John Tozzi, a writer for BusinessWeek, wrote a piece recently describing alternative sources of funding for entrepreneurs…

As the economy slowly improves, banks that have severely tightened their lending standards won’t be loosening them any time soon.  In fact, a recent survey conducted by the Federal Reserve of senior loan officers shows that banks will maintain high lending standards for another year and a half.  Paired with a terrible job market and a credit card industry that has significantly lowered limits and increased interest rates, entrepreneurs who wish to start a business are finding it more difficult than ever.

Luckily for these funding-starved businesspeople, there are alternative funding sources that don’t break the bank.  These include asset-based lenders, merchant cash advance providers, and factors. PRN Funding is an exampled of a factoring firm.

According to the Commercial Finance Association, asset-based lending increased 8% in 2008; increases are also expected in the coming years. 

There are other unique lenders sprouting up who are trying to take advantage of the credit-depressed market.  Jim Mayer, an entrepreneur from Chicago, is bringing back a firm he started in the 1980s called DiversiCorp.  His company specializes in collateral control-reassuring creditors by safeguarding their inventory after it is shipped but before it is paid for.  The inventory acts as the collateral while outside lenders extended the credit. 

To read the entire Business Week article, click here: Entrepreneurs Turn to Alternative Finance