. 

Note that hosting sites may differ, which means they offer varying advantages. Reading the fine print helps you understand and calculate how much you’ll get from a particular host. If you make the wrong move, you’ll make nothing but peanuts out of this method.

With crowdfunding, you won’t have to pay any interest rates. Additionally, you get an audience already interested in your business. 

  • 4. Invoice Financing

This option allows you to sell your unpaid invoices to a lender. You later pay them some percentage when your payment matures. The interest rate will depend on your agreement with the lender.  So, when going for this option, you can negotiate for better deals.

Invoice financing is a quick way to access funding instead of waiting for the invoices to be paid. It’s best for businesses with a large client base operating with the invoice payment method. 

  • 5. Peer-To-Peer Lending 

This method involves individual-to-individual lending. The whole essence of this method is to match you with an interested lender. One thing about this funding option is that any regulatory body, including banks, doesn’t govern it. You’re required to pay back your lender as soon as possible, usually within the timeline upon which both parties have agreed.

The beauty of this method is that everything happens online, thus, making it a quick and convenient way to get funds for your business. 

  • 6. Microfinancing

Microfinancing is also a quick way to get capital. This option is a simpler version of traditional banking, and the approval time is faster. Again, the interest isn’t exaggerated, and you can easily pay with your daily sales. You need to plan your repayment procedure thoroughly. If you miss your dues, you’ll face severe consequences. You’ll either not qualify for another loan when you need it or end up paying hefty fees.  


Alternative funding methods are excellent for small businesses. They have startup-friendly interest rates, and you can easily access them. Remember to negotiate for fairer deals with your lender if you want to avoid paying expensive fees.