Alternative Financing Landscape
Alternative Financing Landscape
The alternative financing market is experiencing rapid growth, doubling in size each year. Whether you’re an individual or a business with good or bad credit, or you’re seeking funds for a start-up or charitable cause, billions of dollars are being donated, lent to, or invested in entities every month. In the three sections below, we offer detailed explanations of various alternative financing products, industry trends and statistics, and nine warnings for borrowers.
Table of Contents
Alternative Finance Explained
- Introduction
- Debt Financing
- Merchant Cash Advance
- Revenue Cash Advance
- Receivables Based Financing
- Accounts Receivable Factoring
- Inventory/Working Capital
- Purchase Order/Supply Chain
- Asset-Based
- Loans & Micro Loan
- Equity Financing
- Reward Financing
- Donations
- Capital Sources
- Crowdfunding
- Peer to Peer
- Direct Lenders
- Brokers
- Opportunities for Investors
Industry Statistics & Trends
- Introduction
- The Genesis
- The Opportunity
- Institutional Involvement
Warnings for Borrowers
- Introduction
- Compare Interest Rates
- Understand Implied Interest Rates
- Daily Payment Amount Fine Print
- Should You Really Borrow?
- Downward Spiral Caution
- Don’t Borrow to Pay Off Debt, Unless…
- Don’t Commit Fraud
- Personal Guarantee Issues
- What To Do If You Have Problems
Alternative Finance Explained
Alternative financing encompasses various forms and sources from across the globe. Definitions of “alternative financing” can vary among professionals, reflecting its diverse nature.
Our 2015 Alternative Financing Directory featured over 700 organizations that:
- Utilize technology for rapid authorization and financing processes.
- Leverage technology to connect crowdfunding and peer-to-peer finance platforms.
- Provide non-traditional financing options. Traditional financing avenues like bank loans, charitable grants, venture capital, payday loans, credit cards, home equity loans, private placements, friends and family loans, equipment leasing, and SBA loans were excluded from our directory.
Two primary factors driving the surge in alternative finance availability are technology and the Great Recession. FinTech (financial technology) employs software to streamline data collection, analysis, lending criteria determination, and connection between consumers and investors. The near-zero interest rates post the 2008 Great Recession prompted investors to seek higher returns in alternative investments compared to savings accounts and corporate bonds. Over 90% of the surveyed organizations emerged post the Great Recession. The value of investments in alternative finance is doubling annually.
