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Additional Lending Options for Small Business
Mortgage Lender
Usually allows for a long-term repayment based upon monthly payments of principal and interest. The collateral is a security interest in real estate which may be the operating location of the business or another property owned by the business or business owner. The purpose is ordinarily for purchase of the real estate but can also be used for refinancing an existing property.
Business Grants
Being awarded a business grant can be a big boost to your business as you don’t have to pay it back. However, the process to get a grant can be difficult and there is no guarantee that you will receive the funds. There are a lot of organizations that offer business grants; you just need to search for them. The NASE Growth Grants are a good example of business grants available to you.
Factoring
Less of a loan and more of a purchase agreement. In a factoring arrangement, a business agrees to sell either all or a portion of its Accounts Receivable at a discounted value to a third party Factor. The Factor therefore owns the A/R and seeks to collect the face amount due. Factoring is normally a more costly option and often is used when the business is unable to qualify for more traditional financing.
Credit Unions
Provide many of the same lending options as commercial banks but as non-profit entities commonly offer more favorable terms than commercial banks. To qualify, a borrower must be a member of the credit union although in recent years membership rules have become more lenient.
Micro-lender
These nonprofit organizations fill a gap and lend smaller amounts –usually $30,000 or less to business startups and to microbusinesses with only a few employees. A benefit of these micro-lenders is that they often offer training and assistance to business owners.