If you’re a small business owner in this day and age, you have already shown remarkable tenacity. Between the COVID-19 pandemic and its wide-ranging effects on the economy, small business owners have survived a great deal of uncertainty.
How can you secure financial assistance for your business in the future? Throughout 2023, watch for these small business lending trends and consider whether any of them are right for you.
Peer-to-Peer (P2P) Lending
Due to economic uncertainty and rising interest rates, many small business owners opt for non-government options when seeking a loan. Peer-to-peer lending services allow you to seek out loans without the involvement of a traditional bank. This way, you can avoid those high interest rates and secure a loan with more confidence.
Also called factoring, invoice financing methods enable your business to borrow against the money your customers owe you. While you wait for your clients or customers to repay those debts to you, you can keep cash flowing to your business.
401(k) Business Financing
While Rollovers for Business Startups (ROBS) and other forms of 401(k) small business financing are not loans, they are innovative financing options that allow you to bypass traditional banks. Instead of cashing out your 401(k) or borrowing against it, you simply roll it into your company’s new 401(k) account, and then from the company’s 401(k) account to the company’s checking account. Your business can start paying for expenses like buying equipment, leasing space, and hiring employees.
Venture Capital (VC) Firms
Venture capitalists are independent individuals who seek out promising businesses and invest in them in exchange for a seat on each board of trustees. More and more businesses are going the VC route these days instead of taking their chances on a traditional loan. While partnering with a venture capital firm does bring another decision-maker to the table, you can consider it a valuable mentorship opportunity.
If the economic landscape of 2023 makes you nervous, watch these small business lending trends that enable you to bypass banks and government institutions. You don’t need to resign yourself to the high interest rates of a traditional bank loan; plenty of other options are gaining popularity this year.
Want to learn more about the business funding options for which you may be eligible? Use Pango Financial’s funding solutions tool for more information.