Using Alternative Lending to Fund Investment Opportunities
Cash flow can be difficult for would-be business owners and investors. Those without capital who can use it as collateral to secure a loan can find it difficult to just go into a bank and come out with financing that can provide the needed funds.
If you find yourself in this situation, it’s not impossible to find the funding that you need. Here are some alternative lending options that can fund your investment goals.
Some of them might involve researching your car title loan options, but all of them will come with some form of risk. If you can achieve your investment goals, the risk could turn out to be well worth it.
Margin Loans
If your alternative lending investment opportunity happens to involve purchasing the stock of a company that you think will provide outsize returns, a margin loan could be the perfect vehicle to get you into the position without a great deal of cash.
Margin loans allow investors to put money down and buy more shares through a loan. If you decide to go this route, you’ll pay interest.
You’ll also have to sell some of your shares if your chosen investment goes down in value. This will restore the required margin.
If the investment goes up in value, you’ll be able to keep the difference between the loan amount and the sale price.
If it goes down, you’ll have to pay the difference. This is the major risk that comes with investing through margin loans.
Crowdfunding
One way to avoid having to deal with traditional lenders is through crowdfunding. It’s also a way to access money if traditional banks don’t want to deal with you.
Like the name would indicate, many crowdfunding sites like Crowdfunder allow potential business owners to access funding from an online crowd.
Most of the time, there will be multiple sources of funding within a fundraising campaign. Having a good business plan and a good pitch will likely bring more of the crowd around to contribute to your alternative lending investment opportunity.
Not all crowdfunding sites are set up to draw in investment. Some are focused entirely on charitable causes. Therefore, it pays to do a bit of research before signing up.
Other Alternative Lending Options
Some companies will offer merchant capital opportunities for businesses looking to raise capital.
A couple of these options include popular payment processing companies like PayPal and Square. Another option is invoice factoring.
Some companies will provide investment capital for companies that have invoices and inventory on hand. The inventory serves as collateral that will secure the loan.
Credit Cards
This might not be the cheapest option, but individuals who have decent credit but still cannot access more alternative lending traditional loans could use credit cards to fund their investment opportunities.
Companies like Visa and American Express offer personal and small business credit card options. There is the benefit of being able to float expenses for a month or more, but there is also the risk that comes with having a relatively high interest rate should the borrower not pay off the bill in full when it’s due. Regardless, this is an option that could allow for investment funding.
With the dawn of the Internet, the options for finding funding have only increased. From crowdfunding sites to invoice factoring, there are options for those who are willing to take the risk to see their ideas and goals come to fruition.
There are risks, but the rewards can really pay off in the long run for those who are able to succeed.
Category: Investing
