Alternative financing advantages can solve your working capital deficiency more effectively than banks. Financing with an alternative lender, loans are judged on business cash flow. There is no required business plan, funds can be used for a variety of purposes. Many companies choose to finance their everyday operations with working capital loans. It is easy and a simple way to secure funding quickly without having to wait weeks for a decision. Contrary to traditional bank loans, having monthly installments and longer terms. Working capital loans are characterized with regular micro payments and shorter terms. More and more business owners are turning to alternative lending, staying clear of SBA denials, plus producing on a long list of qualifications.
Traditional banks can take weeks or months, before an application to be approved. SBA loans require the applicant gathering and organize 2 years’ worth of financial documents. See the extensive list on the SBA website. In contrast, an application with an alternative lender takes less than five minutes to complete. Alternatively, some of the alternative financing advantages, many applications are approved in a single day. Hands down, alternative Lenders have fewer requirements for business loans. This means there is minimal paperwork to compile, which saves business owners time and resources.
When applying for a business loan, the lender can review both your business and personal credit. Due to stick guidelines reported by the small business association, more than 80% of small business lending applications are denied by traditional lenders. One of the top reasons for denial is low credit scores. Applying through an alternative lenser with good credit and a history of positive cash flow; can result higher funding amounts, better rates, longer terms, and lower payments. Contrary; low credit scores can result in higher rates, shorter terms, and larger payments.
Alternative lending interest rates can be higher than SBA loans. Simply because unsecured loans are more risky for lenders. Rates can differ due to the individual credit risk of the business applying for the loan. Other factors include the qualifying amount vs. the amount funded (debt ratio), Industry segment, age of business, financial performance, plus the business and personal credit history. For businesses that need working capital quickly, alternative lending is very practical.
Alternative loans do not require collateral. On traditional loans, many times owners use their personal homes as collateral. In the unfortunately situation leading to a business failure, the owner could face losing their home. In contrary with alternative loans, as a last ditch option lenders can consider lower payment modifications. Resulting not being able to qualify for new lending for the short term future.
Traditional lenders have to adhere to strict rules, which gives businesses less flexibility in how you use business funds. Simply said, whether a business needs funds quickly for a new business venture, maintain business operations, or pay off other creditors. Alternative lending provides more options than traditional banks.
Click below to see different industries, business strategies, and how to get started.