3 Options for Getting a Small Business Working Capital Loan

Working Capital Loans - 2 Min Read

As 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:

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).

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.

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. Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.