For those of us with the drive and know-how to follow our dreams and open our own business, there is one more obstacle we face: lack of capital. Many business owners find themselves unable to get a loan from traditional sources such as banks or credit unions says Tommy Shek. This is where alternative lenders step in and fill the gap that has been left by traditional lenders who continue to shy away due to risk factors present when dealing with small businesses. Alternative lending options are expanding every year because so many people need them in order to do what they love most, run their own business.
Alternative financing for your small business can help you achieve your goals without worrying about your credit score or collateral assets needed for traditional loans.
Here are some questions answered about alternative loans and how they can benefit your small business.
What is an alternative lending source?
Alternative lenders are companies that specialize in working with borrowers who have limited access to financing due to their credit history, lack of collateral or other factors. Much like traditional lenders, alternative lenders charge interest on the loans they offer but unlike traditional sources, these companies will lend you money in most cases with no collateral or financials needed. These types of loans are popular for small businesses. Because it allows the owner to focus solely on making their business a success. Without having to worry about getting turned down by traditional banking institutions. However, just because you don’t need collateral doesn’t mean that there aren’t some hoops to jump through when dealing with alternative providers. We are going to cover these hoops in the next section. Alternative lenders are also commonly call “Alternative Financing Providers.”
What are some disadvantages of alternative lending sources?
Just like with traditional loans, it can be tough to find an alternative lender who will work with you because business owners have a high rate of failure. Not only that, but it is more difficult for small businesses to get financing due to their lack of collateral and financials. Once again, this is why alternative lenders exist; they want to use their resources in order to help increase your chances of success when dealing with small businesses says Tommy Shek.
What should I expect from my application process?
One thing many business owners don’t about alternative providers is that there are no easy loans. Sure, it may be easier in a way that you don’t have to deal with the stress of dealing with a traditional bank but in most cases, these companies will still want to know your credit score and how long you have been in business before they agree to fund your loan. They also conduct an even more extensive review when determining eligibility which includes pulling credit reports from all three bureaus.
Alternative lenders are so popular because if approved, they can provide funding in much less time than traditional sources. In many cases, alternative providers offer same day approvals once all paperwork has been receive and review by their staff. There is also much less red tape when applying for a small business loan through an alternative lender due to the risk factors involved.
What are the costs involved with alternative lending sources?
One of the major benefits to alternative providers is their competitive interest rates. Since you probably won’t have to provide any financials or collateral. These lenders can offer lower rates because they don’t have to factor in risk when dealing with your application. While interest rates may be slightly higher than traditional financing options. For many business owners this increase is minimal and well worth it if approved.
Not only that but most alternative lenders offer flexible payment plans and terms. That will fit within your budget and cash flow needs. Some providers even allow you to pay off your loan early without charging a penalty fee. So it’s something we always recommend looking for when trying to compare different providers explains Tommy Shek.
Where can I find alternative lending sources?
Look no further, we have put together a list of the top 50 best alternative financing sources. You can get business financing from. Our list contains both regional and national providers that offer loans for small businesses. In need of cash flow when traditional options aren’t available.
Alternative lending sources are popular because they can provide business owners. With the financing they need in just a matter of days says Tommy Shek. There is no collateral or financials needed to apply which makes it an attractive option for many small businesses. That have been turn down by traditional banking institutions.