Benefits of Alternative Lending
Do you need a loan but don’t have the credit or down payment necessary to qualify? Is your business too new to gain financing from a traditional lender, or do you need a small loan? If yes, you may consider looking into lending alternatives. The institutions that provide alternative lending opportunities are not traditional banks. These institutions offer personalized loans that may meet your needs. These are the benefits of working with alternative lenders.
Fewer Qualification Requirements
Alternative lenders have fewer and less stringent qualification guidelines. Whereas traditional banks use rigid credit and income guidelines to determine whether you have the ability and motivation to repay your loan, alternative lending institutions base your creditworthiness on other factors, such as property value, annual revenue, and cash flow. You may even be approved with less-than-perfect credit. In addition, you only have to have one year in business for most financiers, whereas traditional banks require at least two years in business. In addition, if your industry is a high risk, you may not qualify for a traditional bank loan, but you can be approved in the alternative financing market.
Easier Application Process
Most alternative lenders have a streamlined application process, and many offer these applications online. A typical application only takes about 30 minutes to complete because detailed paperwork is not necessary. For example, many only require your bank statements to determine your creditworthiness.
In addition, the approval process is relatively quick, especially when compared to traditional lenders. You may apply, be approved, and receive your funds within 24 hours, while it may take a month or more to gain approval from a bank.
Use the Money How You Want
These lenders don’t have any restrictions on how you use the money you receive. For example, you may expand your building, pay salaries, purchase inventory or raw materials, etc. You don’t even have to submit a plan for how you will use the funds you are granted. This makes alternative lending a great tool for companies who need working capital for day-to-day operations or business growth plans.
Different Loan Types Available
Alternative financing also offers several types of funding. For example, you can seek lines of credit, collateral loans, equipment-specific loans, etc. Also, whereas traditional lenders typically only approve high-dollar loans, alternative funders offer loans for $3,000 or $250,000, depending on your need. You may also find more favorable loan terms, including lower interest rates, but shop around because some of these financiers have higher interest rates. Alternative loans also typically have shorter loan terms.
If you need a loan but don’t meet traditional lending requirements, check out the benefits of alternative financing.