Do you own a business or are you thinking of starting one? When it comes to financing, your first thought may be to go to a bank and take out a traditional loan. Unfortunately, as you may or may not know from experience, regular loans can be difficult to obtain, depending on your situation. Many first-time small business owners often find themselves getting denied loans for a variety of reasons. Luckily, for business owners and hopefuls of all types, there are alternative lending solutions out there. These can really help someone who has been unable to obtain a traditional loan to get their business off the ground.

One exceptional alternative financing method is factoring. Factoring is a type of financial transaction that allows a business to have fast access to the cash they need to grow or to help get through a period of cash flow problems. How does it work? In the process, a factor will buy a business’s accounts receivables at a discounted price. Then, the business will get access to capital immediately rather than having to wait. This is great if your credit is not all that good, as the lender will take your receivables into consideration rather than your credit score like a bank would. Another difference between this alternative lending source and traditional loans is that once the factor has purchased the invoices, the firm gets paid upfront and then collects the customer invoices. The downside of this is that the factor will charge commission.

Another alternative to a bank loan is a merchant cash advance. In this instance, a lender will provide a business with a certain lump sum upfront, and in return they get a share of that business’s credit card sales in the future. With each credit card sale you make, a portion of the sale goes towards paying back your loan. A benefit of this alternative lending method is that there are no fixed payments or specific due dates for you to meet.

Equipment sale-leaseback is another source of alternative financing you may opt for. If your business owns expensive equipment, this might be for you. How it works is a lender will purchase the equipment from you for a lump sum of money. They will then lease it back to you, hence the name of the method. An advantage of this alternative is that you get to use the equipment plus you get funding. However, you will no longer own the equipment and you will be required to pay off the cost in addition to interest. Now that you know some alternative lending solutions, you can get moving and skip over the traditional loan process if you need to.