3 Alternative Lending Sources for Small Businesses

And companies are seeing dollar signs in the alternative lending space. Even Amazon (AMZN) has started to offer selective loans to some of its merchants.

A few companies are looking to give more transparency to the merchant cash industry and offer another route to get capital to small-business owners.

1. Advance Me

Capital Access Network subsidiary AdvanceMe is one of the biggest cash-advance lenders in the country. According to the company, AdvanceMe has made over 82,000 advances, providing more than 35,000 businesses in all 50 states with over $2 billion in working capital.

Brick-and-mortar as well as e-commerce businesses can use AdvanceMe capital to "renovate, purchase new equipment and supplies, fund advertising, manage unexpected expenses and seasonal downturns and free themselves from second-mortgage liens and personal guarantees associated with loans," the company says.

Merchants are required to submit their last four credit card processing statements and must have a minimum credit card volume of $5,000 per month. The fees on AdvanceMe's fund transactions were not available to TheStreet.

2. American Express Merchant Financing

American Express (AXP) launched a merchant financing program for its small and medium-sized merchant customers in September 2011. Under the program, businesses in good credit standing with American Express will have access to as much as $750,000 in three to five business days. The money is repaid automatically through settlement charges. American Express charges merchants a fixed rate of 0.5% if they choose a monthly disbursement or 6% if they choose annual disbursement.

Because it is a fixed-fee product, the merchant knows upfront exactly how much will be paid in finance fees in connection with the loan, according to the company.

To qualify, merchants must charge at least $100,000 a year, be affiliated with American Express for at least two years and have no prior account issues, the company says.

An American Express spokeswoman declined to disclose how much merchants have financed through the initiative.

3. Kabbage

Kabbage provides quick financing for online sellers. In just 18 months, Kabbage has provided more than $40 million in funding to small businesses, according to the company.

Merchants sell some of their anticipated future credit card receivables to Kabbage. They can receive as much as $50,000 per six-month period. They pay between 8% and 18% on the advance if they take the full six months to pay back the amount. The percentage is based on a store's monthly revenue, credit quality and time to payback.

Clients who increase their selling potential, such as adding online stores like Amazon, eBay (EBAY), Yahoo! (YHOO), Etsy and Shopify or other payment options can increase their funding. Even the amount of social media interaction between businesses and customers can lift advance limits.

"Many customers take out the funds and pay them back in one month, two months or three months. There are no fees at all to pay back earlier," the company says. "Our customers use Kabbage repeatedly during the year for their working capital needs -- in fact they take Kabbage advances an average of 9.7 times during the year (so almost once per month)."

Would you use a merchant cash advance if you needed quick capital? Tell us why or why not in our comments section below.

-- Written by Laurie Kulikowski in New York.

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