Alternative funding refers to working capital which is acquired outside of traditional lending institutions like banks. So what are the benefits of using this type of funding to grow your small business? Here are five of the big benefits of alternative funding.
1. Keeps things simple
Gone are the days of lengthy application processes that require stacks of historical data and paperwork to get the green light. The lending landscape (or lendscape) has changed dramatically in recent years. While traditional lending could once bury you under a pile of paperwork, alternative lending applications can be processed online or over the phone, requiring minimal support documentation. With a Merchant Capital Cash Advance for example, your business needs to have been running for 12 months with a monthly turnover of R80 000 in order to qualify. Simple as that.
2. Faster is better
Alternative funding is all about getting you what you need, when you need it. Cutting edge alternative lenders are entrepreneurs themselves. So they intrinsically understand the complexities facing small business owners. In fact, the market leaders in this space can offer funding in under 48 hours with a streamlined administrative process that allows for quick processing and pay outs.
3. Freedom to spend
Nobody knows your business like you do. Which is why you should be allowed to use your funding as you see fit. Many traditional lenders prescribe what the funds may be used for. Alternative lenders on the other hand, are a lot more flexible. While using funds for growth enhancing activities is always better, at the end of the day it’s your business and you can make a call on how and where you want to use your cash injection.
4. Boost cash flow
Cash flow is like air for any business. The trouble is that you don’t always know when you’re going to need it. And if you don’t have cash on hand, then you can’t take advantage of last minute opportunities. This is incredibly counter-intuitive for any entrepreneur. Alternative funding like a Merchant Capital cash advance however, can empower a small business owner to apply, qualify and get paid out for a cash advance in less than 48 hours. Resulting in a vital boost in cash flow, empowering you to take advantage of on-the-fly opportunities or manage unforeseen emergencies.
5. Healthy and realistic repayment terms
A Merchant Capital Cash Advance is a product specifically designed for retailers. This pay-as-you-trade model allows you to repay your loan as a small agreed percentage of each future purchase. Which then continues until the loan is repaid. This really suits small businesses (especially seasonal ones) as it works directly in line with trade cycles. When business is slow, you pay back the loan slower. And when trade picks up, you pay your loan back that much faster. That way you are not lumbered with a set monthly repayment as prescribed by many traditional retailers. Which often put your business under unnecessary stress at month end.
The bottom line
As an entrepreneur, you are already thinking differently. So surely you should also be thinking differently when it comes to working capital? Fortunately alternative funding is alive and well in South Africa. And working incredibly hard, for hard working small business owners. For more information on how alternative finance can serve your business’s ambitious growth, get in touch today.
