If a small business loan isn't right for your company, consider these other ways to finance your business.
Small business credit cards
I love using small business credit cards as a source of short-term funding for three reasons:
- It can be free. If you pay off your balance in full before the due date, most cards won't charge you interest. If you need to carry a balance, you can get a card with an intro 0% APR deal to avoid interest fees on that balance, too.
- They're reusable. Credit cards are like a line of credit; as long as you keep paying them off, you can use them again and again. In fact, using and paying off your card on time every month is a great way to build credit.
- You can earn rewards. When the business budget is tight, earning that 2% to 5% cash back on your big expenses can go a long way.
Check out our best small business credit cards to find the right fit for your business.
Outside investors
Many businesses grow with the help of financing from investors. This could be as simple as taking on a business partner, or as complex as finding an angel investor or venture capitalist. Just keep in mind that most investors will want some sort of say in how your business is run. At the very least, you'll need to repay your investors with regular dividends or a percentage of your revenue.
Fundraising and crowdsourcing
Plenty of small businesses get off the ground with a little help from friends and family. (If you're not going to pay that help back, then they're donors, not investors.) In today's digital age, you can also look for donations from the world at large on a crowdsourcing platform like Kickstarter or Indiegogo.
Personal loans
If your business revenue isn't great but your personal credit is, you could potentially qualify for a personal loan even if a small business loan isn't an option. Most personal loans are term loans that typically range from 24 to 60 months, though shorter and longer loans are available. Interest rates will depend heavily on your credit and income.
Merchant cash advance (MCA)
A merchant cash advance is very similar to a personal cash advance. It's an extremely expensive type of short-term financing that promises a portion of your sales revenue as repayment. The pro of this type of financing is that your personal credit isn't much of a factor. The downside is that your interest rates can easily hit triple digits. This should be considered last-resort funding, and only if you have absolutely zero other options.