How to Find the Right Lending Alternative for Your Small Business Four reasons you may need to borrow, and alternative lending options for each one.

The American economy relies upon small businesses for stability and growth. However, to grow, expand and ultimately succeed, small businesses require consistent and reliable access to capital. According to the U.S. Small Business Administration's Office of Advocacy, young firms rely heavily on external debt, receiving about three-quarters of their funds from banks via loans, credit cards and lines of credit.

Related: Seeking Capital Online Instead of From a Bank May Be Your Startup's Best Option

Data provided by the Office of Advocacy reveals that in 2013, over 5.4 million loans were approved for small businesses. Borrowing amounted to about $1 trillion -- including $585 billion in outstanding business loans and $422 billion in credit from finance companies, with the rest from a mix of sources.

The increased demand for quick and easy access to working capital has sparked fierce competition among lenders to provide alternative lending options that meet the needs of small businesses; however, the type of financing they require will vary depending on the industry and stage of the business.

Here are four principal reasons that small businesses need to borrow money and some alternative lending options available for each:

1. Starting a Business

The average cost to start a business can range anywhere from a few thousand dollars to over $30,000, depending on the nature of your business. It is often difficult to get approved for a loan because most lenders want to see a track record of success and profit.

If you're starting a business and need start-up capital, first figure out how much you need. Use Entrepreneur.com's Starting Cost Calculator, which will help you itemize all the costs you'll incur as you start your business. Then, look into raising the necessary funds. If securing a bank loan isn't possible, consider reaching out to your immediate network of family and friends to raise the initial seed money, or use crowd-funding sites such as GoFundMe, TrustLeaf and IndieGoGo.

2. Expansion

Once you have your business off the ground and have established a track record of success, it may still be difficult to obtain a small business loan to finance business-growth operations. SnapCap.com offers a credible alternative for businesses to get a quick loan. According to the president and founder of SnapCap, Hunter Stunzi, qualified users may obtain approval and funding within a few hours of submitting their application.

In order to qualify, you must have at least $100,000 in revenue at the end of your first year in business, and a credit score of at least 500. "We are looking to provide additional capital so entrepreneurs can enhance their operations," says Stunzi. "These loans are designed to help business owners grow their revenue, profitability and ultimately their business."

Related: Choosing a Lender? Watch Out for These Costly Traps

3. Purchasing Inventory

Product or retail-oriented businesses often require financing to purchase additional inventory, keep their shelves stocked and maintain profitability and reputation. Due to seasonal shifts in the number of sales and cash flow, businesses may experience a greater demand for a product at certain times of the year. An inventory loan can help bridge that gap.

According to Stunzi, if you're in a position to make a purchase that is offered for a limited time or has a short shelf life, you may need an immediate capital solution. "Many borrowers come to us because they have a need that is pressing. and their bank presents an application process that will take weeks," says Stunzi. "Our inventory loans are designed with speed and efficiency in mind, so you can secure inventory on demand."

4. Strengthening the Firm

Revenue-based financing is a great alternative for businesses that are growing and/or have a fluctuating cash flow that requires a more consistent stream of funds to keep the business running strong. According to David Goldin, CEO of AmeriMerchant, "Selling credit card receivables is good for businesses, where the majority of customer payment methods are from credit cards [i.e., retail, restaurants, bars, etc.]."

This means that business owners can get a loan for the amount of money that they expect to receive in credit card sales the following month, in order to limit inconsistencies in cash flow due to changes in sales volume. Says Goldin, "These programs have a variable repayment option that works with the merchant's cash flow [a percentage of sales], compared to a fixed payment amount."

Receivable-based financing is best for B2B companies. These types of loans use a company's receivables, or the money owed them by customers, as collateral. According to Chinwe Onyeagoro, CEO and founder of FundWell, receivable-based financing providers like Fundbox and BlueVine are good for B2B businesses that need capital to cover the period between when they send an invoice to those businesses and when they receive payment. They'll usually need a 60-to-90-day bridge for receivables, which can help streamline the business and strengthen the firm.

There really isn't a "one size fits all" lending solution for every business. Onyeagoro says, "You're going to want to choose alternative lenders that are focused on improving the experience, when applying for capital. If you're an early-stage business or a start-up, focus on microlenders that have online loan applications. If you're a later-stage business, focus on nonbank SBA lenders that have online loan applications, or community banks/credit unions that have online loan applications."

A multitude of options are available for small businesses to obtain the capital they need to start up, sustain operations, expand and ultimately succeed. Having a solid understanding of the options available and how they meet your business needs is key to determining the lending option that is not only best for your small business, but will offer a quick turnaround and quality user experience.

Related: Need a Bank Loan for Your Small Business? Timing Can Make or Break Your Chances