Banks aren’t the only places to go for small business loans anymore. In fact, seeking a loan from a big bank may be the least effective way to get cash for your business—big banks are currently approving only 23.3% of small business loan applications, according to Biz2Credit’s most recent Small Business Lending Index. In contrast, small banks and credit unions are friendlier to small business loans—credit unions currently approve 41.6% of loans, and small banks approve 48.8% of loans. Still, even smaller community banks are out of reach for many businesses. Restaurants, for example, are considered too risky by many traditional lenders, and business owners with poor personal credit aren’t likely to be approved for bank loans.
So what do you do when your business needs cash and a bank loan is a no-go? Here are 5 places to find quick cash for your small business:
1. Marketplace lenders. Alternative lenders like Lending Club typically approve more than 60% of loan applications. Interest rates range from 5.9% to as much as 30%, depending on the borrower’s credit history. Applications can be submitted online in just a few minutes, and if you’re approved, you’ll get the cash fast, sometimes even within 24 hours. But not all businesses qualify. Lending Club only lends to businesses that have been in operation for 2 years and have $75,000 in annual sales, for example.
2. Lending networks. Networks of marketplace lenders like Fundera link small businesses to multiple lenders at once. With one application, you can check your eligibility for multiple different types of loan products including lines of credit, term loans, and even SBA loans. Of course, the type of loan and lender you’ll be able to work with will depend on your personal credit, your business history, and other factors.
3. Crowdfunding. Crowdfunding platforms like Kickstarter offer the chance to raise money from ordinary people who are less concerned with credit scores than they are with how much potential your business has. Some require you to give your backers rewards; others ask you to give away equity in your company. Peer-to-peer lending networks like Kiva can be extremely low-cost options—but in any form of crowdfunding, you’ll have to do the legwork to market your business in order to get the cash. This option will likely work best for businesses that benefit the community or sell a unique new product—anything that will appeal to a broad audience of ordinary people.
4. Clover Cash Advance. Clover offers cash advances to businesses that process sales through First Data. Businesses only have to have been in operation for 9 months and processing credit cards for 6 months, and there are no personal credit score requirements. Your business can get an advance of up to 100% of your monthly average credit card sales, and repayment is totally automated—Clover will simply withhold a small portion of your credit card sales every day. That means there’s no need to worry about making payments or having money pulled out of your business account.
If a traditional bank loan won’t work for you, there are plenty of options out there, many of which will get you cash within a couple of days after you’ve applied. There’s no reason to let a black mark on your personal credit report or the perceived risk of the industry you work in hold your business back.
[image: Roll of Cash by 401(K) 2012 on flickr]