3 Advantages Small Business Have with Alternative Lending
Working capital is vital for a business to grow. In order for you to take advantage of exciting opportunities for your company’s future, it is important to have consistent cash flow. There are going to come times when your available capital is low and you might need to explore additional options to find the financing you need. Alternative lending is one path to consider and it can have a number of advantages for small businesses.
While there are many different ways to apply for a loan, the most popular choice typically involves visiting a large financial institution like a bank. In most cases, a bank is going to have specific regulations and restrictions for who will qualify for their loans. Unfortunately, plenty of small business owners do not meet the criteria. Banks will often require you to put forth assets as collateral to produce a secure loan. Alternative lending, on the other hand, does not always require assets. This choice may be able to provide you funds without requiring you your assets on the line.
Your Credit History
There are other areas where traditional bank loans can prove to be a disadvantage. Most lenders will require your credit score and credit history in order for you to apply for financing. Banks want to minimize risks with their investments, so they won’t give loans out to people who fall short of their credit score requirements. When you opt for a less-traditional form of financing, you may still be able to qualify for a loan even though your score isn’t as ideal as you’d like it to be.
Improving your credit score can take time. Since you probably don’t have the time to waste on this task while you’re seeking funding for your business, alternatives could prove beneficial.
Fast and Effective
Another drawback to traditional financing options is that the application processes for loans can be long and drawn-out experiences. If you’re trying to obtain financing to handle a time-sensitive problem like payroll issues or an opportunity for expansion, then you probably don’t have time to wait around for approval. While traditional loans can take a bit of time to hear back on, alternative lending is an expedited process. In most cases, you’ll know whether or not you’ve been approved for the loan within a few days of submitting your application.
To make the best decisions for your business, it can be a good idea to explore all your financing options. With some time, you’ll be ready to pick the best possible loan choice for your business.