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What’s Available for Consumer and Small Business Financing?

Small business financing and consumer financing have an overlap with banks and credit unions offering long term loans to each, yet other financing options are often only available to one market but not the other.
small business finance definition
Often viewed as an expensive option, both small businesses and individuals can make use of credit card financing (also known as a merchant cash advance) or payday loans (the consumer version of these cash advances). Though they can be expensive, these types of cash advance financial agreements can provide small businesses and individuals with much needed cash usually the same day. Of course both individuals and businesses can take advantage of credit card offerings if they need money fast as well provided they have a decent credit score.

Invoice Factoring Not Available to Individuals

Conversely, factoring accounts receivables (also known as invoice factoring) is a option available only to those in the business sector. Equipment based lending and asset based lending similarly are only available to those in business (though one could argue that personal assets are used as collateral for a consumer based long term loan.) Venture capitalists, angel investors and equity based crowdfunding can only be used to finance small businesses.

Business and Individuals Can Use Peer to Peer Lending

Yet thanks to the power and connectivity of the Internet, individual consumers have a new way to get money they need to pay down their credit card bills, student loans, medical bills and more. Peer to peer lending is one of today’s fastest-growing consumer financing trends. It combines the more casual practice of borrowing money from a rich uncle with the formal credit checks and risk assessment tools of a bank’s lending environment. Peer to peer lending companies have produced a viable way individuals can safely borrow from everyday people.

Though it isn’t entirely without risk, the unsecured loans aren’t necessarily much riskier than investing in the stock market. Unlike angel investing where the investors tend to be millionaires, the financiers for peer to peer lending sites tend to have some affluence but are more likely to be everyday working “thousandaires” rather than rich millionaires. Those seeking to be lenders in this space should proceed with caution and consider the risk-reward ratio before deciding to participate.

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About the Author:

Since 1991 I specialize in Invoice Factoring, PO financing and ABL facilities. I currently work internationally with companies in the US and Canada via our internet marketing division. Specialties: Accounts Receivable Factoring and Payroll Funding for Manufacturing, Oil & Gas, Telecommunications, Wholesale Trade Distribution, Staffing and Transportation. I always enjoy helping companies rise to the next level of success.

View More Posts By Robert Bernfeld