What is Alternative Finance?
How does alternative finance work? US Small Business Administration defines it as “financing from sources other than banks or stock and bond markets”. The term typically refers to fundraising through online platforms. However, alternative funding could come from a variety of sources. There are times when knowing where to find cash can add value to a company. This is where ArkCare Financial comes in.
Compared to bank loans, alternative sources of funding offer numerous advantages that make them a better option for many businesses. In contrast to bank loans, alternative sources of funding typically do not require collateral, do not have fixed repayment terms, and don’t require personal guarantees. In addition, alternative sources of funding often provide more flexible terms, including longer repayment periods, lower interest rates, and lenient credit requirements. Businesses can also use alternative sources of funding for any purpose without having to explain or justify their actions, since these sources come with fewer strings attached. By focusing on their growth strategies rather than debt management, businesses can focus more on their growth strategies. By avoiding the restrictive terms and stiff regulations of traditional financing options, alternative funding sources give businesses the freedom to make smart investments in their growth.
Why Do Some Companies Turn to Alternative Financing?
This is something you see all the time. The inability to get capital makes it difficult for companies to raise capital. Either it is too risky, they do not meet covenants, or it just does not work out. Where do those companies go? Alternative financing options must be explored.
Alternative financing: why do we need it? For a variety of reasons, not all entities (banks, stock markets, bond markets, etc.) are willing to finance certain companies. As an example, Company A is a 2-year old company with a technology that will not be available for 6 years. Due to the lack of revenue for 8 years, a bank is unlikely to fund that project. It is not guaranteed that the company will succeed.
In order for Company A to continue research and development and bring their product to market, alternative forms of financing will be necessary.
Getting a loan from a commercial bank or lender for business startup is very difficult for a new business. In fact, new businesses are the riskiest loans that a bank or lender may encounter. Hence, startup loans are understandably nerve-wracking for them. Even private lenders require startups to show proof of one year in business and $100K in receipts before lending.
However, ArkCare pre-qualification requires six months of business experience and $5,000 in monthly revenue.
Call ArkCare Financial at 201-890-7472 to discuss your financing options today! The information shared here is intended to be used by you only for informational purposes only and you should independently research and verify.
