3 Better Business Funding Solutions Than Taking Out a Loan

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When you need working capital to get your business through a tight financial spot, the first solution you probably think of is a traditional bank loan. But why should you have to be in debt with monthly payments for years to solve a temporary cash-flow issue?

The banking industry makes a lot of money off of businesses that don’t realize they have alternatives. However, the financial scene of today looks a lot different than it did in the past.

If your business needs cash fast, you don’t have to rely on the bank for a loan anymore. You have other avenues you can turn to first!

Check out these three better business funding solutions before you take out a loan. You might find an alternative that solves your problem without putting you further in debt!

1. Accelerated Invoicing

One of the newest types of financing on the market is something called “accelerated invoicing.” It’s the perfect solution for businesses that invoice their clients but don’t want to wait for the invoices to get paid organically.

If your business needs working capital and you’re waiting on your 30-60-90 day invoices, you’ve already earned the money. You shouldn’t have to get behind on your expenses just because you’ve given your clients the benefit of waiting to pay.

Accelerated invoice payment solutions, such as Now, step in here to give business owners the money they’ve earned. The business is able to continue to let its customers have the long-term payment options that they’re used to.

This type of financial alternative is often confused with invoice factoring, but the two are very different. Invoice factoring fees get complicated, often with daily interest accumulated for every invoice that doesn’t get paid. But with accelerated invoicing, you choose which invoices you want to share with the company, and they charge a flat fee for their services.

For example, if you’re waiting on a $10,000 invoice to get paid and you need that money for your immediate cash flow, you can submit it to the invoicing company. If their fee is 3%, they pay you $9,700 upfront ($10,000 – 3%) and then collect the invoice from the client.

No hassle, no loans to repay, and no hidden fees. It’s easy and can be used regularly or for the occasional tight financial spot.

2. Business Lines of Credit

A line of credit (LOC) for a business works similarly to a credit card, without the major interest. If you’re approved for an LOC, you’re basically given a pool of money to use as you need it until the time in the term agreement is up.

Lines of credit can be secured or unsecured. Secured are easier to obtain since there is collateral to cushion the lender’s investment. Unsecured lines of credit may have a higher interest rate attached.

With an LOC, you’re given access to a certain amount of money. You can pull from these funds with a check or debit card, just as you would use your own bank account. You pay interest on what you use, and if you pay it back, you have access to it again until the end of the term.

Say you’re given a LOC of $100,000. You need $5,000 for payroll this month because business was a little slow. Next month, you pay back that $5,000. Now, you have the full $100,000 to pull from again if you need it.

The lender makes their money by charging annual fees and transaction fees on top of the interest that you’re paying on what you borrow.

3. Asset-Based Lending

If your business has assets in its possession, you can use them as collateral to obtain a loan. It’s similar to a traditional loan, but you go through an asset financing company.

Asset-based lending gives your business working capital using your accounts receivable and inventory. In short, your assets are used as collateral to give you a cash flow.

This type of financing is used in between busy times, for startup companies, and to refinance an existing loan with high repayment terms. They tend to be easier to obtain and more flexible because they’re secured.

Asset financing can also be used if you need to purchase inventory. In some businesses, machinery and other assets are essential but expensive. If you need to buy an asset but can’t afford to pay cash for it, asset lending is an option.

With this type of funding, the financing company gives you the money to buy the equipment, and that asset is the collateral for the loan. The funder owns the asset until you have paid the loan in full.


Taking out a loan for a short-term financial issue can put you in long-term debt. Instead of the traditional, yet expensive, route of bank loans, check into your alternatives! As a business owner, these three funding solutions may be better for your bottom line than taking out a loan.

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