Getting financing the non-traditional way

While most business owners know about the traditional methods of obtaining financing for their business, they might not be aware of some of the non-traditional methods. Let's take a look at some of the non-traditional methods you have to choose from.

Merchant cash advance and credit card receivables programs:
If your business is one that accepts credit cards for payments you can give yourself an option for non-traditional financing just for accepting credit cards. You might be able to qualify for a business cash advance with your credit card receivables. Because banks are a traditional way of financing they can be a poor choice to use when needing a cash advance, so you should look at non-traditional lenders when thinking about a cash advance. One thing to keep in mind is that getting cash advances is similar to getting a loan, but it is still not the same, you might have higher interest rates on cash advances so do not use it to borrow huge amounts of money.

Commercial mortgage loans:
When trying to purchase property for your business you can run into problems with banks wanting to lend you money for certain types of properties, which are known as special purpose properties. These kinds of properties can include funeral homes, churches, sheet metal shops, etc. Banks try to avoid giving loans to these types of purchases because they are not as safe as other loans. Another thing that banks might try to do is to attach a balloon and/or recall provision to commercial loans. This means that the bank can require you to pay back the loan early under certain conditions. These can both be avoided if you look for non-traditional lenders, who tend to be a bit more understanding when giving commercial loans.

Selling assets:
You can choose to sell personal or business assets to continue financing your business or to start up your business. If you do decide to sell some of your business or personal assets to obtain some financing you need to be careful in what you are selling, do not go overboard. Before you sell an item make sure it is not something that is important to the basic operation. For example if you are an independent freelancer you will not want to sell your computer, unless you have two or three extras sitting around. Also before you sell your personal items make sure that the amount you are getting out of the sale is going to be enough to get you buy. You wouldn't want to sell your boat only to find out you can not keep the company going any longer after two weeks.

Borrowing against the cash value of your life insurance:
If you have a whole life policy in place you can borrow against this policy. If you have term life insurance this would not be feasible. If you are going to borrow against this policy you should only do so if you have had the policy for several years so that the policy has some cash value. Insurers are known to let policyholders borrow up to ninety percent of the policy's value. But be sure to keep up on your payment obligations so that the policy stays intact, otherwise you will have to pay everything back at once.

Second mortgages:
This is a drastic option because if your business does go under you can lose your house. But some people will take out a second mortgage on their home rather than a regular loan because the interest you pay on the second mortgage is tax deductible and the interest you pay on it is usually lower than a credit card or an unsecured loan. Second mortgages are best for people who want to borrow a lot of money all at once and get a fixed monthly payment.