Small banks and credit unions, on the other hand, are more receptive to lending small businesses. Credit unions approve 41.6% and small banks 48.8%. Even smaller community banks remain out of reach for most businesses. Many traditional lenders don’t approve loans for restaurants, for instance, or for business owners who have poor credit.
What can you do if your business is in need of cash but a bank loan doesn’t work? Here are four ways to get quick cash for your business.
1. Marketplace lenders. Lending Club and other alternative lenders approve 60 percent of all loan applications. Interest rates can range from 5.9% up to 30% depending on the borrower’s credit rating. Online applications can be submitted in just minutes. If approved, the money is available quickly, sometimes within 24 hours. But not all businesses qualify. Lending Club will only lend to businesses with a minimum of two years’ experience and $75,000 annual sales.
2. Networks of lending. Fundera, for example, has a network of marketplace lenders that connects small businesses with multiple lenders. You can apply for multiple types of loans using one application. This includes lines of credit and term loans as well as SBA loans. The type of lender and loan you can work with depends on your credit score, business history and other factors.
3. Crowdfunding. Kickstarter and other crowdfunding platforms offer the opportunity to raise funds from people with no credit score, but who care more about your business’ potential than their credit scores. Others ask that you give them equity in your business. Some platforms require that you give rewards to your backers. The peer-to-peer lending network Kiva is a low-cost option. But in any form, you will have to work hard to market your company in order to receive the money. This is a good option for businesses who benefit the community, or have a new and unique product.
4. Clover Cash Advance Clover offers merchants cash advances. The merchants must have been operating for at least 6 months and have processed a monthly minimum volume of Visa and Mastercard transactions totaling $1,000. Additional credit qualifications apply. Clover automatically deducts a small portion of your daily credit card sales. This means you don’t have to worry about paying or having money taken out of your account.
There are many options available if a bank credit is not for you. Many of these will give you money within days of applying. You don’t have to let the black mark on your credit report or perceived risk in the industry that you work in stop your business.
