Financing for SMEs and the self-employed is one of the most important aspects to be able to face payments and have liquidity.
In this post, we are going to present some types of financing for SMEs that you can take into account as alternative bank financing. So keep reading!
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Types of alternative financing for SMEs
The daily activity of a company requires liquidity to carry out its operation, despite the gaps caused between the time of collection from customers and the time of payment from suppliers.
To avoid situations of lack of liquidity of a small company, the different forms of financing for SMEs that can ensure the availability of working capital must be known.
As Alternative financing options for SMEs:
Promissory note discount and invoice advance
One way to avoid non-payment of invoices is the promissory note discount, in addition, the beneficiary will have financing to continue with the operation of his SME.
The promissory note discount occurs when a company anticipates the payment of customer promissory notes before their maturity, injecting liquidity to the promissory note holder.
Between his advantages:
- The speed of operation, you will collect the promissory note immediately without waiting for maturity.
- Security, the company in charge of advancing the amount assumes the risk of non-payment.
- Another advantage, your CIRBE remains intact, since it is a type of financing for non-bank SMEs.
Disadvantage:
- associated cost. The promissory note discount has a price. Due to this, the full amount of the promissory note will not be charged, since the company that makes the advance payment will take its commission.
Inventory financing
If you sell physical products, inventory financing is an alternative that can be very useful for you.
When inventory is available, but liquidity is needed, then it is a good time to resort to this type of financing.
He inventory financing operation It is given through a loan obtained for the value of the inventory that the company has immobilized in the warehouse.
Once the products start to be sold, the entrepreneur can pay the part of the loan with his earnings.
The main purpose is usually to expand the business or buy more inventory to market.
- Advantage: avoid the stock break, ensuring the normal performance of the activity.
- Disadvantage: When the credit is granted, the creditor signs a contract in which he obtains ownership of the products in stock. As collateral in the event that the customer is unable to pay the loan, they can keep the inventory purchased.
Alternative financing services for SMEs from Alter Finance
As specialists in alternative financing, Alter Finance can get the resources and alternative financing services for SMEs that you are looking for.
Our financial advisors have the knowledge and experience that will allow them to detect the type of financial alternative that best meets the needs of your organization.
There are very efficient alternatives beyond traditional banking. Contact us without obligation.