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Private Investors and Alternative Lenders

Private investors and alternative lenders also offer credit lines. These are easier to qualify for than conventional SBA loans. They also require much less documentation for approval. These alternative SBA credit lines usually require good personal credit for approval.

Unlike with SBA, many of them don’t require good bank or business credit approval. Almost all of these types of programs require 2-year’s of tax returns. Tax returns MUST show a profit. Rates can vary from 7% or higher and loan amounts range from $25,000 into the millions. Loan amounts are typically based on the revenues and/or profits reflected on the tax returns. Sometimes lenders may want other financials including a P&L, balance sheets, and income statements.

Merchant cash advances have quickly become the most popular way to get financing, in large part due to the easy qualification process. Companies with 10k in revenue can get approved, with the business owner having scores as low as 500. Some sources have now even started to offer credit lines that go with their loans. You will need to have at least 10k in revenue for approval. You should be in business for at least one year, 3 years is preferred. Lenders often want to see a credit score of 650 or higher for approval.

Loan amounts are usually around $20,000. Lenders often do pull your business credit, so you should have some credit already established and sometimes lenders will want to see tax returns. Rates vary based on risk for this program, and there aren’t a lot of funding sources who offer it.

You can get financing regardless of personal credit if you have some type of stocks or bonds. You can also get approved if you have someone wanting to use their stocks or bonds as collateral for your financing. Personal credit quality doesn’t matter as there are no consumer credit requirements for approval. You can get approved for as much as 90% of the value of your stocks or bonds. Rates are often less than 2%, making this one of the lowest rate credit lines you’ll ever see. You can still earn interest as you normally do on your stocks and bonds.

Credit cards and lines are very similar each other.