Small businesses are often placed in the fringes by traditional lenders as they lack the financial incentive to offer the funds. The Small Business Administration reported that around 85% of small businesses are getting rejected on their loan application by banks. A need that alternative lending platforms have taken advantage of to the benefit of small business owners.
To fully take advantage of the benefits that alternative lending platforms offer, we advise you to weigh the pros and cons of to see if this type of small business financing makes sense for your company.
Alternative lending provides a streamlined financing process
The financing process through traditional lenders would take more than a couple hours as banks require more than a few detailed paperwork before you even begin the application. Compounded with the wait time, the process is just not sustainable for small businesses.
This is where flexibility in the process that alternative lending offer becomes its strongest attirbute. The majority of the lending platforms live online as well as their application and only require minimal paperwork such as business bank statements and the owner’s drivers license. The burden of the application is transferred from the borrower to the platform providers.
With tech savvy lenders, the application process would take as little as 15 minutes of your time and once approved, the offers are delivered exclusively to you. This tech focused approach also means that you can get access to your capital in as little as 24 hours.
A diverse range of options are readily available for you
While banks carry only a few specialized financing options for small business, the lending marketplace comes with a plethora of options. This may sound amazing at first until you realize the number of loan types that exist and how many lenders that offer them to you.
Having these many options will require you to do some research before you consider applying. Each loan type comes with its own rates and terms. Knowing how they relate to your budget, business plan, and immediate needs will save you a lot of headaches in the future.
Here are the financing options available to small businesses through alternative lending:
- Short term Loan
- Term Loan
- Business Line of Credit
- SBA 7(a) Loan
- SBA 504 Loan
- SBA Express Loan
- Invoice Financing
- Merchant Cash Advance
- Equipment Financing
- Personal Loan for Business
- Startup Business Loan
What do lenders look at in the process?
After you choose the loan and started the application process, lenders will look at several factors to review your request and determine their response
- Personal Credit. Lenders will usually take a look at your personal credit history as a measuring stick for how you are going to manage your business finance.
- Business Debt Coverage. Lenders look at your debt history against your assets and revenue.
- SteadyBusiness Pipeline.Lenders take a look at your cash flow to determine if you have the pipeline to meet the repayment obligations. An upward trend or a steady stream of revenue means good news to you
With its advantages, there’s also a downside to working with alternative lending. However, that shouldn’t stop you from considering the lending marketplace as a viable financing options. Consult with alternative lending experts who are happy to help you navigate the process and find the perfect financing option for your needs.