You can be on Entrepreneur’s cover!

Get a Line Of Credit Product For Your Small Business Through Alternative Financing Solutions Serial entrepreneur and CEO Xan Myburgh began Backd to address a funding shortage for expanding companies

By John Stanly

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Asia Pacific, an international franchise of Entrepreneur Media.

Handout

If you're a small business owner or an established company, you probably know that to expand your operations or launch a new product, you could use more funding. More capital lets you pursue your passion, and it's a key factor in making your small business expand quickly.

Due to a booming market for venture capital and private equity funds, alternative financing solutions such as Backd Business Funding offer small businesses the advantage of the same financial tools offered to large businesses by banks and other institutions.

What Are Alternative Financing Solutions for Small Businesses?

According to the Washington Post, startups seeking financing and established businesses seeking expansion can benefit from alternative financing solutions. These alternative financing solutions for small businesses include a variety of ways to get the money you need including:

Venture capital: Venture capitalists invest in startups, usually in exchange for an equity stake in the business. Venture capitalists are typically looking for companies with high growth potential and can make a lot of money down the road.

Angel investors: Angel investors provide funding for companies that aren't quite ready to go public or get venture capital from institutional investors but are still promising enough to attract angel investors' money. Angels invest in a wide range of companies, from app developers to high-tech startups, with the potential for high returns on investment.

Credit cards: Credit cards give small businesses access to short-term funding without having to pay interest on purchases until they're paid off - but many businesses have trouble paying off their balances each month because credit cards are so easy to use unnecessarily (for example, buying lunch when the company cafeteria is nearby).

Bonds and debentures: Bonds are certificates of debt issued by cities, states, and corporations; they're essentially loans that set dates and must be repaid at set interest rates. Debentures are similar instruments issued by private companies; they're also called bonds or notes.

What Are the Biggest Challenges Small Businesses Have When Looking For Funding?

Small businesses are the backbone of the economy, but they don't always get the respect they deserve.

"Small businesses are an important part of economic growth, but they're also often overlooked," says Xan Myburgh, CEO of Backd Business Funding. "Many people think that small business is synonymous with mom-and-pop shops, but there's a lot more to it than that."

According to a Washington post-publication, small businesses account for over half of all jobs in America and two-thirds of new job creation. They also generate about two-thirds of the U.S. gross domestic product (GDP). But many small businesses struggle to get funding from banks or other traditional sources, according to Dulaney.

"Regulatory restrictions make it hard for banks to offer loans to small and medium-sized businesses," Myburgh says. "It is more common for them to offer large dollar amounts of loans to businesses. As a result, it's difficult to obtain financing from banks."

Xan Myburgh

What Makes Backd Different

1. Quick loan approval turnaround times

Businesses occasionally require an immediate infusion of cash to fund salaries or unanticipated spikes in client demand. In business, things can get overwhelmingly unpredictable and unforgiving.

Because of lengthy credit checks, collateral requirements, and lengthy approval processes, it is often difficult to get funds quickly with traditional lenders. Backd provides a much quicker turnaround time without much paperwork upfront, so businesses can get the cash they need as quickly as possible.

2. Ability to provide flexible loans known as lines of credit that can be withdrawn whenever needed, as long as the credit limit offered isn't exceeded. The funds that are drawn accumulate interest, usually at a fixed rate.

A business line of credit is the ideal option for business owners looking to cover short-term priorities like payroll and equipment.

Once you need more capital for your project, you can draw against what has been previously issued without penalty. For example, if you receive $50,000 in funding from an alternative lender, you may only need $10,000 at first so there would be no penalty from drawing less than you need.

3. Bridging cash flow gaps with working capital

Another significant benefit is that you can bridge a cash flow gap with working capital. It's faster and easier to qualify for this loan alternative than waiting for a traditional bank approval during a bad season or high overhead costs.

Serial entrepreneur and CEO Xan Myburgh began Backd to address a funding shortage for expanding companies. His company exists to finance other firms that cannot obtain conventional financing.

John Stanly

Start-up mentor

Business News

James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building

The hardest step is usually the first one, he says. So make it short.

Leadership

You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Science & Technology

AI Will Radically Transform the Workplace — Here's How HR Teams Can Prepare for It

HR intrapreneurs are emerging as key drivers of AI reskilling, thoughtful organizational restructuring and ethical integration, shaping an inclusive future where technology enhances both efficiency and employee development.

Living

Get Your Business a One-Year Sam's Club Membership for Just $14

Shop for office essentials, lunch for the team, appliances, electronics, and more.

Fundraising

Why Women Entrepreneurs Have a Harder Time Finding Funding

Intentional or not, most investors are more likely to give money to males. That needs to change.