Creative finance vs. traditional venture capital.

• Author: Peterson, Eric
• Position: SMALL BIZ: FINANCE

NEED A LOAN? SMALL BUSINESSES HAVE MORE OPTIONS IN 2014.

CROWDFUNDING, TECH-ORIENTED alternative lenders and resurgent venture capitalists are rewriting the financing rules for upstarts seeking growth capital. Entrepreneurs still need to show investors they can generate sales, and alternative loan rates can be steep, but now those with a vision and the industriousness to make it happen have a better chance of finding financing that fits the stage and scope of their enterprise.

Here's a look at how those funding options are playing out in Colorado:

ALTERNATIVE LENDING 2.0

After three tours in Iraq with the U.S. Army, Will White started Caveman Cafeteria in Denver in 2012. His business encompassed a food truck and catering focused on the popular Paleolithic, or "paleo," diet.

By early 2013, White wanted to open a food stand on Denver's 16th Street Mall and raised $21,000 on Kickstarter. Mission accomplished--for the time being.

A few months later, he began applying for bank financing to launch a prepared-food delivery service. He needed money for a website reboot and marketing. No dice.

"They said until we were in business for two years to forget about bank loans," White says.

He went online in his hunt for alternative lenders and discovered OnDeck, which opened an office roughly a year ago in Denver with nearly 50 employees. "Within 24 to 48 hours, we had the funds in the bank."

Once White landed his loan, he hired a chef to continue to grow. He's since received a renewal loan through OnDeck and plans to utilize that service along with Kickstarter in hopes of expansion into California later this year.

New York-based OnDeck aims to make better small-business loans through its technology. Founded in 2007, the company has delivered more than $900 million in loans to date, with $30 million going to Colorado companies, including $13 million in 2013.

"At OnDeck we have built a technology platform that revolutionizes how small businesses can access capital," says COO James Hobson, noting that the company tracks data on 700 industries. "They have traditionally been underserved by the banking industry."

He says the company's algorithm-driven application process is "super-efficient," providing working capital in the amount of $5,000 to $250,000, with terms from three to 24 months. Loans up to $30,000 can be closed online the same day. Rates are premium, ranging from 18 percent to 36 percent.

OnDeck requires clients to have been in business for at...