1. Community Banks
Community banks represent about 50 percent of all outstanding small business loans, and are a major source of microloans, according to Lael Brainard, a member of the Board of Governors of the Federal Reserve System. As their name suggests, these banks are typically focused around local communities–as opposed to large regional or national banks.
The chief advantage to using community banks is that most conduct relationship-based lending. This means that bankers will take the time to assess the quality of your loan application based on a number of different factors; they will go over your company’s finances to establish creditworthiness.
2. Small Business Credit Cards
One of the best ways to help finance purchases is to use small business credit cards. Outside of the obvious advantage of providing you with revolving credit month-to-month, credit cards can also help you build your credit score and earn rebates.
Quality of past loans makes up a major portion of how your business’s score is determined. Unless you are frequently engaged in lending with various vendors, odds are your firm has a thin credit profile. For this reason, using a business credit card to pay for your expenses is prudent–over time; this practice will build your company’s credit score.
3. Online Lending
Online platforms account for just a small percentage of the small business lending market, though they are also the youngest. As with community banks, online lending provides an advantage over credit score-based approaches of larger banks, which ostracizes many young companies.
By: Robert Harrow