Financing Alternatives for the Small Business Owner

Getting a business loan is more difficult than ever before. With banks tightening their credit guidelines, unless you have nearly perfect credit, it is almost impossible to secure a business loan. But all is not lost.

Just because the economy is tight and banks are clamping down doesn’t mean that there are no alternative business funding options for you.

Here are a few financing alternatives and business funding solutions that can help you secure the funding you need for your small business to succeed.

Personal Investors

We’ve all heard the stories about the guy who borrowed $50 from his uncle Joe and started a business that is today worth millions. Personal investors are a great alternative to bank loans.

This is especially true for people who might not have great credit, but who do have a business idea that people believe in.

Finance Companies

While you may not be able to find the approval that you need from a bank, a finance company might be a good alternative business funding solution.

Since their lending guidelines are usually more lenient than banks, even those without perfect credit have a chance to be approved.

The downside is higher interest rates, and some will require some form of collateral.

Credit Cards

This is not a great option, but if you have no other business funding options, you may consider using a credit card to fund your business.

Plenty of successful business owners funded their start up by maxing out a credit card or two. Just keep in mind that there is also the possibility that you won’t be successful and you’ll be left with the bills.

Make sure that you are not putting yourself in a position that could result in personal financial ruin should the business not succeed as quickly as you’d hoped.


Many small business owners are reluctant to dip into their savings to start their companies, and with good reason.

Spending your life savings on a venture that might not work is really not a good idea.

But, if you can take just a portion of your savings to start your business, it’s an idea worth considering.


There are companies that have gotten pretty creative with their business funding options. One company will loan you up to one month’s worth of your average credit card receipts.

For example, if you sold $12,000 in Visa/MC sales last year, you can borrow $1,000. The company then takes a small percentage of each sale that you make until the loan is paid in full.

The downside is a higher interest rate, but it’s a good option for established businesses that need some extra cash in order to take the next step.

There are also other cash advance types of loans available for businesses. Many require no credit check, but the interest rates are high and there usually needs to be a business history of at least one year. In other words, they normally will not loan to start ups.

While looking for business funding solutions is more challenging now that it was in the past, there are options out there for many business owners.

If you cannot secure funds using any of the suggested financing alternatives, you may need to put your plans on hold long enough to shore up the weaknesses in your credit score so that a wider variety of business funding options will be available to you.

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