What Alternatives Are There to SBA Financing?

Business funding through the Small Business Administration calls for rigorous requirements. Learn about loan alternatives if SBA financing isn’t possible.

The past year has been tough for small businesses and aspiring entrepreneurs. The pandemic has forced multiple business sectors into dire financial situations due to public restrictions and safety protocols. At the height of the pandemic restrictions in March and April, small businesses in the United States were pushed to their limit. 

According to a survey at the time, more than 7.5 million small businesses were in danger of closing permanently due to the shutdown. 

However, these enterprises could turn to the Small Business Administration for financing. This organization has been trying to help small businesses for years and tried to provide a beacon of hope through uncertain times in 2020. But not every small business meets the SBA’s rigorous requirements to secure a loan, in fact – most don’t. And even if they do meet requirements, there simply isn’t enough money to go around, as was seen in 2020 when the SBA quickly ran out of stimulus and PPP funds.

So, what alternatives are available for entrepreneurs who need small business loans

Below are a few options you can explore if SBA financing isn’t possible.

1. Personal Loans

Your first alternative is to take out a loan yourself. This means that your personal credit history and credit worthiness will be scrutinized by banks and other organizations, rather than your small business’s profitability. If you have a stellar credit score, you could be fast-tracked for adequate loans to use to finance your business – but most people don’t have a great credit score, and it can be quite risky.

The downside of personal loans means that if you don’t manage to recoup your losses and revitalize your business, the obligation and consequences falls on your head, and on your collateral. This can mean liquidating personal assets, such as cars and residential property to pay for the loans should you fail to do so.

This is why personal loans are ultimately highly risky, and are only really used in dire times.

2. Loans from Friends & Family

If you don’t want to put your personal property at stake or your credit score isn’t up to par to secure personal loans, you can turn to people close to you for financial support. However, many people feel uncomfortable securing loans from their relatives or friends, as this simply moves the risk to them.

However, a benefit is that you can negotiate lower interest rates or find alternative methods for repayment in some scenarios. You could ask them to become investors, giving them a stake in your business in exchange for their loans too – though this still has the risk of losing it all (yours and theirs) if the business cannot be revitalized.

The key to borrowing from close friends and relatives is to be transparent about the odds of your business recouping its loss. You should also be diligent in making payments to avoid personal drama infiltrating your business.

3. Term Loans

If your business isn’t in financial trouble now, but you can see the writing on the wall, you may have time for a lengthy alternative to SBA financing. Term loans are one such option. 

You still have to meet the requirements for borrowing from the lender and wait through the lengthy application processes, but this might be quicker than an SBA loan in many situations.

These types of loans typically shell out higher amounts and come with low interest rates. However, they do tend to be more thorough with their assessment as they want to ensure you can return their money in due course. 

4. Equipment Financing

Sometimes your business model may not seem highly profitable to others and can torpedo your hopes for securing SBA financing or even other financial support. However, you can still turn to an alternative that does not take into account your business status or profitability as much. 

If your small business uses expensive equipment for its production process, you can use equipment financing to take out loans. These types of loans use your machinery as collateral, and your other assets won’t be part of the process.

This type of financing can be quicker, thanks to minimal paperwork. But you will be expected to provide a down payment. Some companies even require a down payment as a step in their process.

5. Online Loan Providers or Alternative Financing

If your business isn’t eligible for SBA financing and you don’t qualify for a personal bank loan, or it seems too risky, then you can turn to the internet for help!

Probably Yes offers quick and streamlined small business loans as a needed alternative to SBA loans, personal loans, or asking friends and family.

Our applications can take only a day or two for approval! Plus, we don’t need the extensive collateral that many others require. Some online small business loans have high interest rates, or prepayment fees in case you pay them back early – but not Probably!

Be sure you choose a reputable online lender like Probably Yes, and always check reviews, affiliates, and history to ensure you are getting your loan through a company that doesn’t cut corners.

Contact Probably Yes For Your Small Business Loan + An Alternative to SBA Loans

Times have gotten tough for small businesses, but there is hope on the horizon!

Thanks to the efforts of the private and the public sector, these uncertain times may end in the foreseeable future. However, until that happens, consider a seamless online small business loan provider to stay afloat with financing options that work for you. 

We make small business loans fast and easy. We’ll work with you to help you get the working capital you need when you need it. Call Probably at (844) 940-2303 today.