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5 Alternatives to A Traditional Business Loan

5 Alternatives to A Traditional Business Loan

A friend of mine recently needed $10,000 to expand the scope of her little coffee shop, one that was starting to receive more attention than she had ever hoped for. The $10,000 would go towards a central air conditioner unit, new furniture and the purchase of a POS system to help her manage her transactions better and quicker.

Now, the problem was that my friend had a spotty credit history. A failed prior business venture and repayment problems related to a loan for that doomed venture meant that seeking out a traditional business loan was simply out of the question.

When she asked me for advice, I introduced her to peer-to-peer lending and she quickly found a lender who believed in her and her business. Now, 3 months down the road since then, she has paid back almost 40% of that loan and is well on her way to financial freedom, thanks to the continued and heightened success of her now not-so-small coffee shop.

This friend has thanked me many times and has repeatedly said that she would have just let her business stagnate if not for my advice, after being denied a business loan from the bank that denied her. It then dawned on me that I should try to put the word out there, that a traditional business loan isn’t the only way to go about securing funds for a small business.

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Here are 5 alternatives to a traditional business loan, alternatives you can easily pursue.

1. Peer-to-Peer Lending

This is what worked for my friend. FundingCircle is a great site that connects potential borrowers with potential lenders. What is different about FundingCircle as a lender is that it allows individual investors and even institutional investors to fund your loan request. This means that someone who believes in your business can lend to you. In other words, your loan request isn’t looked at by loan officers but by people who actually take time to understand your business!

Unlike banks where your business is very objectively viewed, FundingCircle investors take a very subjective look at your application. For example, the investor who funded my friend’s loan request had a history of running his own coffee chop chain. He thus quickly saw the potential of my friend’s coffee shop, ran the numbers and worked out a $10,000 loan with great terms, for both parties!

Though FundingCircle connects you with a lender in a very unique way, the are traditional like banks in the sense that they will require you to put up collateral that can be in the form of cash, property, assets or even your business for that matter. They typically process loans in a day and will award funds to your business in less than 10 days, should your application be approved.

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2. 401k Loan

This will be your perfect option if you are a salaried employee contributing to your 401k, while also moonlighting with a business on the side.

Unlike a traditional loan or peer-to-peer loan, a 401k loan will not need a collateral at all, as your 401k savings become a collateral in itself. 401k loans are extremely affordable and come with other great benefits such as a no-prepayment penalty clause. They are also available very quickly, often in a matter of days.

The disadvantages are that taking out a 401k loan will mean that you can’t contribute to your 401k until the loan is repaid. Also, ending your employment or getting fired from your job will mean that your repayment period on the 401k loan gets knocked down to just 60 days, unless you can secure new employment.

A 401k loan is one of the most popular ways to fund a startup, as startup business owners are usually still earning a paycheck.

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3. Crowdfunding

Here’s a fantastic story about two first year college graduates who recently raised $10,000 to fund their business venture of selling cold coffee on a tricycle, to just one college! They did it and did it easily with crowdfunding. What is amazing is that they secured the funding even though they promised to repay with just a free cup of coffee, a T-shirt, a picnic, or a coffee roasting class! Read about the BrewBike crowdfunding story here!

You can do the same for your business as well. All you need is passion for your business and a good presentation! Indiegogo and Kickstarter are two of the most popular crowdfunding sites out there. Give them a shot today!

4. Business loans based on your cash flows.

If your business has a stable cash flow, there are lenders out there who can lend you as much as $500,000 as a loan, as long as they see that your cash flow can handle the repayment. Such lenders will only require you to put up a personal guarantee and not even a collateral, to secure such loans.

Not surprisingly, this is one of the most sought after alternative funding methods for businesses that already have a stable operating history. Since such loans are processed in a matter of a few days, they are also the most popular option to business owners seeking emergency business loans, like when loans have to be used to repair or replace machinery that keeps a business running on its feet.

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5. A Loan from friends and family, with a legal agreement.

Everyone has great friends and family members that they look up to. Chances are that such friends and family adore you as well. There is absolutely no harm in raising funds from these people that you know, as long as you believe in your business and have all the intentions to pay it back.

But, you must do your homework before you approach friends and family for a business loan. Read this great book about how to seek out a business loan from family and friends, after making it a legal binding. Adding a legal  aspect to it will tell your friends and family that you are sincere about this loan request and that you want to pay it back.

Making it a legally binding loan request will also remove the awkwardness that might arise when they are willing to give you a loan, but want it documented in some way. Most friends and family say no to loan requests because it is just “asked” for, often leading them to think they have no recourse if the borrower decides not to repay the loan.

If you are uncomfortable approaching friends and family for a loan, try the other 4 options mentioned in this article. But then, don’t entirely rule out this option. You never know as there might be a friend or relative who will be more than happy to help you out, often for nothing in return!

Featured photo credit: Loan Now via loannow.com

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Last Updated on April 19, 2021

40 Healthy And Really Delicious Meals You Can Make Under $5

40 Healthy And Really Delicious Meals You Can Make Under $5

Ever had those moments where you really wanted to eat something delicious and healthy but didn’t have the financials means to do so? Whether you’re a student or parent, this compilation of 40 great, healthy, and inexpensive recipes will make every night special and help you get fit! No more meals where you have to force the food down! It’s time to make that budget your best friend and turn it into great recipes. Enjoy!

1. Fish Tacos in Crunchy Shells ($3.56 per serving)

Is there a better way to end the day than a Fish Taco dinner filled with protein and nutrients and is easy on the wallet? This recipe calls for a boys’ or girls’ night in front of a good movie or game.

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    2. Mini-Meatball Noodle Soup ($3.43 per serving)

    We’ve heard of the delicious spaghetti and meatballs recipes, but imagine having that same meatball goodness in a soup? It’s like Christmas in a bowl. Healthy, warm, and only $3.43 per serving.

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      3. Spaghetti and (Vegan) Meatballs ($2.13 per serving)

      Now it’s time to look at the traditional spaghetti and meatballs recipe, but with a little twist: vegan meatballs. This way, you can enjoy the Italian tradition without adding on the extra calories. I’m sold!

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        4. Kabocha Squash and Lentils ($3.12 per serving)

        Absolutely delicious way to end the day with a Kabocha Squash and lentils dinner. The beauty of this recipe is that you can actually make many other things from the mixture, from dips to full-on meals. All under $5 per serving.

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          5. Baked Coconut Lentils ($0.91 per serving)

          Coconuts are always a good idea, but it doesn’t have to be eaten only for dessert or breakfast. With this great recipe, you can now eat a lunch or dinner filled proteins and a coconut twist. Yum!

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            6. Easy Marinated Roasted Chicken ($3.40 per serving)

            We love chicken and at less than $5 per serving, we are in heaven with this recipe. Add some vegetables and rice on the side and you’ve got yourself a full meal!

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              7. Organic Greens and Goat Cheese Gratin ($2.36 per serving)

              This is absolutely divine. You get in your healthy greens and your fat macros with this great recipe. Takes only a few minutes to make and it’s easy on the wallet. Bon Appetite!

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                8. Beef Pot Roast ($3.22 per serving)

                One word: perfect. This meal will warm your insides and fill you up with the high protein content.

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                  9. Fajita-Style Quesadillas ($0.43 per serving)

                  If you want to eat Mexican tonight but want to stay in your budget, this Quesadilla recipe is your best friend. It’s tasty and filled with healthy ingredients for less than a dollar per serving.

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                    10. Fish Tostadas with Chili Lime Cream ($2.82 per serving)

                    Another great lunch idea for the busy days ahead. Prep this in the morning or the night before and you’ve got yourself a healthy and cheap lunch meal!

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                      11. Beef and Black Bean Chili ($1.36 per serving)

                      Might not look like much, but this amazing chili is actually extremely healthy for you. The protein from the beef and the carbs from the black beans will fill you up in no time, and keep you full for a long period of time. Delicious and warm, just right for the winter!

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                        12. Crispy Fish and Peppers ($2.18 per serving)

                        Amazing recipe for anyone looking to change up their meals while keeping their macros in check and not going overboard on spending. Satisfies your crunch tooth (see what I did there?) and gives you all the protein you need to stay full and lean.

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                          13. Vegetarian Gumbo ($1.50 per serving)

                          You have the perfect macro mix here with the carbs, fats, and proteins. At less than $5 per serving, you’ve got yourself a meal that will last for the whole week!

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                            14. Mexican White Bean Soup ($0.99 per serving)

                            With the cold weather creeping in, it’s not a surprise that soups are coming back in style. This great Mexican White Bean Soup dish will keep you warm for winter without making a hole in your pocket.

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                              15. Black Beans with Mango & Cilantro ($0.38 per serving)

                              Mangoes make every dish a little bit sweeter, which is why we absolutely love this recipe. A normal rice and bean dish might be a little meh, but add the sugary taste of mangoes and you’ve got yourself a party!

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                              Black-Bean-Cilantro-Mango

                                16. Bean Burritos ($0.71 per serving)

                                If you’re having people over tonight and don’t want to spend too much time or money on food, this dish is a great option! You can even cut up the burritos into pieces and make finger foods while everyone’s watching the game or gossiping.

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                                  17. Five-Spice Beef Kabobs ($2.43 per serving)

                                  The spices in this recipes add a delicious twist to the beef kabobs, which is definitely worth trying!

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                                    18. Cornmeal Crusted Pork ($1.92 per serving)

                                    If you like the fried crunch but want to opt for a healthier alternative, cornmeal is your man. This healthy recipe will satisfy all your fried desires without making you pop open your pant’s button.

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                                      19. Chicken, Tomato & Cucumber Dinner Salad ($2.57 per serving)

                                      Easy to do, extremely healthy, and super delicious. A must-try!

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                                        20. Lentil Soup with Beef and Red Pepper ($1.90 per serving)

                                        I can’t believe how cheap this meal is, especially for all the nutrients it contains. You can make a big pot on Sunday night and divide it into small portions to last you a whole week.

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                                          21. Smoky Mushroom Stroganoff ($1.90 per serving)

                                          Craving pasta but not sure what to top it off with? How about smoky mushrooms with a twist?

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                                            22. White Bean Tuna Salad ($1.36 per serving)

                                            You can add this White Bean Tuna Salad in your sandwich or just eat it as-is for a quick lunch on a busy day.

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                                              23. Sausage Eggwiches ($0.80 per serving)

                                              Who says you have to eat fast food to get an eggwich? This delicious recipe will give you an amazingly healthy eggwich for less than a dollar per portion. Can you say Breakfast?

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                                              Sausage-Eggwiches

                                                24. Baja-Cali Black Bean Salad ($1.17 per serving)

                                                Great snack to add to a movie-night with friends. You don’t have to use chemically-processed salsas anymore, you can now use this homemade salad for your chip dips.

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                                                  25. Gnocchi, Sweet Corn & Arugula in Cream Sauce ($2.24 per serving)

                                                  Italians always knew how to make carbs look good! This delicious Gnocchi recipe will give your lunch a whole new meaning. Easy to make and only $2.24 per serving.

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                                                    26. Vegetable Lasagna ($1.73 per serving)

                                                    If you were looking for a healthy lasagna, you’ve just found it. At under $5 per serving, you can fill yourself up right away without putting on the extra calories.

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                                                      27. Fajita-Ranch Chicken Wraps ($2.05 per serving)

                                                      Don’t know what to make for lunch this week? How about delicious chicken wraps with a healthy ranch? This recipe will make all your lunches, even the quick ones, healthy and colorful.

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                                                        28. Quinoa with Pan Roasted Brussels Sprouts ($1.24 per serving)

                                                        A dish that has quinoa and brussel sprouts can’t be unhealthy, it just can’t, which is why this dish is one to keep in the books. Easy to make, healthy, and will keep you full for a long period of time.

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                                                          29. Butternut Squash Chili ($1.04 per serving)

                                                          You don’t need meat to make chili now that you have this recipe! It’s 100% healthy, filling, and smells absolutely delicious.

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                                                            30. Fast Shrimp Bisque ($2.03 per serving)

                                                            Seafood doesn’t have to be expensive if you know how to do it right, and this fast shrimp bisque is a great recipe to try if you’re in the mood for some seafood!

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                                                              31. Chicken-Noodle Casserole ($0.98 per serving)

                                                              Looks divine doesn’t it? This super easy to make dish will satisfy all your taste buds without burning a hole in your wallet or adding a few extra numbers on the scale.

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                                                                32. Burrito Cups ($1.18 per serving)

                                                                Entertaining someone tonight and don’t know what to make as appetizers? These burrito cups are a great alternative to chips or other greasy finger foods. All you need to enjoy it is a spoon and a cup.

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                                                                  33. Lemon-Dill Shrimp & Pasta ($2.45 per serving)

                                                                  Another impressive shrimp recipe under $5 per serving. The lemon-dill twist adds a great taste to the dish.

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                                                                    34. Potato Frittata ($0.87 per serving)

                                                                    If you want to eat potatoes for breakfast but still want it to be healthy, this is the recipe for you. At under a dollar per serving, this potato frittata will make you see potatoes in a whole new light.

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                                                                      35. Grilled Pork and Pineapple ($2.67 per serving)

                                                                      Meat and fruits? Oh, yes. The juiciness of the pork mixed with the liquid sugar in the pineapple will make you wish you knew about it sooner.

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                                                                        36. Greek Honey-Lemon Pork Chops ($2.15 per serving)

                                                                        Another splendid recipe mixing sweet and salty for a healthy meal. Easy to make and absolutely mouthwatering.

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                                                                          37. Jamaican Pork Stir-Fry ($2 per serving)

                                                                          You can add this healthy stir-fry to any dish as a side or amply enjoy it as-is for lunch or dinner. You can even make a wrap sandwich out of it if you’re in a rush to eat.

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                                                                            38. Herbed Salmon ($2.49 per serving)

                                                                            Salmon contains a healthy dose of fats that will boost your metabolism, lower inflammation, and make you happier. At under $5 per serving, need I say more?

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                                                                              39. Five-Spice Pork Kabobs ($1.96 per serving)

                                                                              Exquisite recipe under $5 per serving that will most definitely awe everyone at your dinner party.

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                                                                                40. Stuffed Sweet Potatoes with Mango-Black Bean Salsa ($1.24 per serving)

                                                                                You don’t have to eat sweet potatoes alone anymore with this flavorful recipe.

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                                                                                  Featured photo credit: Featured Photo Credit: 5 Dollar Dinners via 5dollardinners.com

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