One of the biggest hurdles entrepreneurs consistently identify in surveys and focus groups deals with problems accessing capital but there are creative ways to get financing, according to an article on the website Credibly.

“Whether you’re running a startup or an established small business, it seems to be harder than ever to access capital from banks,” said Katrina Manning, the author of Credibly’s “Five Ways to Access Capital for Your Small Business.” 

“But even if a financial institution says ‘no’ to your request for a business loan, that shouldn’t stop you from pursuing your goals,” she said. “There are funds out there, you just need to know where to look.”

Manning said instead of focusing on traditional funding sources such as financial institutions or even monies from relatives and friends, there are five ways to get extra capital which business owners may not have considered or utilized.

Small Business Grants

“Often this form of capital gets overlooked but it deserves more attention, “ she said. “The government offers small business grants that fit initiatives it tries to promote. On the federal level, people can visit business.usa.gov to get information on small business grants. In the District, visit the website of the D.C. Department of Small and Local Business Development for its grant programs, whether the businesses are Certified Business Enterprises or not.”

Manning added that Fundera’s Zach Grant provides a $2,500 check each year — submitting a video explaining why a proposal for a startup business serves as the only requirement.

Credit Cards

Manning said using credit cards might not be a first option but they can use Fundora’s help when in a financial bind. She said an SBA study reported nearly 60% of entrepreneurs use credit cards when needed. Manning said when managed correctly, credit cards can help build your business credit score which can make the business owner eligible for lower-risk capital in the future. Nevertheless, she said using credit cards incorrectly can damage a credit rating and cause future lenders to be wary of offering financial assistance.

Factoring

Invoice factoring has become an obscure method of financing, according to Manning. This method provides advances on future revenue. Basically, the factoring company will give the business owner money upfront for invoices that have already been sent out. The entrepreneur settles the debt with the company once the client pays the invoice. Manning said this method works when customers are slow to pay and during months when business tends to be sluggish.

Online/Alternative Lenders

Online and alternative lenders can get entrepreneurs funds in days, not weeks or months and can customize loan sizes, Manning said. She said accessing capital from an online/alternative lender, an entrepreneur would need to prove monthly cash flow. The good news, according to Manning, has to do with the application process being completed in less than an hour and the paperwork less burdensome than a traditional bank loan.

Open a Side Business

The transition  from an adjunct business to a primary operation can be a funnel, Manning said. Think of something that won’t take up too much time away from your main business but will give you cash in hand. An example of this could be a newspaper company charging the general public for use of its equipment.

Manning said pursuing alternative capital will give entrepreneurs better control of their business operations.

“Instead of giving up when a bank turns you down, try to determine other routes of getting the money you need,” she said. “By doing so, you might be able to expand your business beyond its wildest dreams.”

James Wright Jr.

James Wright Jr. is the D.C. political reporter for the Washington Informer Newspaper. He has worked for the Washington AFRO-American Newspaper as a reporter, city editor and freelance writer and The Washington...

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