Why should you choose alternative lenders to get a small business loan?
Money can’t buy you happiness, but it can indeed build a business for you. And a successful business can indeed make you happy. You may want to purchase more inventory, new equipment, hire more employees, or even buy more space to expand your business. Whatever it is that you want to accomplish with your business, it needs funding. Yes, you have various business loan options, but the real challenge is to find the right lender.
There can be a multitude of problems when you try to seek loan conventionally, from banks. First of all, it takes up to three months or more to get loan approval from the bank. It’s not easy to get approval from banks if you don’t have excellent credit and long years in the business. On the other hand, it’s far convenient and quicker to seek a loan from alternative or online lenders.
The following are the six significant reasons to choose alternative lenders for getting a small business loan.
- Free from debt and thus, stress too
When you traditionally get the loan, you’re spending the bank’s money and likely to pay a steep interest rate. Alternative lenders have business loan options that offer minimum to zero debt. An option like invoice factoring keeps you entirely debt-free. The lenders purchase your invoices, and the money you get is something you meant to receive already.
- Speedy approval
Traditional banks use money from checking and savings accounts to fund loans. But, alternative lenders get money from private equity groups, investors, and hedge funds, etc. They have no depositors and less accountability. Thus, the government puts far fewer regulations on them, and you get all the benefits. Online lenders can provide you funding in as little as three days.
- Easy to qualify
It’s easier to be eligible for an alternative loan. Of course, you need to provide evidence that you’re credible enough to repay the amount. But, the online process is a lot simpler than the traditional process at banks. Alternative lenders use various ways of assessing credit-worthiness that go beyond your credit history. And it turns out; you can easily qualify to get the loan.
- Bad credit is not the problem
Banks are reluctant to provide loans if your business is new or you have a bad credit history. If you still apply at banks, you will get less funding than required or get rejected. The good news is, alternative lenders, don’t mind about your bad credit history. In business loan options like invoice factoring, your credit score doesn’t even come into the picture.
- Great flexibility
Since alternative lenders don’t have strict regulations upon them, you get more flexibility in return. The lenders offer you creative loan approvals, collateral types, repayment terms, and funding amounts. Not to mention, you also get access to a variety of funding options. Some of the common ones are invoice factoring, business line of credit, and SBA loans, etc.
- Wide range of options
The banks require the loan amount to be a minimum of $200,000 or more. But lenders can offer funding from as little as $5,000 for your small business. Also, an option like a business line of credit wants you to pay only for the amount you borrowed. It can be ideal for small businesses that experience unplanned expenses. Online lenders offer variety while providing great convince too.
On a final note
Those were the six significant reasons to choose alternative lenders for getting a small business loan. It offers speedy approval, convenient process, and reasonable rates and terms as well. You can also choose from a variety of business loan options provided by alternative lenders.