Creative financing is an interesting concept that has many business owners wondering how it can work for them. Many business owners still have not yet realized the non-traditional financing methods that take traditional bank loans or work together with banking institutions. Some of these creative financing methodologies are not loans. They cannot be accessed through traditional financing sources based on their conceptual makeup. The conceptual makeup of some of these options can include the use of your credit client, the ability of government contracts, current paper or tangible assets, or even the use of payment expected in your future.
When small business owners can see “outside the box” to get the financial assistance they need, this creates a win-win-win situation. Many creative options need banking institutions involved but do not need to require them to be part of the process. When this financing option is used effectively, many small business owners, and even large companies, usually see the benefits.
Banking risk tolerance
It is often said that the “bank does not loan”. This is not true. The bank is in the loan business. Without solved loan transactions, the bank will come out of business. The problem you face, as a business owner, is a strict bank loan practice, especially in the current strict loan market. When this affects you negatively, the simple truth is that you and your business does not match certain bank loan models or their level of “risk tolerance”. The bank refused to risk their capital.
Conservative loan institutions such as banks will not risk their money to support your business. Your business or business must show sustainability in advance. This will make lenders like to lend your money.
Creative Financing Solution
This financing model varies in a number of sectors and is not contained in the practice of loans such as traditional institutions. Creative financing solutions developed on request or need to solve financial problems for large groups. When business owners are rejected access to capital through the banking sector, not everyone will give up on their dreams to move their business forward or satisfied only survive through economic difficulties.
Creative financing sources overcome requests access to capital in various ways. These options are usually provided and operated by private companies. Many have private investors who prefer these investment roads. This solution crosses all types of business sectors including medical, construction, food, manufacturing, government, and more. When a business owner seeks this kind of financing, the success factor depends on the industry, payment sources, customer credit reports or clients and scores, contracts now and more.
Creative Financing Type
Factoring – Most companies that must generate invoices after shipping goods or services can use this option. This model facilitates sales of your invoice (assets) with cash benefits. This option is not a loan.
Equipment rental financing – is a loan. You can buy the equipment needed for your business and pay in installment payments instead of having to pay the full price of the product in advance. There is a tax incentive, so talk with your BPA.
Micro loans – are available both through traditional financing and creative financing sources. The difference between the two is in terms offered. This option can fill the gap if you need a larger loan. Use it right and you can always apply again.
Peer-to-peer Lending – This is an online loan program online. Through many online peer-to-peer loan sites, you can get up to $ 25,000 depending on your needs. This concept requires a crowd of people who lend you in small quantities that match the amount you need. The important thing to note is that the risk for