A Non-Traditional Lender is often a short-term loan lender that is not heavily regulated by state or federal agencies. There are different ways and paths one can take to finance their business. Below are some popular non-traditional sources:
Angel investor: offers investments for a new small business or one looking to grow. These investors expect a larger increase in return than “traditional investors” would, looking for at least 25 percent of return. The angel investor will put forward an investment rather than taking an equity position in the business. For businesses that lack sufficient cash flow or collateral to secure a loan, obtaining this type of investor could assist you in the beginning stages of your business. There are some advantages and disadvantages of doing business with angel investors. However, a partner will now be involved and will have a say on business related matter. Angel investors can be, family and friends, wealthy individuals, groups, etc. You can consider which option better suits your small business.
Microfinance: is an alternative funding option that offers banking resources to those who are out of a job or have little income or money to start their business. Microfinance allows people to obtain small business loans safely. Microfinance organizations also provide resources such as: bank checking and saving accounts as well as informative learning programs that will help you grow as a business owner. By choosing this type of funding, you are also able to put in for larger loans once you begin to show a positive line of credit.