Show Me the Money!

Unusual places to find small business funding

“In a slow economy, the vendor may supply the product with a small deposit and a payment plan that makes sense for the business owner,” Johnson says. (Learn more about vendor financing online from CIT at

Peer-to-Peer Lending

Small business owners looking to bypass banks and gain access to cash quickly can check out peer-to-peer lending, a concept that’s growing as more companies seek out creative financing options. This type of lending finds two individuals working together without intermediation or participation of a traditional financial institution. In the Internet age, many of the participants are finding one another and working together in the online environment (through social networking platforms, for example).

Lending Club is a peer-to-peer lending company with more than 17,000 lenders averaging $2,500 (per borrower) in loans. The organization brings together investors and creditworthy borrowers, the latter of which can get personal loans of $1,000 to $25,000 at competitive interest rates. The loans are awarded within two weeks or less, on average, with borrowers paying interest and principal monthly.  (Learn more about peer-to-peer lending at or at

Accounts Receivable Factoring

Factoring is an age-old financing technique that’s getting more attention in this tight economy. Using this financing tool, small businesses can get invoices paid in just a few days (versus the typical 30-60 days) and use that capital for operations, accounts payable and to fund growth. Invoices are sold to a factoring firm at a discount (typically 1%-6% less than the invoice total), and the small business gets immediate use of its funds while the factoring company waits to get paid.

Dreschel says factoring can be especially useful for service businesses that have few if any “physical” assets (such as equipment) to use for leverage. The strategy is particularly popular when “times are tough,” he says. “The harder it is to make ends meet, the more we see companies using factoring.” (There are many firms that offer factoring services. Find them online by Googling the keywords “accounts receivable factoring.”)

Regardless of which financing avenue you select, Snyder says the key to success is to stay strong and not get discouraged, particularly when your requests are rejected. Despite the challenging environment, there is a funding source out there with your company’s name on it. “Figure out ways to be creative not only when developing your product or service,” says Snyder, “but also when looking for ways to fund it.”

Financing Tips

–Go beyond bank and Small Business Administration financing to find unique sources of funding.
–Don’t get discouraged. If one source turns you down, try the next one on your list.
–Always do your homework and investigate the funding source thoroughly before signing on the dotted line.

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