Small Business Lending Is Back – Who’s The Right Alternative Leader To Choose From?
Over the last year we have learned a lot about how lending is the reason why most businesses succeed or fail. What we doto forecast the future has a lot to do in how we build our businesses overtime. The Pandemic has shown us how vulnerable our finances can be and it’s better to have a plan to make sure we have resources for catastrophic events. Having the right resource is everything and it’s just not a bank but a partnership you can turn to when you need it. However, you’re in the same place that many other successful entrepreneurs started out along their paths.
Your banks are there to help you keep the money safe, give you a solution to help you or help you finance your future. Sometimes those relationships with banks change overtime. What do you do when that happens? Alternative lending is one partnership you can rely on because as long as your business is bringing in revenue you have the opportunity to turn to money when you need it. To secure the funding that they needed, many of them relied upon one game changing solution — alternative lending.
These days, this solution makes it possible to skip the trips to the bank altogether and keep everything online. However, without the proper guidance, jumping into alternative business loans right away can be a very cost-effective way to help your business in a fast and easy way. That’s why here at Affinity Member Services, we’ve compiled a small guide on the best small business lending tips and tricks out there to help you expand your business with the support of alternative lending.
What Is Alternative Lending?
In a nutshell, alternative lending is a type of lending that takes place outside of a conventional financial institution, such as your local bank. Because of its flexibility and fast turnaround, it often has plenty of advantages that appeal to many budding small business owners. Without further ado, let’s take a closer look at the four most popular kinds of loans that most alternative lenders will provide.
- A term loan is a lump sum that you’ll have to repay in four or five years, along with the annual percentage rate and any set terms considered. This allows you to have a weekly or monthly payment with a higher credit score.
- A line of credit gives you the ability to tap into a determined amount of money whenever you need it, this gives you flexibility in times of need.
- If you have to deal with unpaid invoices, then invoice factoring gives you the option of receiving an advance on those invoices instead of having to wait. As soon as your customers pay, then you’ll pay the loan back.
- Alternative Capital lets you get an advance on future credit card, revenue or debit card sales to solve an immediate problem.
Whether you’re looking to do some business expansion or are just starting out, there are plenty of advantages that alternative lenders can bring to the table over other conventional options. For one, the application process is typically much simpler to fill out. Sometimes, it only requires as little as your digital bank statements to make it through the door.
That advantage also comes with a fast turnaround as well, both on the approval of your application and the provision of your funding. Whereas you might have had to wait months on end to hear back from the banks, alternative lenders can get back to you within a few days.
Finally, in terms of how you want to structure your loans, alternative lenders have more flexibility to package their financing options in ways that can best serve your needs.
Opportunities To Consider
In some areas, regular bank loans can actually beat what an alternative lender can provide. One of the main areas concerns the interest rate. In the application process, you’ll find that alternative loans usually have a higher cost but solves your immediate issue interest rate that tags along.
It’s also important to keep in mind that alternative loans are also mostly short-term to solve those business issues that a traditional bank could not solve with you in a short amount of time because the bank will want to have collateral on the loan and processing time can be as long as six weeks.