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3 Options for Getting a Small Business Working Capital Loan

Posted by Rick Nischalke on March 31, 2016

small business working capital loanAs a small business owner, you know that “it takes money to make money” – and that means getting a working capital loan isn’t optional, but necessary for your continued success and growth and, frankly, your long-term survival as well.

However, as you may have discovered, getting a small business working capital loan from a bank is a non-starter. Since the Great Recession in 2008, banks have fled the small business lending marketplace, and have made it virtually impossible for most small business owners to get the funding they need – especially if they have less-than-exceptional credit, haven’t been in business for at least two years, or don’t have enough collateral to secure a loan. 

Fortunately, there are some other 100% bank-free ways to get a small business working capital loan. Below, we highlight 3 of the most common options:

  1. Alternative Business Funding

A growing number of small business owners across the country are applying for – and receiving – alternative business funding from leading companies like Mulligan Funding. Unlike banks, we don’t require perfect credit, collateral, or years of credit history (a few months is fine).

  1. Peer-to-Peer Lending

Some small businesses are getting the working capital they need through peer-to-peer lending. While there are some impressive success stories, the truth is that most businesses don’t generate the funds they need because competition is fierce (it’s analogous to the number of resumes that are submitted for a single job opportunity). Furthermore, it can take months to meet fundraising goals -- if ever -- because individual investment amounts are small.

  1. Purchase Order Financing 

Some small businesses are also raising working capital through purchase order financing. Essentially, this is selling a purchase order to a lender in return for cash (typically 80% or so of the purchase order’s value). The lender then gets paid directly by the customer with the purchase order is due, keeps the principal plus interest, and sends any residual cash to the small business (though usually there isn’t much or any).

While it’s legal and somewhat common, there are some serious risks with purchase order financing that small businesses must be aware of from the outset – or else they can find the experience very regrettable. We highlight and discuss these risks in our article here.

Moving Forward and Learning More

As you can see, banks clearly aren’t the only -- or even the best -- option when it comes to getting a small business working capital loan.

To learn more, contact the Mulligan Funding team today. Your consultation with us is free, and everyone on our leadership team has an in-depth small business background. We know the challenges you face, the opportunities you want to exploit, and most importantly: the high level of respect that you’ve earned and deserve!

For more on the differences between a working capital loan and a conventional business loan, check out our FREE eBook below:

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Topics: Small Business, Business Loans