When traditional financing falls short, alternative finance steps in to power business growth. For small businesses, securing capital can feel like a battle, banks often demand perfect credit or hefty collateral, leaving many stuck. But what exactly is alternative finance, and how can it help? At Express Business Funding (EBF), we’re redefining financial solutions with options like invoice factoring and asset-based lending.
“Alternative finance for small businesses is about flexibility,” says Gareth Bird, EBF’s Chief Growth Officer. “It’s not just a lifeline, it’s a launchpad.” Unlike rigid bank loans, these tools unlock working capital and fuel cash flow, tailored to your unique needs.
This article explains alternative finance, how invoice factoring boosts cash flow, how asset-based lending supports growth, and how EBF turns challenges into opportunities. Discover how alternative finance helps businesses thrive beyond traditional financing.
Key Takeaways
- Alternative finance offers flexible financial solutions for small businesses.
- Invoice factoring provides quick access to funds for cash flow.
- Asset-based lending unlocks capital for business growth.
- Alternative finance vs traditional financing options.
- EBF delivers tailored financing to scale your success.
Defining Alternative Finance
What is alternative finance? For businesses, it’s a way to access capital when banks say no.
“It’s about meeting you where you are,” Bird explains. Unlike banks fixated on credit scores or long histories, non-conventional funding focuses on your business’s real value, its invoices, assets, or potential.
Why It Matters
- Differences between traditional and non-traditional finance: Banks prioritize stability, steady cash flow, low risk. Alternative options like EBF’s innovative funding options see opportunity in instability, funding startups, niche players, or recovering firms.
- How alternative finance helps businesses: It bridges gaps. A retailer waiting 60 days for payment or a manufacturer with idle equipment can turn those into cash now, not later.
Who Benefits
From entrepreneurs to established SMEs, alternative finance suits those that traditional financing overlooks. It’s not just a backup, it’s a strategy.
Options like invoice factoring for cash flow, equipment leasing for operational funding, or crowd funding for business ventures adapt to your stage and goals. With EBF, flexible financial solutions mean small businesses get cash when and how they need it, without the red tape.
What forms of Alternative Finance are available?
Invoice Factoring
Invoice factoring, or trading, lets you sell unpaid invoices to investors or financiers like EBF at a discount. You get immediate cash, say, 80% of a $50,000 invoice, while they collect the full amount later, earning a return. “It’s quick access to funds with factoring,” Bird says. Perfect for cash flow solutions for small businesses stuck in 60-day payment cycles, it’s debt-free and scales with sales.
Equipment-based Lending
Equipment-based lending provides capital by using your equipment as collateral. Borrow against its value, say, $20,000 against a $30,000 machine, and repay over time. “It’s a lifeline for businesses needing gear without cash upfront,” Bird notes.
Unlike banks rejecting poor credit, this hinges on the asset’s worth, offering small businesses flexibility to maintain operations and drive business growth while managing repayments.
Debtor-in-Possession (DIP) Finance
Debtor-in-Possession finance firms under bankruptcy protection (e.g., CCAA). Secured by assets, it prioritizes repayment, funding operations during a rebuild.
“It’s a lifeline for financial stability,” Bird explains. A retailer in distress might get $100,000 to pay staff and suppliers, boosting odds of recovery. It’s niche but vital for struggling businesses.
Merger & Acquisition (M&A) Finance
Merger & Acquisition finance provides capital to buy or merge with another business. Whether acquiring a $500,000 competitor or merging operations, it’s the same process, flexible funding for big moves. “It’s about seizing growth opportunities,” Bird says. Banks might balk at risk; alternative finance steps up, fueling scaling business with non-traditional funding without draining reserves.
Peer-to-Peer (P2P) Lending
Peer-to-Peer lending connects you directly to investors via platforms. Skip banks, borrow $20,000 from individuals for a loan, not equity.
“It’s tech-driven and fast,” Bird notes. Rates vary, but it’s tailored financing for small businesses needing working capital, say, a café expanding seating. P2P lending democratizes capital, bypassing traditional financing hurdles.
Crowd Funding
Crowd funding for business ventures raises cash from many small contributions, think $5 from 1,000 backers for a $5,000 goal. Equity-based (unlike loan-based P2P), it trades shares for funds. “It’s perfect for startups or creatives,” Bird says.
A tech gadget might fund via crowd funding, sparking business growth without bank approval.
Choosing the Right Alternative Finance
Match Your Needs
- Cash flow crunch? Invoice factoring delivers quick access to funds, ideal for short-term gaps.
- Need gear? Equipment leasing funds assets without credit woes, supporting operational funding.
- Restructuring? Debtor-in-Possession finance stabilizes during bankruptcy.
- Expanding? M&A finance powers acquisitions; P2P lending or crowd funding suit smaller leaps.
Weigh Benefits vs. Costs
“Each has trade-offs,” Bird advises. Invoice factoring fees trade for speed; leasing locks you into payments but keeps operations humming. DIP finance prioritizes lenders, risky if recovery fails.
M&A finance demands repayment strategy; P2P lending varies rates; crowd funding trades equity. Improving cash flow with non-traditional funding requires picking what fits your financial stability.
EBF’s Role
Our financial solutions are tailored to you. “We mix and match,” Bird says. EBF’s alternative finance options ensure businesses get capital without bank rigidity, scaling wisely.
In Conclusion
What is alternative finance? It’s a lifeline beyond traditional financing, offering cash flow solutions and business growth for businesses.
From invoice factoring for cash flow to crowd funding for business ventures, these flexible financial solutions unlock working capital where banks falter.
At EBF, we craft tailored financing to fit your journey, proving how alternative finance helps businesses thrive. Scaling business with alternative finance starts here, fast, adaptable, and yours. Ready to explore EBF’s alternative finance options? Let’s fuel your next step.
Need capital fast? Discover alternative finance for small businesses with EBF, invoice factoring, asset-based lending, and more. You can contact our Account Managers to begin your journey.
