Many small businesses are experiencing cash flow problems and bank loans are not always available or the wisest decision. If you don’t have good credit, then obtaining an unsecured loan from a bank will be nearly impossible. If you are a homeowner, you might be able to get a secured loan like a home equity loan to come up with the cash you need. But while this might seem like a good idea because home equity loan rates are at an all time low and they can be paid off over a long term, if your business goes under, you’ll be out of a house. Therefore, in order to stay financially viable small businesses should look for an alternate means of bringing in ready cash. Nowadays, there are several options that the cash-strapped small business owner can utilize in order to keep the business afloat. Bypassing the traditional lending institution route has made it easier for small business owners to get a much needed infusion of cash for the company coffers. Asset based loans are loans that lenders will give the business based on the solid assets that the company possesses. This will include all assets that the business can lay claim to in both tangible and intangible form. These assets may include inventory, office furniture, buildings, music rights, patents and so on.

All assets that are rightfully owned by the small business are considered assets and are then assessed to come up with the total value of all assets combined. The lender then decides how much of the total value of all assets are going to be approved for a loan. Generally the loan amount is 50% to 65% of the total value of the assets. If the assets are worth $100,000, the loan may be between $50,000 and $65,000. If the business should go bankrupt and default on the loan, these lenders will be first in line to recoup losses when the assets of the business are put up for sale.

Peer to peer financing is the act of lending between groups or individuals without using traditional financial institutions. Peer to peer financing can be as simple as getting a loan from a friend or family member. The terms of the loan are drawn up and then it is up to the borrower to pay back the loan for the agreed terms. There are now companies that will bring people together for these types of loans. Now that the internet has made international transactions between people so easy, loans are much easier to come by.

There are internet companies that mediate between entrepreneurs and investors who then agree to the loan terms. The internet companies will charge a fee for this service. These enterprises use the same systems that the larger banks use to give the borrower a credit rating. Interested lenders are then brought together with the borrower and legal contracts are signed. If payments are missed by the borrower, the same collection methods used by larger financial institutions will be employed by the peer to peer enterprises. The rules are just as strict for making repayment of the loan.

Another form of loan is called purchase order financing. This is similar to factoring but with a bit of a difference. This option is available for businesses that resell or distribute hard goods and lack the money to pay the manufacturers. A purchase order is a transaction that represents a commitment to buy products from the reseller or distributor. A purchase order financial enterprise will pay the manufacturer for producing and shipping these products. The purchase order company is then responsible for collecting the money from the buyers who had signed these purchase orders. The purchase order enterprise will then get its money back and collect fees for the service. A loans calculator will help to calculate the interest rate for the loans available.