As a small business owner, it is sometimes necessary to seek out unconventional loans, for a variety of reasons. In some cases, you may find it difficult to get approved for a typical loan. For instance, some banks are reluctant to offer large-term loans to new business owners, particularly those with a lack of business experience. In other cases, you may need funds for a particular purpose — like a small renovation — and want to find an alternative or less intensive means of financing.

There are several types of alternative loans worth considering for small businesses. Below are a few types that may apply to your situation.

Bridge Loans

Bridge loans are a class of loans that effectively “bridge” the gap from a short-term to a longer-term loan. For instance, if your business is waiting on a longer-term loan — perhaps for a major expansion — a bridge loan can be effective immediately to keep operations going. It may be used for payroll purposes, inventory, equipment, or something else. 

Bridge loans typically have terms of a year or less, and high-interest rates, but can be a useful solution if a more sustainable loan can be secured down the road.

Asset-Based Loans

An asset-based loan can also be useful for finding a small business project. An asset-based loan works by lending against the value of an “asset” — like inventory, real estate, or something else — that you list as collateral. Asset-based loans are quick to secure and typically unrestrictive about use.

While you may not be able to use an asset-based loan to fund a substantial project, it can be effective for partial funding or smaller projects.

Crowdfunding

While not a typical type of “loan,” crowdfunding can be a very effective way to raise funds for a business. 

There are two common types of crowdfunding methods. Under one method, you will raise money from a large number of small donors to fund a project or business expense. Under a second, you will raise funds from a much smaller number of large-dollar donors, who may receive an equity stake in the business in exchange for investment.

While both offer unique advantages over loans, crowdfunding can sometimes be difficult or impractical as a means to raise large sums of money.

Whatever your business needs are, there are a variety of alternative business loans to help you. Considering the financing methods above may suggest possibilities for your company.