With all the resources available for entrepreneurs, starting your own small business is now easier than ever – but even the most successful small businesses find themselves needing a little financial assistance every now and then. Bank loans are a common way to secure financial assistance or funding; however, there are many reasons why a business owner may not want to rely on this method of funding. We’ve broken down why bank loans aren’t always the best option, and we’ve outlined the best alternatives when your business is in need of a cash injection.
Why some businesses prefer bank loan alternatives
There are a number of reasons why a business owner would seek out non-bank options when they need financial help for their business. Some disadvantages of opting for a bank loan include:
- Banks typically do not offer much flexibility in their loans.
- Banks aren’t willing to look past a less-than-ideal credit score, whereas other lenders or sources of funding can offer you great options regardless of credit standing.
- You may find less competitive interest rates and fees from banks.
- Non-bank lenders often have more personalised customer service.
- Alternative lenders, like Zip Co, will have your business’s best interests at heart.
These are significant factors to consider, especially when the wellbeing of your business is at stake. If you decide that a bank loan isn’t right for you, here are some great alternative ways to find funding for your business.
Non-bank lenders – also known as alternative lenders or non-traditional lenders – can be a fantastic substitute for a bank loan. Often they offer lower interest rates or fewer fees on their business loans. Because your business is at the forefront of what they do, they will typically compare loans from around the country to ensure you are getting a loan that suits your business’s needs and financial circumstances. Plus, their customer service is second to none, meaning you will receive personalised advice when you need it.
Angel investors are successful people in your industry who have experience running their own businesses and can offer financial assistance to emerging small businesses in the field – this assistance comes in the form of shares in your company. You will receive the funds that you need and the angel investor will see a return on their investment once your business is succeeding. In order to secure an angel investor, you will need a thorough business plan that you can confidently pitch to potential investors. Make sure you know your business inside and out, from its mission statement to financial projections and everything in between.
If you have a business idea that provides a solid solution to a common problem, crowdfunding might be a fruitful source of funding for your business. This requires posting your business idea on a crowdfunding website and asking members of the public to donate funds toward your business. Often this will involve offering them some sort of incentive for donating: a small share in your business, early access to the product or service you’re offering, or even a discount.
How can Zip Business help?
Whether you’re trying to get your small business off the ground or you just need a little financial assistance, Zip Co can help you. On top of our buy now, pay later service, we offer fantastic small business loans. Contact us to apply today.