Published:

09/02/2013 04:16pm

Small Business Loan: Declined! What Now?

“I need to cover payroll and have no idea how Im going to be able to do it.” – Sarah Schwab

Business today can be tough for the owner who owns a small company and needs to secure some capital. The tough times in the current economy are having a direct impact for the small business owner, however, there are ways to be creative and obtain the cash you need to be able to continue your goals and hang in there until the more conventional methods of loans open up. There are multiple Alternative lending options and it may mean putting several vehicles together to keep your business open, and learning to be resourceful.

#1 Try Merchant Cash Advance

If you are in the food establishment or a retailer that does not have huge volume, you have been assigned a merchant account which permits you to process payments via credit cards. Your merchant bank does have requirements, but if you have a volume where most of your sales are debit/credit card sales, you may be able to obtain operating capital with payment based from future receivables. The method provides a quick turnaround providing you have a track record. One of the things attractive about this vehicle of alternative lending via merchant cash advances, is that it does not require personal guarantees but they are short term with a normally higher rate. Repayment occurs from processing your sales, which they keep the percentage and you keep the balance. Although this method may be expensive, you do have the opportunity to do business in the rough times instead of closing.

#2 Try Accounts Receivable Financing

Another useful method to obtain money via alternative lending is Accounts Receivable lending. Simply stated, the money owed to you by your customers is used for backing to receive a loan. This helps you use the debt you have to acquire a loan. This loan will be based on the aging of your receivable, so the older the accounts receivable, the amount you receive will be less. The method also serves as an option to transfer your focus from the debts to the current operations of your business.

#3 Purchase Order Financing

The method of this type of financing is similar to the process of factoring but it brings an extra bonus taking it to a higher level that makes sense and is creative for the small business owner. The buyer of the product will pay for the manufacturing. Upon completion your buyer will take their percentage and let your company have the residual.

I have seen this method used by several small business owners who manufactured goods that were exported. It worked well and the buyer was able to work directly with the manufacturer regarding design, which left the headaches to someone else other than you.

I suggest you look at the above alternative lending options as they can be the bridge for you to continue to conduct your small business operations. Staying in business is paramount so be creative.