Creative Strategies for Getting Small Business Loans

These days, banks like Bank Norwegian are very stringent in who they lend money to, and small businesses without collateral or good credit are simply not going to get funded. This doesn’t mean you have no options when you want to grow your business or increase working capital, though, but you’ll need to get creative if you want to get small business loans today, particularly start up business loans or those for bad credit. Here
are some creative strategies that may work or you.Factoring is an ancient form of lending that involves selling your accounts receivable to a third party to get immediate payment. While you’ll receive money instantly, rather than waiting up to 3 months (or never) to get paid from your customers, it can be expensive. These forms of small business loans are best for businesses that are growing, not those shrinking in size.

You might be tempted to borrow money from your 401(k) or IRA to fund your business. Think about a 60-day interest free loan first, because you won’t have to pay fees if you pay back the balance before then. Keep in mind this strategy is very risky and you could be destroying your financial security if you lose the business. Depending on where you live and your business type, you may have luck by searching for local, state or federal government grants, such as those through the Department of Commerce or the USDA. Don’t forget, though, that these business loans typically have very strict requirements and most have strings attached.

Peer-to-peer lending websites like Lending Club allow you to get funding from people you don’t even know. The amount you will pay depends on many factors, including the length of the loan, your credit, your reasons for getting the loan and even the economy as a whole. Despite what you may think, peer-to-peer loans are not necessarily easy to get and the interest rate may be very high.Crowdfunding is similar to peer-to-peer lending, although it allows strangers to invest in your business or your idea in exchange for something that isn’t money. You don’t have to repay this funding, and you may offer your donors something unique like some of your first products if you’re after an alternative to start up business loans, or even naming a product after them. Kickstarter is one of the most popular websites that enable crowdfunding, and your ability to take advantage of this option depends on how appealing your idea is.

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