Alternative Business Funding
Business funding is a really important topic. For most entrepreneurs and business owners, there’s a sense of urgency when it comes to funding. Others may not need the money today, but would like to have cash on hand “just in case.” For example, if you came across a great deal, but didn’t have the capital available to take advantage of the opportunity, you’d be very frustrated. Business funding is ideal for any entrepreneur to have available at any time.
You probably don’t realize you need business funding until you run out. Here at Quest Education, we’re going to teach you how to get the business funding you need. That way, you can pull the trigger and make the investments you need to move you towards your financial goals. By acquiring the business funding you need, you’ll be able to take your entrepreneurial endeavors to the next level.
What Is Alternative Business Funding?
Let’s define alternative business funding before we go any further. Alternative business funding is capital for small businesses that comes from non-bank lenders. These lenders are financial institutions that do not offer both lending and depositing services (usually just one or the other). Non-bank lenders offer dozens of types of loans, so anyone considering this option should study the loan terms in detail before moving forward.
How Can You Get Alternative Business Funding?
There are countless places to secure alternative funding for your business. Once you start your search, you may find so many options that you feel overwhelmed. To narrow down your choice, try to find a reputable lender someone else can recommend. Then look for reviews and compare the costs of various loan options until you find one that feels right for you.
Once you’ve decided on a lender, you’ll simply fill out paperwork to apply for the loan and wait for a screening process to see if you qualify. After you’ve qualified, you could have the money within hours or a few days, depending on the lender.
How Can You Use Retirement Funds for Alternative Funding?
Though you may have been putting away money for use in retirement, you luckily have the option to take it out as a form of business funding. This is a great option because you won’t have any debt or interest, you’ll have quick access to the funds, and you’ll be independent of any investors.
To go this route, you’ll need to use a Rollovers as Business Startups (ROBS) method. This means you’ll take money from a 401(k) or IRA, start a C Corporation, and then transfer funds from your personal retirement account into a company-sponsored retirement account within your business.
Traditional banks pull a hard credit check affecting your credit score with every inquiry.
Interest rates for small-business loans from banks can be quite high, and the amount of bank funding for which a business qualifies is often not sufficient to completely meet its needs.
One of the greatest disadvantages to bank loans is that they are very difficult to obtain unless a small business has a substantial track record or valuable collateral such as real estate.
Having a lower credit score may decrease your chances at getting funding.
Too many credit inquiries will negatively affect your credit score.
Did you know?:
"Education and empowerment around creditworthiness is a core issue, and can make or break a small business’s ability to get financing.
Many business owners starting out are unaware of business credit, and may do significant damage to their credit without realizing it."
Here is a comparison of one of the many alternative funding options we have educated our customers with: