Question

research two "non-traditional" forms of financing and provide their pros and cons.

Answer 1

Answer

Two "non-traditional" forms of financing are as follows;

A. Peer to Peer lending

Peer to Peer lending, also known as P2P Lending, is a budgetary advancement which interfaces confirmed borrowers looking for unstable individual advances with speculators hoping to procure more significant yields on their ventures. Confirmed borrowers are recorded on the P2P loaning platform, Investors can see all the insights regarding the borrowers before loaning cash to them. Financial specialists have the alternative to loan limited quantities to different borrowers to broaden their ventures.

Peer to Peer lending is as of now a massively effective model for substitute financing over the globe. In India, P2P Lending is picking up foothold at an extremely quick movement and gradually turning into an exceptionally alluring speculation choice for speculators. RBI has just taken a perception of this advancement and think of guidelines for the area.

Pros;

1. Better yields to the financial specialists,

2. More available wellspring of financing,

3. Lower loan costs then others.

Cons:

1. Credit hazard/Risk,

2. No protection/government assurance,

3. Not enactment for regulation.

B. Invoice Factoring

Invoice Factoring makes an expansion in real money with cash that is now owed to your business by clients. The essential cycle is basic; you offer your extraordinary solicitations to a considering organization that pays a single amount, typically somewhere in the range of 70 and 90% of the receipt complete. At that point, you'll this cash will be shipped off your ledger and can be utilized promptly for working capital. This can be especially useful on the grounds that as opposed to holding up to 30 to 90 days for clients to pay your business, you could get this cash surprisingly fast from a receipt calculating organization.

Pros;

1. Quick Cash Flow:

2. Progressing Cash Flow:

3. Better Chance of Getting Approved:

4. Capacity to Outsource This Task:

5. No Security Required:

6. Improved Customer Relationships

Cons;

1. The Cost is higher,

2. Lots be burden of Liabilities,

3. Default by Customers,

4. Absence of Control on collection.