For small businesses, it is critical to have access to fast funds. While in most instances, their liquidity requirements are small (less than $10,000), the speed of funding is vital. The traditional banking sector has, sadly, not been able to serve the needs of SMEs – the approval time generally extends into weeks, rejection rates are high, and funding offers are rigid. And if by chance, the owner or the business doesn’t have a good credit history or collateral, then the chance of getting the funds become razor-thin.
The failure of the traditional financial sector prompted SMEs to look elsewhere, and they found a perfect partner in alt-lending institutions, who provide fast and flexible funding to all sorts of businesses – even the ones deemed high-risk.
Here is a list of the most useful types of alt-fin services for SMEs –
Equipment Financing: For SMEs looking to upgrade or add new services, the high cost of equipment is usually their biggest expense (and hence, a roadblock to growth). Alt-lenders such as Mantis Funding, which primarily serve New York-based businesses, offer two types of equipment financing – leasing aid and equipment purchase funding. In both these offers, the business owners just need to put in a small initial amount while the rest of the expense is taken care of by the lender.
(Recommended for businesses that don’t have enough cash reserves for purchasing expensive equipment or don’t want to tie up cash reserves in large equipment payments)
Business Line of Credit: A perfect option for small businesses looking for long term funding! A line of credit works just like a credit card wherein a certain amount is agreed upon between the lender and the client. The business owner can withdraw and use the sum as and when required and only pay interest on the amount used.
(Recommended for businesses looking for capital for long-term operational costs such as working capital or as expansion funding)
Accounts Receivable Financing: Using their business receivables (such as invoices) as collateral, SMEs can generate capital through alt-lenders. Companies like Mantis Funding reviews the receivable and purchases it for cash. When the money flows in, they get repaid automatically.
(Recommended for businesses strapped for cash due to slow payments from customers)
Merchant Cash Advance: A merchant cash advance (MCA) is like an advance on a business’s future earnings. It is decided by looking at a projection of future earnings, based on past revenue patterns. For example, Mantis Funding reviews quarterly or annual revenue flow of a company and, based on that, advances a cash amount. The repayment is made as a percentage of their daily sales.
(Recommended for companies in need for quick and small funds to tide over urgent cash flow problems)
Purchase Order Financing: For businesses, which have pending orders but are having trouble fulfilling them as they don’t have immediate capital to buy manufacturing supplies or pay for business expenses, purchase order financing is a perfect funding option. They can sell a customer’s purchase order in exchange for capital and fund the manufacturing costs.
(Recommended for businesses looking to expand their services with new clients)
For entrepreneurs, doing business has become a tad more manageable with the support of alternative lenders. Whether they need to get through a tough cash flow situation or grab a sudden business opportunity – SMEs can now be sure of gaining access to fast and fair funding deals through agencies like Mantis Funding.