What does “alternative financing” mean?
Alternative financing means that funding didn’t come from a traditional bank or credit union.
Is alternative financing better than traditional lending?
Alternative financing is not inherently better than traditional lending. But alternative lending has less stringent requirements, which opens the door to more business owners.
Why is it difficult for small businesses to get loans from banks?
Banks want to see a solid business track record, good credit scores, and substantial assets. Most small businesses don’t have these resources available.
When did alternative financing begin?
The alternative financing industry has existed in different forms throughout history. But technology made this option more accessible in the early 2000s with peer-to-peer lending platforms and crowdfunding opportunities.
How do I fund a business with no money?
It takes creativity to fund a business without any money. A few options include bootstrapping, crowdfunding, peer-to-peer lending, grants, and pitch competitions.
What’s the most popular alternative financing for a small business?
Crowdfunding is a very popular form of alternative financing. But the right option for you varies based on your business needs.
Do you need a business plan to get alternative financing?
A business plan is sometimes a requirement for alternative financing. But you might not need a business plan to obtain financing.
What is the cost of alternative financing?
The cost of alternative financing varies widely based on the option you pursue. For example, merchant cash advances are very expensive but bootstrapping avoids financing costs.
How do you find alternative small business financing options?
Alternative small business financing options are available through many online lenders and crowdfunding platforms. But you can also pursue local opportunities through networking groups.
Can I get alternative small business financing with bad credit?
Yes! It’s possible to get alternative small business financing with bad credit.
Who are the best alternative lenders?
A few of the best alternative lenders include FundBox, Credibly, Fundera, Rapid Finance, and Lendio.

Final Word

Alternative financing for small businesses can help you tackle the next challenge. Whether you are a growing business or a brand new startup, the right funding source is critical. Take the time to determine which funding solutions you might qualify for and apply today!

About the Authors

Sarah Sharkey

Written by: Sarah Sharkey

Personal Finance Writer

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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Kal Salem

Reviewed by: Kal Salem

MA Accounting - Arizona State University

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

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Somer G. Anderson, Ph.D.

Fact checked by: Somer G. Anderson Ph.D., CPA

PhD Finance - Maryville University

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

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