In today’s technology-rich world, it is easier than ever before for a person to launch their own enterprise.
Technology has made it possible for individuals to pursue their dream business and launch it from the comfort of their own home. A range of applications and services can take care of the fundamentals, while the person is free to pursue the business itself.
Of course, every business eventually hits the point where it needs to scale. When the time is right, businesses must secure the funding that they need to take things to the next level. This is a critical make-or-break point that many modern businesses hit and begin to falter.
In fact, it is estimated that 82 percent of new businesses will eventually fail because of cash flow issues. The NSBA also conducted a survey which found that 27 percent of businesses claim a lack of funding was the reason for the failure of their business.
But times are changing. Traditional financing options were a big reason that businesses failed to secure the funding that they need. Finance is now evolving, however, and many businesses have non-traditional financing options available to them.
Here is a closer look at why non-traditional financing is taking off in 2019.
More New Businesses
As previously mentioned, the pace at which new businesses are being created continues to increase. As more businesses join the market, more of them will be searching for the non-traditional financing that will help them to succeed.
These new businesses are not confined to one geographic area or industry, leading to an explosion in innovation and high-quality services and products.
Of course, the more businesses that are created, the better our shared understanding of entrepreneurship. A staggering 82% of startup funds come primarily from the entrepreneur themselves or their immediate family – as the word of non-traditional financing continues to spread, we can expect for more businesses to pursue it and secure success.
More Non-Traditional Financing Options
A big reason that non-traditional financing is going to succeed in 2019 is the diverse range of non-traditional financing options that are available now.
Many businesses pursue online unsecured lending, which is capable of offering faster service and better accessibility. Credit scoring algorithms can also see beyond the limited view of traditional lenders, helping both lenders and businesses to prosper.
There are many lenders, offering businesses of all sizes the funding that they need with an incredibly fast turnaround and with a deeper look at the company beyond the surface of credit scores.
Peer-to-peer lending is also a viable funding method for some businesses. Platforms like Kickstarter have propelled many businesses to viability and success. As non-traditional methods such as these enter the mainstream, we can expect more new businesses to pursue them.
Ease of Access
This is perhaps the most prominent reason behind the growth of non-traditional business financing.
The rapid proliferation and growth of non-traditional financing options means that businesses find it easier than ever before to locate and collaborate with those lenders. Many of those lenders understand that securing traditional financing is a real nightmare for many small businesses, and have worked to differentiate themselves by offering simplicity and ease of access.
There are many websites which help small business owners get the information that they need to compare their options and succeed. Small business owners are finding it easier to secure funding when compared to the past because of this ease of access.
An Altered Mindset
It is entirely logical that as non-traditional businesses emerge, they understand the need for non-traditional financing.
Technology has completely and utterly transformed business, and new dynamics are now at play. New business owners intuitively understand that non-traditional financing options are out there, and they pursue them naturally.
As this becomes more and more common, we will even see how the use of the phrase “non-traditional financing” will fall out of use. The vast majority of small business owners will begin to pursue these more flexible, accessible, and effective forms of funding over traditional options.
We hope that this piece has helped you to get a better understanding of the non-traditional financing landscape and why we can expect it to rise to prominence throughout 2019 and beyond.