The Alternative Edge: 4 Online Lending Options for Small Business

Date: March 28, 2017

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1. Crowdfunding

Post information about your business endeavor on a site like Kickstarter or Indiegogo. Set a fundraising goal. Users can pony up dough in exchange for goods and services from your company.

Pros: You never have to pay the money back.

Cons: You must meet your fundraising goal. Managing the campaign can be time-intensive.

RELATED: 5 Biggest Small Business Loan Mistakes

2. Line of credit

Platform lenders like Kabbage set up a pool of money that you can draw from as many times as you wish, as long as funds are available. Use funds for whatever you want, including inventory, equipment purchases, repairs, and more. Flexible, ongoing access to the credit line is often available 24/7. You typically have six to 12 months to pay back the loan.

As an NFIB member, you can receive a $200 Amazon Gift card when you qualify for a Kabbage business line of credit.

Pros: Bad credit isn’t an automatic disqualifier. You can take money out when you need it, and each draw has its own repayment structure. Approval takes minutes with Kabbage.

Cons: Some have requirements for years in business and amount of sales, so startups might not be eligible.

3. Crowdlending

Set up a profile on a site like Funding Circle or Lending Club. Unlike crowdfunding, you must pay back the money you raise—usually with interest.

Pros: Convenient, speedy, and boasts a high approval rate. A good option if you’re more comfortable borrowing money than asking for it.

Cons: Interest rates and fees can be high. Expect a 7 to 36 percent annual percentage rate.

4. Merchant cash advance

Snag a lump sum based on a portion of your monthly credit card volume. Repay the money over three to 12 months by giving the lender a fixed percentage of future card receipts.

Pros: Same-day approval. You’ll owe less during slow months.

Cons: Not an option for cash-based businesses. Some interest rates and fees drive the APR into triple digits.

RELATED: NFIB Small Business Guide to Loans: A Free E-Book

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