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5 Unconventional Ways to Get a LoanPersonal Finance


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"Money" via Nick Ares on Flickr, Creative Commons licensed

“Money” via Nick Ares on Flickr, Creative Commons licensed

Whether you’ve been rejected for credit in the past or you are just interested in alternative loan methods, it’s nice to know that there are options out there aside from dealing with big banks.

Getting rejected is never fun, and if you have bad credit, you know this all too well. Maybe you are starting or growing a business, need a loan to get out of a tight financial situation or think you have a surefire investment, but bad credit is holding you back. (You can see where you stand by checking your credit scores for free on Credit.com.)

Here are some ways to get a loan on your terms.

 1. P2P Lending

P2P or peer-to-peer lending connects people seeking a loan with people looking to invest in others without charging high interest. In place of banks or lending institutions, often third-party intermediary websites can help manage the relationship. Your credit and loan purpose will still be evaluated, but you can get help without being indebted to the banks. Your information will become available to investors and they might ask for more information than banks do, but interest rates are likely to be lower.

2. Crowdfunding

Funding a project or business as an Average Joe or Jane has never been easier. Crowdfunding means contributors can give a little or a lot of money through donations, investments or loans through the Internet. Sites like Kickstarter and Indiegogo are just two examples of the many options for rewards-based crowdfunding, where donors give money in exchange for a piece of the company they invest in or early access to a product or service.

3. Microloans From the Government

The government offers microloans to spur small business creation and expansion. The U.S. Small Business Administration (SBA) has a program that can provide up to $50,000. These funds come from local, community-based intermediary organizations. You can find where to apply at your local SBA District Office.

4. Home Equity Line or Second Mortgage

Although it involves the bank, you can use the equity you have built in your home to fund your own new business or venture. You can use the equity you have already built in your home to fund your own new business or venture. This can be risky so it’s important to think carefully about the stipulations of taking out a second mortgage. If you default on the loan, you can put your home in jeopardy and do serious damage to your credit.

5. Loan Against Retirement Plan or Insurance Policy

This is another risky option and one that financial experts discourage, but it offers the chance to access money without borrowing from the bank. If you have either, you can borrow from your retirement fund or even against your life insurance if you have a cash value policy. This is risky because if you can’t pay it back (and in some cases quickly), taking a loan from either source can leave your financial future vulnerable, so plan ahead and do your research.

This article originally appeared on Credit.com and was written by AJ Smith.