The ‘Great Recession’ may be behind us, but the economy is still full of uncertainty. For some business owners, they are still struggling to get back on their feet. For others, foreign competition, or new technologies have thrown them a curveball.
The government knows it is tough to run a small business, but they are doing little to help. According to a recent report from the Federal Reserve, ‘47 percent of the respondents applied for financing, and of these, about half were approved for all the credit they were seeking.’
If healthy businesses can’t get the money they need, then what about struggling small businesses? Banks are not an option. Their requirements are too inflexible. Even if they do come through, they will expect you to sign away your life.
This is no way to treat someone who is reaching for the American dream. You are trying to build something and your employees rely on your business for their families.
The internet is full of stories about struggling small business owners who are going to extremes to get loans: taking out second mortgages, going into credit card debt or borrowing from friends and family. You name it, someone has tried it.
When seeking financial help for struggling small businesses, you really need to think about all the options available today. This could include loans based on receivables, or inventory, even special loans for female or minority owned businesses.
Seek out the advice and counsel of experienced business leaders in your community. Often they will be able to provide some perspective as you look at your choices.
Alternative Funding Options
When the government and banks aren’t helping small businesses, many small business owners think they’re out of options. However, the good news for a struggling small business is you can turn to alternative funding options to help you bounce back. In fact, this is why alternative financing has become the lifeblood of struggling small businesses in the U.S. today.
Alternative funding options could include a merchant cash advance. Unlike the fixed loan payment associated with a Working Capital Loan, a Merchant Cash Advance is paid back based upon your daily credit card transactions. These can be useful, especially in the short-term. They can help you get through the tight times and smooth out your cash flow.
Other non-bank options can include customer financing and supplier financing. Customer financing is when you work out faster payment terms with your customers. This can be at a slight discount, by requesting deposit payments for future orders. This can be a great option when you are providing a high-value-added service for your customers.
If customer financing focuses on your customers, then supplier financing focuses on your suppliers. In many ways, it is better than customer financing. The way supplier financing works is by usually by extending payment terms to your suppliers. Other options can include getting inventory on consignment or even using your supplier to get the financing you need to pay for your orders.
This is an extremely useful tactic for a struggling small business. One which works best when your suppliers will be affected by your hardships.
One last supplier financing option is even selling part of your business to your supplier. Though this also means they might learn more about what makes your business special. As such, it should be a final option.
Beyond a merchant cash advance, customer financing, and supplier financing, there are hundreds of alternative finance companies out there willing to help struggling small businesses. So even if you are running a struggling small business, there is always the opportunity for you to find the funding you need. Banks and the government might not be much help, but there are many funding options to choose from. Talk to a funding expert and find the best option for your business.