If your business is experiencing cash flow troubles, you’re not alone. According to a recent study, over 60% of small businesses worldwide struggle with cash flow, and nearly one-third have had experiences where they couldn’t pay vendors, employees, or themselves due to cash flow issues. In our current economic environment, as traditional lenders tighten lending qualifications, businesses are finding it more difficult to access conventional working capital solutions to bridge cash flow gaps.
For example, traditional lenders offering loans and lines of credit often require:
- Financial statements and evidence of profitability
- A personal guarantee and net worth statement
- Time: preparing loan terms and setting up funding can often take months.
These qualification requirements can prove to be excessive for many new or struggling businesses that need quick funding to overcome pressing financial challenges.
Enter alternative financing.
Alternative financing is a rapidly emerging funding solution outside of the traditional banking system that’s helping businesses get paid faster through unique funding terms, quicker qualification processes, and flexible funding limits.
In this article, we’ll explore 4 ways that alternative financing can help you speed up payment schedules; providing much-needed relief from cash flow struggles.
1. Through accelerated invoice payments
The longer it takes for your customers to pay, the longer your business is without the cash needed to pay suppliers, employees, and other operating costs.
Alternative finance companies can exponentially shorten the time it takes for your business to get paid by offering an invoice factoring solution. In an invoice factoring arrangement, a factoring company buys your business accounts receivable invoices at a discount in exchange for immediate payment. Upon receiving your invoices for financing, the factoring company simply verifies documents and transfers funds within 24 hours – or even quicker.
For businesses that commonly wait weeks or months for invoice payment, this alternative financing method can be a vital tool in a business’s cash flow strategy. As a result of its consistently rapid turnaround, Invoice factoring has become a go-to alternative to traditional debt financing.
2. By expediting the qualification process
Alternative financing services are often easier to qualify for than traditional lending agreements. That means less time waiting for the approval process to be completed and first funding to begin.
Most invoice factoring agreements, for example, result in funding within a few days of approval. Submitting invoices is easy once an account is set up and funds are transferred and accessible within hours.
Alternative finance companies can also expedite qualification for other lending services, such as asset-based lending. While traditional lenders may take multiple months to assess the value of collateral assets that determine the amount of your loan, alternative finance companies have streamlined the underwriting process by providing direct access to decision-makers. This direct line of communication helps to accelerate asset valuations and approvals, shortening the path to the working capital you need.
3. By providing 24/7 access to your funds
Urgent repairs, unexpected bills, or last-minute purchases can’t always wait until the next business day. Often, unexpected events require immediate attention to be managed effectively. The best alternative finance companies can deliver funds 24/7 through easy-to-access online platforms, meaning you can withdraw the cash whenever you need it, day or night. This also means you’ll have 24/7 access to monitor account balances, track transactions, and view credit limits to maximize efficiency in cash management.
A Visa commercial credit card from an alternative finance company offers even further withdrawal flexibility for you and your business team. The card provides easy access to your cash whenever you need it to cover costs and to provide the control you need to regulate expenses.
To simplify your own approval process, business owners can issue the cards to their employees with spending limits and categories for where the cards can be used. Specific alternative lenders can provide this powerful tool to customers who would not otherwise have access to such a versatile resource.
4. By offering flexible funding limits
Alternative financing agreements are designed to be adaptable to diverse funding needs. For example, a revolving line of credit ensures funding up to a specified limit, but you only pay on the amount you’ve drawn. If your business spends $40,000 of an approved $60,000 credit limit, you only pay interest on the amount you access. With invoice factoring, your agreement can grow with your business over time.
Instead of being limited by stringent loan terms, the amount of money you can access hinges mainly on the size, volume, and quality of the invoices you factor. If your business grows and generates more invoices to creditworthy customers, your credit limit can be adjusted to scale with you.
This flexibility means an alternative financing partner can provide you with more cash in less time than traditional lenders who require new applications or loan terms for additional lending services.
Conclusion
As traditional loans become more restrictive and difficult to attain in a challenging economy, alternative financing has become a more accessible source of fast funding. Alternative lenders are meeting the need for fast, easy-to-manage funding solutions with flexible products and services.
By providing easy qualification requirements, faster speed of funding, and flexible funding limits, alternative lenders can keep pace with your company’s immediate capital needs and growth projections.
To break free from cash flow struggles, investigate reputable leaders in the alternative financing space to help your business get paid faster and to strengthen your connection to the working capital you need.
ABOUT eCapital
At eCapital, we accelerate business growth by delivering fast, flexible access to capital through cutting-edge technology and deep industry insight.
Across North America and the U.K., we’ve redefined how small and medium-sized businesses access funding—eliminating friction, speeding approvals, and empowering clients with access to the capital they need to move forward. With the capacity to fund facilities from $5 million to $250 million, we support a wide range of business needs at every stage.
With a powerful blend of innovation, scalability, and personalized service, we’re not just a funding provider, we’re a strategic partner built for what’s next.
