6 Reasons Small Business Owners Choose Alternative Funding Options

Posted by Karen Erdelac on Apr 18, 2015

alternative fundingA significant number of the 23 million small businesses don't want traditional bank loans, but they are seeking out alternative funding options.

Earlier this year, Federal Reserve Chair Janet Yellen revealed an interesting fact: small business owners, despite the recent growth in the United States economy, simply do not want business loans. The central bank head cited uncertainties in the market since the financial crisis, the drop in home values and the growing trend of alternative funding options.

Although The Federal Reserve has implemented record-low, zero-percent interest rates, small business owners aren't taking the bait and are turning to their own cash flows to fund their expenditures. But what happens when the small business wants to substantially invest in the company and expand operations? Well, it could make the alternative funding options all that more attractive.

Why do small businesses want alternative funding?

Small business owners may opt for the various alternative funding options because of:

  • Low Credit Score: the economic collapse obliterated the financial accounts and credit ratings of millions of Americans. This has hurt small business owners because now it has become difficult for many of them to attain business funding.
  • The Long Banking Process: big banks are interested in lending to small businesses, but the problem is that the conventional process is a long, outdated one that makes it harder for entrepreneurs to get money.
  • Interest & Charges: it's no secret that financial institutions add on fees and charges to loans. This can be a huge obstacle for small business owners.
  • Short-term Cash: sometimes, a small business needs funding quickly and for a very short period of time to help cover a repair, an installation or new equipment. Since it can take a long time to get funds from banks, it may not be worth it to small business owners who need something short term.
  • Ebb & Flow: all types of businesses suffer from the ebb and flow of revenues. One month, sales are booming. The next month, sales are tumbling. When a loan is due, businesses have to fork over cash no matter what. Alternative funding options provide greater flexibility by fluctuating with sales.

Moreover, a business cash advance is quickly becoming one of the most popular alternative funding solutions for business today. A business cash advance is easy to apply for, simple to understand and fast to receive. It remains flexible and it can provide a certain level of stability, whether it's for a short-term cash injection or a long-term investment.

alternative fundingTop uses with alternative funding

Not every small business has the same priorities, wants or needs. Small businesses allocate funds to different parts of the business, and this can change week to week, month to month, or quarter to quarter: from computer equipment to website development, from interior decor updates to social media marketing.

Wasp Barcode Technologies released its

State of Small Business Report earlier this year and identified three key areas in which small businesses should invest:
  • Increase IT spending and invest additional funds into new tech initiatives and projects, including customer relationship management (CRM), network security and business intelligence tools.
  • Most small businesses list social media as their primary marketing tool, and this will persist moving forward. Also, businesses say their website is a crucial element of their company.
  • With the unemployment rate continuing to fall, small businesses are becoming more confident in the labor market and are actively taking on additional employees.

A business cash advance is an alternative

If you're a small businesses looking to expand then a business cash advance offered by a financial services firm like Quikstone Capital Solutions is your business funding solution.

Learn more by checking out Quikstone Capital Solutions today and apply for a business cash advance. You can finally expand your small business and grow your brand to new heights.

Schedule a FREE ROI Assessment

Topics: Funding Your Business