Raising Money in this Unstable Financial Climate

A lot of banks are still holding fast to their funds, so credit remains scarce for many businesses, especially small businesses. Of course this shouldn’t put you off the capital hunt. With some persistence you can still find financing, but sometimes you need to get creative. Below you’ll find five ways to get you started:

1. Micro-loans

It all depends on how much credit you’ll need, but for small businesses with a reasonably good credit history seeking a micro-loan may be the thing. As long as the credit of the small business is good your business can get a micro-loan (up to $50,000) from a micro-lender. Micro-lenders, such as for instance “The Fox Valley Micro loan” give out loans to businesses, even if a traditional bank has rejected them.

2. Assets Lending

Although banks have pulled back on lines of credit, there is an increase in asset-based lending to small businesses. For instance you can secure a line of credit against eligible receivables in which the lender fronts you a percentage of the total. Example: they front you 85 percent of the total, then forwards the remaining 15 percent after your customer have paid in full.

3. Big Banks

If your business is profitable and has a good credit history then there are still big banks (and local smaller banks) that are willing to give a credit line. But you’ll need to prepare yourself by taking a closing look at your business balance sheet. The banks also look closer than ever before, so make sure your number are correct and realistic.

4. Search the Web

Sometimes you need a very small amount of working capital for your business. Then you could try so called peer-to-peer lending networks, which connect lenders and borrowers online. Sites such as for instance lendingclub.com, prosper.com and loanio.com allow entrepreneurs to search for lenders and borrow up to $25,000 with widely ranging rates.

5. Sweet-talk

Sweet-talking your vendors for a line of credit is often an overlooked source of credit. Most vendors are motivated to keep their customers business going, because they depend on your business. Often they are willing to work out a payment structure to help their client’s. Of course if they themselves have a credit problem, they most likely won’t be able to help. But you should definitely give it a try.