Alternative Finance: The Ultimate Guide for Funding Your Business

Key Takeaways

• Alternative finance offers flexible funding outside traditional banks: Options include invoice factoring, crowdfunding, P2P lending, and merchant cash advances, enabling businesses to access capital quickly even with limited credit history.
• Fintech and digital platforms simplify funding: Technology-driven solutions streamline applications, automate processes, and expand access, including embedded finance and online lending.
• Businesses can qualify based on revenue and assets, not just credit: Lenders often evaluate revenue history, repayment ability, and collateral, making alternative finance accessible to startups or businesses without credit.
• Each financing method has unique costs, speed, and repayment structures: For instance, invoice factoring converts receivables into cash, merchant cash advances take a percentage of daily sales, and P2P loans feature varying rates based on the platform.
• Safety, compliance, and due diligence are crucial: Reputable platforms follow SOC2 or ISO 27001 standards, and borrowers should verify lender legitimacy, understand fees, and consider regulatory requirements for crowdfunding and P2P lending.

This guide walks business owners through the world of alternative finance, covering options outside traditional banks and public markets. It starts by defining alternative finance and explaining why it’s increasingly in demand. The blog then explores solutions for businesses who need funding outside of banks, highlights top funding alternatives for startups, and details qualification requirements. It covers specific methods like invoice factoring, crowdfunding, peer-to-peer lending, merchant cash advances, and small business lines of credit, while also explaining fintech innovations, safety considerations, and regulatory aspects. Finally, it provides practical guidance for applying online and securing fast, reliable funding.

What is alternative finance?

Alternative finance is funding that operates outside traditional banks and public markets. It includes crowdfunding, peer-to-peer lending, invoice factoring, and private equity. Businesses and individuals use alternative finance to raise capital when bank loans are limited, slow, or unavailable. Digital platforms facilitate most alternative finance transactions.

It’s in demand:

24% of small businesses surveyed sought financing through an online lender in 2024, up from 22% in the prior year. Quick service and lack of collateral requirements were the top drivers. (Federal Reserve Banks – 2025 Report on Employer Firms (2025 SBCS)

More than one-third of small businesses report applying for funding from a non-bank financial institution U.S. Treasury – Financing Small Business: Landscape and Policy Recommendations (January 2025)

What alternative financing options exist for businesses with bad or no credit?

Alternative financing options for businesses with bad or no credit include revenue-based financing, merchant cash advances, invoice factoring, equipment financing, crowdfunding, and microloans. These options rely on revenue, assets, or sales volume instead of credit scores. Lenders often require 3–12 months of revenue history and minimum monthly revenues of $5,000–$20,000.

What are the best alternatives to traditional banks for startups?

The best alternatives to traditional banks for startups include venture capital, angel investors, crowdfunding, revenue-based financing, online lenders, and startup accelerators. These options provide capital based on growth potential, traction, or revenue instead of credit history. Venture capital firms typically invest $500,000 to $5 million, while angel investors often invest $25,000 to $250,000.

What do you need to consider when applying for a loan through an alternative lender?

When applying for a loan through an alternative lender, consider the total cost of capital, repayment structure, eligibility requirements, and funding speed. Alternative lenders often charge 10% to 50% annualized rates and require daily or weekly repayments. Most require 3–12 months of revenue history and minimum monthly revenue of $10,000–$20,000.

Why would a business need alternative business funding?

Use cases include:

• Cash flow crunches: This can be caused by long net terms, mismatches between A/R and A/P, and a lack of forecasting.
• Burn rate and runway: If startups get close to running out of initial funding or their burn rate is too high, alternative business funding closes the gap.
• Bank rejection: If banks deny a loan or line of credit, alternative lending can help. This also includes businesses who have a bank relationship, but get denied additional funding.
• Growth opportunities: Landing a large contract requires upfront capital for expenses. Alternative lenders can move quickly to enable a business to fulfill the job.

How do you qualify for alternative finance?

Every type of alternative business funding has their own requirements. Common requirements include:

• Ability to repay: Lenders want proof your business generates consistent income to repay the loan. They typically review monthly revenue, revenue trends, and bank deposits (often last couple quarters of statements).
• Time in Business: Most alternative lenders require a minimum operating history of at least 3 to 6 months. A longer track record signals stability and reduces risk.
• Credit Profile (Personal and/or Business): Many alternative lenders check personal credit scores and sometimes business credit. Requirements are often lower and more flexible than traditional banks.
• Business Documentation: Required documents typically include bank statements, financials, articles of incorporation, and your ID. These help lenders verify financial health, your identity, and your business’ legitimacy.
• Collateral or Revenue-Based Security (When Applicable): Some lending types require collateral, like equipment, invoices, inventory. They can also require repayment tied to sales, like percentage of revenue.
• ESG (Environmental, Social, and Governance): Alternative lenders are increasingly using ESG scores as a data point for non-traditional credit evaluation.

What do fintech firms do?

Fintech firms deliver financial services through technology-driven platforms. They provide services such as digital payments, online lending, mobile banking, investment management, insurance technology, and cryptocurrency exchanges. Fintech firms use automation, data analytics, and software to reduce transaction costs, increase processing speed, and expand access to financial services.

Fintech firms offer a wide array of products and solutions such as:

• Crowdfunding platforms, to help raise funding for startups
• Cryptocurrency and digital cash to facilitate online transactions
• Blockchain technology, a digital ledger in which transactions using cryptocurrency are recorded
• Smart contracts, to automatically execute contracts between buyers and sellers
• Open banking, which provides third-parties with access to bank data to build applications, such as budgeting and money management tools
• Insurtech, which uses technology to streamline the insurance industry Invoice factoring
• Peer-to-peer lending, to facilitate lending outside of the traditional banking system
• Regtech, which helps financial service firms meet industry regulatory and compliance rules
• Robo-advisors, which automate investment advice at an affordable price for consumers
• Cybersecurity, to protect against unauthorized use of electronic data

Are fintech companies regulated?

Fintech companies are regulated under financial services laws in most countries. Regulators such as the U.S. Securities and Exchange Commission (SEC), the Federal Reserve, the Financial Conduct Authority (FCA) in the UK, and similar agencies oversee fintech firms based on their services. Companies that provide banking, lending, payments, or investment services must comply with licensing, anti-money laundering (AML), and consumer protection regulations.

What is embedded finance?

Embedded finance integrates financial services into non-financial platforms. Companies add services such as payments, lending, insurance, or banking directly into apps, marketplaces, or software platforms. For example, a rideshare app can offer in-app payments and driver debit cards. Embedded finance increases user convenience and creates new revenue streams for platforms.

What are non-bank financial institutions?

Non-bank financial institutions (NBFIs) are financial entities that provide financial services without holding a full banking license. They offer services such as insurance, investment management, lending, leasing, and asset financing. Examples include insurance companies, hedge funds, private equity firms, credit unions, and pension funds. NBFIs do not accept traditional demand deposits like commercial banks.

Why online lending?

The biggest benefit of online lending is that the entire process is much easier than with a traditional bank. Below are some of the biggest benefits:

• Quicker approval: a traditional application form for a bank loan takes a long time to review, and you may need to visit the branch in-person. With online lending, you can instantly find out whether or not you’re approved, the amount you can borrow, and what your payment plan will look like.
• Easier approval: in order to approve a loan, banks require a high credit score and multiple years of credit history. This makes it difficult for most startups or small businesses who do not have years of credit history. In contrast, online lenders offer much more flexibility and will turn to other methods to evaluate your trustworthiness, such as utility payments.
• Lower fees: since online lenders don’t have the same overhead costs as a physical location, they are able to charge smaller service fees and at times, better interest rates.
• No collateral required: in addition to credit history, banks typically require the loan to be secured against your assets. Fortunately, most online loans are unsecured, meaning that if you fail to repay the loan, your assets won’t get possessed, but your credit score does have the potential to drop.
• Specialization: traditional banks offer multiple services and financial products, whereas online lenders typically offer just one service – lending. Specialization enables a better customer experience, ranging from more customized solutions to greater employee knowledge and expertise.

What is fintech banking?

The European Central Bank defines a fintech bank to be one which has “a business model in which the production and delivery of banking products and services are based on technology-enabled innovation”.

In layman’s terms, the central role of technology is what separates a fintech bank from a traditional one.

How will fintech affect banks?

Although fintech companies are putting pressure on traditional financial institutions, the reality is that fintech won’t kill banks. Fintech companies are growing fast, however they are still tiny in comparison to the banking industry. For example, 34% of small businesses use credit cards as their primary financing choice, the most common financing tool for existing firms. SBA Office of Advocacy – Small Business Finance FAQs (October 2024) Banks and traditional financing products are still popular.

What sources of alternative business funding are available?

• Neo-banks or small business banks banks
• Family and friends grants
• Venture capital
• Angel investors
• Business incubators
• Merchant cash advances
• Invoice factoring companies
• Crowdfunding
• Peer-to-peer lending

Invoice Factoring

What is invoice factoring?

Invoice factoring is the process by which a business sells its invoices to a third party (called a factor) at a discount. This helps businesses with slow-paying customers meet their immediate cash flow needs and cover business expenses.

Invoice factoring is also known as accounts receivable factoring and accounts receivable financing. It’s only available for businesses that sell B2B or B2G (business to government).

What is a factoring rate?

A factoring company will charge a factoring rate – or factoring fee – for their service, which is a percentage of the total amount of invoices being factored.

What is a typical factoring fee?

The factoring fee varies per business, and will depend on:

• The industry you are in i.e. low-risk industries such as consulting, transportation, and staffing will have a lower factoring fee.
• The total quantity of invoices being factored i.e. a higher volume of invoices can lower the factoring fee.
• The stability of your business i.e. companies with a long and stable history can have a lower factoring fee.
• The days outstanding on submitted invoices i.e. the faster your customers pay your invoices, the lower the factoring fee.
• Whether the terms of agreement are recourse factoring, or non-recourse factoring. In the former agreement, the business agrees to buy back the invoices if they go unpaid. In the latter, the business has no obligation to absorb any unpaid invoices. Non-recourse factoring has a higher factoring fee since it passes on a higher level of risk to the factoring company.

How much does invoice factoring cost?

TA typical factoring fee for 30 days will generally range from 1.5% to 4.5% per 30 days. Ensure you understand any additional fees such as origination, underwriting, or credit adjudication fees.

What are the benefits of invoice factoring for small businesses?

Invoice factoring is an excellent choice for small business owners that are looking for fast, ongoing access to cash at a lower rate than most other options.

These are the biggest benefits of using invoice factoring:

• Quick access to cash. Upon approval, funds can be available as soon as the next business day. This is much faster than banks that can take weeks, if not months.
• No debt. Unlike a loan, invoice factoring doesn’t add a liability to your balance sheet because it’s the sale of an asset: your A/R.
• Peace of mind. You will have stable cash flow to pay all business expenses, including payroll every month.
• Easier access. Unlike a bank loan, you do not need long years in business and a strong financial history. Instead, the factoring company focuses more on the strength of your customers’ ability to pay the invoices.
• Less paperwork. A factoring company will deal with the headache of paperwork, processing and collecting payments!

Create a free account to see if you qualify for invoice factoring with FundThrough.

What is the difference between invoice discounting and invoice factoring?

The difference between invoice discounting and factoring lies in who takes responsibility for collecting payment from debtors. With invoice factoring, the factoring company takes responsibility for collecting payments, whereas with invoice discounting, the business still retains control of collecting payments.

Invoice discounting also allows for more confidentiality; customers do not need to know a third-party factoring company is involved in assisting the business with its cash flow. With invoice factoring however, customers are making payments directly to the factoring company.

What is the difference between revenue-based financing and invoice factoring?

The main difference between revenue-based financing and invoice factoring is their repayment structure and funding trigger. Revenue-based financing provides capital in exchange for a percentage of future revenue until a fixed amount is repaid, while invoice factoring advances funds based on outstanding invoices, and repayment occurs when customers pay those invoices.

What are good alternatives to traditional accounts receivable factoring companies?

Good alternatives to traditional accounts receivable factoring companies include invoice financing, which allows businesses to borrow against outstanding invoices without customer notification; supply chain financing, where suppliers get early payment through a financial partner; and peer-to-peer lending platforms that offer short-term capital.

I

s invoice factoring regulated?

Invoice factoring companies are not regulated by a formal government body, which allows them to serve small business owners that are unable to secure a bank loan.

Most invoice factoring companies are self-regulated and are members of associations such as The International Factoring Association and the Commercial Finance Association in order to ensure they are following best practices.

Crowdfunding

What is crowdfunding?

Crowdfunding is a method of raising capital by collecting small contributions from a large number of people, typically via online platforms. Entrepreneurs, creators, and organizations use crowdfunding to fund projects, launch products, or support causes without relying on traditional financing like banks or investors.

What are the different types of crowdfunding?

There are four different types of crowdfunding available; these differ based on what is received in exchange for a contribution:

• Donation-based crowdfunding: the contributor provides a donation to a person or company, and may or not may not be promised something in return.
• Rewards-based crowdfunding: the contributor is promised a reward in return, often related to the project or cause they are supporting.
• Investment-based crowdfunding: the contributor (or in this case, investor) receives a stake in the company, typically a share. This is also known as equity crowdfunding.
• Loan-based crowdfunding: the contributor loans money to a person or company at a set interest rate. This is also referred to as peer-to-peer lending and is discussed in more detail in the previous section.

How does crowdfunding work?

Crowdfunding takes place on a crowdfunding site, also known as a crowdfunding platform. Whether you are looking to raise or contribute funds, you will need to register with the website in order to participate.

Crowdfunding sites will typically list all projects or ventures that are being pitched on the website. Each project or venture should provide details such as:

• How much it wants to raise
• How much has been raised so far
• How many people have already contributed
• How the money will be used
• How long the pitch is open for accepting contributions
• What you will receive in return e.g. shares, reward

Crowdfunding money goes to the project owner or venture only if it raises the full amount of the contribution goal stated in the pitch.

Who uses crowdfunding?

Crowdfunding is used for a variety of reasons, from raising money for a sick family member to launching a small business. Below are some common users that benefit from crowdfunding:

• Non-profits, charities, and social enterprises looking for funds for a project, program, or product with a social mission
• Individuals or teams raising money for a challenge, fundraiser, or charity event
• Individuals looking for funding to take care of a sick friend, family member, or pet
• Creative professionals such as authors, artists, and filmmakers looking for funding
• Startups looking to launch an innovative new product or service
• Small businesses that are looking to expand

What are the pros and cons of crowdfunding?

Which crowdfunding platform should I use?

Choose a crowdfunding platform based on project type, fees, and audience reach. Use Kickstarter for creative projects with a fixed funding goal. Use Indiegogo for flexible funding or innovative tech. Use GoFundMe for personal or charitable causes. Use Patreon for ongoing creator support. Compare fees and payment options before deciding.

How much money can I realistically raise?

Realistically raise between $5,000 and $50,000 with crowdfunding for most small projects. Success depends on project type, audience size, marketing effort, reward appeal, and platform choice. Well-planned campaigns with strong social proof or pre-existing communities can exceed $100,000, while niche or untested ideas may struggle to reach $1,000.

What makes a crowdfunding campaign successful?

Make a crowdfunding campaign successful by setting clear goals, creating compelling storytelling, and offering attractive rewards. Promote the campaign through social media, email, and community engagement. Maintain transparency by updating backers regularly and demonstrating credibility through previous work or endorsements. Strong visuals and a clear call to action increase contributions.

Do I have to give away equity or rewards?

You do not have to give away equity or rewards for crowdfunding. Choose between donation-based crowdfunding, where supporters contribute without expecting returns, and reward-based crowdfunding, where small perks or products may be offered. Equity crowdfunding, however, involves giving investors ownership stakes in exchange for funds.

Is crowdfunding regulated?

From the four different types of crowdfunding listed above, two of these are regulated and two are unregulated. Donation-based and reward-based crowdfunding are not regulated, since the amounts are typically small and contributors are not receiving money in exchange.

Investment-based (equity crowdfunding) and loan-based (peer-to-peer lending) however, are regulated since they involve much larger amounts, and contributors receive money in exchange as well.

Who regulates crowdfunding?

Canada regulates securities at a provincial level; each province and territory has its own securities commission and legislation e.g. the Ontario Securities Commission.

Within the U.S., crowdfunding is subject to oversight by the Securities and In order to operate, a crowdfunding platform has to register at a federal level with the Securities and Exchange Commission (SEC) and become a member of the Financial Industry Regulatory Authority (FINRA) under the JOBS Act.

In addition to federal and provincial regulations, crowdfunding portals have their own standards that often exceed those required by regulators. Funding portals go the extra mile because they realize that in order to be successful, they have to offer the best protection for their users.

Peer-to-Peer (P2P) Lending

What is peer-to-peer lending and how does it work?

Peer-to-peer (P2P) lending is a financial system where individuals lend money directly to other individuals or businesses without traditional banks. It works through online platforms that match borrowers with lenders, set interest rates, and manage repayments. Lenders earn interest on loans, while borrowers access funding more quickly than through banks.

Can my business qualify for P2P loans?

Qualify your business for P2P loans by maintaining a strong credit history, demonstrating consistent revenue, and providing required financial documentation. Lenders also consider your business type, annual revenue, time in operation (usually at least 6–12 months), and repayment capacity. Meeting these criteria increases approval chances and access to competitive rates.

How much funding can I get through P2P lending?

P2P lending platforms typically provide funding ranging from $1,000 to $50,000 for personal loans, and up to $500,000 for small business loans. The exact amount depends on your credit score, income, debt-to-income ratio, and the lending platform’s policies. Approval speed is usually faster than traditional banks.

What interest rates and fees will I pay for P2P lending?

Interest rates range from 5% to 36% annually, depending on your credit risk and platform. Platforms may also charge origination fees of 1%–5% of the loan amount and late payment fees if repayments are delayed. Total costs vary with loan term, borrower profile, and platform policies.

How fast can I access funds with P2P lending?

You can usually access funds within 24 to 72 hours after loan approval. The exact speed depends on platform verification processes, borrower credit checks, and bank transfer times. Some platforms can release funds the same day if all documentation is complete and the investor funding is immediately available.

What happens if my business can’t repay a P2P loan on time?

Failing to repay a P2P loan on time can result in late fees, increased interest rates, and damage to your business credit score. The lender may also initiate debt collection or legal action, which can escalate costs. Communicate with the lender immediately to negotiate extensions or repayment plans to minimize financial and reputational impact.

How big is peer-to-peer lending?

Peer-to-peer lending is one of the fastest growing segments in the financial services industry, with hundreds of sites across the world. The global peer-to-peer lending market size was valued at $67.93 billion in 2019, and is projected to reach $558.91 billion by 2027. The market size of the P2P lending platforms industry in the U.S. declined 1.2% per year on average between 2017 and 2022, it still had a market size of $1.1 billion in 2022.

Is peer-to-peer lending regulated?

Peer-to-peer lending in Canada is regulated, however it is a process that is still evolving. Canadian securities regulators have taken the position that peer-to-peer loans could be ‘securities, and therefore peer-to-peer lending platforms need to register as securities dealers at a provincial level. In some cases, Canadian peer-to-peer lending platforms need to file a prospectus if they are issuing securities.

To sidestep this requirement, many peer-to-peer lending companies are using existing exemptions such as restricting investment to accredited investors.

Within the United States, the lending side is regulated by the Securities and Exchange Commission. The borrowing side of the business is regulated by other agencies such as the Consumer Financial Protection Bureau and the Federal Trade Commission.

What states allow peer-to-peer lending?

Every state in the United States has their own set of lending rules and regulations and laws about investments in securities. Some states can borrow and not invest, some can invest but not borrow. And some can do both.

Lastly, it also depends on which peer-to-peer lending platform is being used, as some states are open to one, but not the other.

Depending on the platform, borrowers may face restrictions in:

• Iowa
• Virginia
• Maine
• North Dakota

Peer-to-peer investing is legal in all states aside from Ohio.

Is peer-to-peer lending taxable?

Interest earned from peer-to-peer lending is taxed, similar to other investment income. As an individual, interest income will be taxed at a marginal rate. Losses on loan defaults are also able to be deducted.

Small Business Line of Credit

How much funding can I qualify for with a small business line of credit?

You can qualify for a small business line of credit based on your business revenue, credit score, and time in operation. Typical funding ranges from $5,000 to $100,000, with lenders assessing cash flow, existing debt, and repayment history. Businesses with strong financials and at least one year of operation receive higher credit limits.

What are the interest rates and fees for a small business line of credit?

Small business lines of credit typically charge interest rates between 7% and 25% annually, depending on the lender and business creditworthiness. Fees may include origination fees (1%–4% of the credit amount), maintenance fees ($50–$200 monthly), and late payment fees (around $25–$50). Rates can be fixed or variable, and some lenders require annual renewal fees.

How does the small business line of credit application and approval process work?

Apply for a small business line of credit by submitting a detailed application including business financials, credit history, and revenue documentation. The lender reviews credit scores, cash flow, and debt obligations. Approval typically takes a few days to a couple of weeks or months, after which the lender sets the credit limit and terms based on risk assessment.

How flexible is repayment on a small business line of credit?

Repayment on a small business line of credit is flexible. Borrowers can draw funds as needed and make payments based on the outstanding balance. Many lenders allow interest-only payments during the draw period, with full principal repayment due later. Terms vary by lender, but flexibility supports cash flow management and seasonal business needs.

How does a small business line of credit compare to other financing options?

A small business line of credit provides flexible, short-term funding that businesses can draw from as needed and repay with interest only on the amount used. Unlike term loans, which provide a fixed lump sum with set repayment schedules, lines of credit allow recurring access and can help manage cash flow, seasonal expenses, or unexpected costs. Interest rates are often variable, and approval may depend on credit history and business financials.

How do you qualify for a business line of credit?

While requirements vary from bank to bank, most require your business to have a credit score of 600 or more. You’ll also need to have been in business for at least two years. Many banks also require a minimum revenue of $10,000 to $250,000 per year in order to approve you for a line of credit. You’ll need to provide documentation that proves all this, in order to qualify for a business line of credit. Unfortunately, small businesses face a rejection rate of up to 80% when they apply for a business line of credit.

What are the best alternatives to a line of credit?

• Invoice factoring: Approval depends more on your customers’ creditworthiness rather than your own, makin approval faster and easier.
• SBA loans: They often offer lower interest rates and longer repayment terms, making them more affordable for small businesses needing structured financing.
• Community Development Financial Institutions (CDFI): CDFIs focus on supporting underserved businesses and may approve loans when traditional banks would not.
• Credit unions: They typically provide more personalized service and flexible lending criteria, making them easier for small businesses to access than a bank line of credit.
• Working capital advance: This provides quick access to cash based on future sales, making it ideal for businesses with seasonal fluctuations or urgent funding needs.
• Bootstrapping. Self-funding is common: 80% of employer businesses used personal savings for startup capital; 76% of nonemployers did the same. SBA Office of Advocacy – Small Business Finance FAQs (October 2024)
• Pitch Competitions: A unique funding route for startups within regional or community-driven contests
• Asset-based lending (ABL): It allows businesses to borrow against inventory or receivables, providing financing without needing a strong credit history.

Merchant Cash Advance

What is a merchant cash advance, and how does it work?

A merchant cash advance (MCA) provides businesses with a lump-sum payment in exchange for a percentage of future credit card or daily sales. Businesses repay the advance through daily or weekly deductions, which fluctuate based on revenue. MCAs offer fast funding without collateral but typically carry higher fees than traditional loans.

How much can I borrow with a merchant cash advance?

Borrowing amount with a merchant cash advance is based on your business’s daily credit card sales. Typical amounts range from $5,000 to $250,000, depending on revenue history, industry, and repayment ability. The lender calculates repayment as a fixed percentage of daily sales until the advance plus fees is fully paid.

What are the costs, fees, and interest rates for an MCA?

Merchant Cash Advances (MCAs) charge fees instead of traditional interest rates. Costs typically include a factor rate of 1.1 to 1.5, which represents the total repayment divided by the advance. Effective annual percentage rates (APR) can exceed 70–200% depending on repayment terms. Additional fees may include origination fees (2–5%) and processing fees. MCAs are repaid via a fixed percentage of daily credit card or bank sales, making costs variable with revenue.

How fast can I get funding with a merchant cash advance?

You can get funding with a merchant cash advance within 24 to 72 hours. Approval depends on your business revenue, credit history, and the lender’s processing speed. Businesses with consistent daily sales or card transactions typically receive faster access to funds, while slower approvals occur for irregular revenue patterns or additional documentation requirements.

What happens if I can’t repay a merchant cash advance on time?

Failing to repay a merchant cash advance on time triggers high fees, increased daily repayment amounts, and potential collection actions. Lenders may deduct more from future credit card sales or pursue legal action. Late repayment can also harm your business credit score, making future financing more expensive or difficult. Ensure you’re aware of the risks that come with merchant cash advances.

Are merchant cash advances tax deductible?

Although payments made towards the principal are not tax deductible, you can deduct the cost of interest on the loans. Overall, merchant cash advance loans will not protect your income from taxes and will also not subject you to additional taxes, so they are by and large tax neutral.

Alternative Finance Safety and Security

Is online lending safe?

Online lending is safe if you work with a reputable and reliable lending company or platform. As with any other life or business decision, finding a safe online lender requires some due diligence.

How do I find safe online lenders?

Before applying for a loan, use the Internet to do some quick research about the potential lending company or platform. You’ll want to look for the following:

• A physical address: Visit the ‘Contact Us’ page of the website and search for the physical address. Then, verify this with a Google search.

Customer reviews: Do a Google search for “[insert company] customer reviews”. A legitimate lender will provide the name of the borrower and the small business if applicable, so that the review can be verified. For example, the FundThrough customer reviews page lists the name of each business owner and their company.

Third-party verification: Reliable companies will go out of their way to receive third-party certification. For example, FundThrough has an accredited business profile through the Better Business Bureau.

• Visit social media: Most safe and reliable lenders will have an active presence on social media platforms such as Facebook, Twitter, LinkedIn, and Instagram. If you see photos of real people working at the office, that’s a pretty good sign!

What are SOC2 & ISO 27001 Compliance and why do they matter?

SOC 2 and ISO 27001 compliance ensure secure handling of sensitive data. SOC 2 focuses on service organizations’ controls for security, availability, processing integrity, confidentiality, and privacy. ISO 27001 sets international standards for an information security management system (ISMS). For online lending, these frameworks protect customer financial data, prevent breaches, and build trust with users and regulators.

How do I apply for funding online?

You will need to create an account with the lending platform or company, and fill out an online application. Fortunately, applying for funds online has become very quick and simple.

For example, with FundThrough you can create your account online in two minutes and get your funds as soon as the next business day upon approval.