The need for extra working capital often hits you when you least expect it. Unfortunately, securing funds is not always easy for the small business. Traditional lenders involve long wait times for funding and seemingly endless documentation requirements. If your business type or industry is categorized as “high-risk”, the bank might refuse to work with you before you even get started.

Thankfully, there are more alternative financing options than ever before. The option you choose should cater to your specific needs; such as, your business’ unique situation, how much capital you need and how quickly you need it. If you need extra working capital to grow, cover costs, seize an opportunity or simply create a cash cushion, consider the following four financing options:

Merchant Cash Advance

An alternative to traditional business funding, a merchant cash advance provides your business with a lump sum in exchange for a daily share of your business’ credit card sales. It’s important to note that a merchant cash advance is not a loan; it is simply a sale. The provider is purchasing your business’ future credit card sales at a discount in exchange for a cash advance. The amount, along with the agreed upon fee, is then paid back as a percentage of the business’ daily sales.

With First American Merchant, the amount purchased and at what discounted cost are agreed upon by both parties. One of the biggest advantages of this option is the simple and straightforward collections process, which provides merchants with much needed flexibility. Business startups, businesses considered to be “high risk” and those struggle with bad credit or bankruptcy can all take advantage of this business funding option. In addition, a cash advance allows business to secure the funds they need in as little as 24 hours.

Short-Term Working Capital Loan

A short-term working capital loan is a faster funding option than a traditional commercial or SBA loan. It is often sought after by businesses that have less than stellar credit, since the qualifying score is not as strict as more traditional options. Those with limited time in business (only one year of business operation) are also approved. Even with these advantages, you should know that APR for a short-term alternative will be much higher than traditional sources of financing. In addition, most lenders will require a personal guarantee and will place a blanket lien on your personal assets.

Small Business Credit Card

Even through credit cards have a reputation for being a very expensive form of financing, 37 percent of business owners use them as a source of working capital. Why? They are an inexpensive form of financing when compared to other small business loan options. The added benefits (earning travel rewards or cash back on purchases) are also attractive. The average interest rate is 15 percent, and some credit cards offer 0 percent interest for a limited time. Thus, some business owners choose to use a credit card for regular operating expenses, and then pay the balance off before the promotional period is over.

Peer-to-Peer Business Loans

Peer-to-peer (P2P) business loans bring together the worlds of business finance and the online marketplace. The process begins when you visit one of these sites, provide basic personal and business information and receive an instant quote. The working capital loan you receive is funded by individuals or institutional investors through the online marketplace. The wait time for funding is typically two weeks or less. This option is best for those with strong credit (600+) who need quick financing. Keep in mind that this option is for the established business that is generating a decent amount of revenue. In addition, the loan amount will be lower than SBA or traditional bank loans.

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