If you’ve recently started diving into the world of alternative lending, you likely have a lot of questions. What is an alternative lender, and why do so many entrepreneurs turn to them?
Alternative lenders provide great business funding options for those who struggle to secure financing elsewhere or find themselves in a unique situation. With so many alternative lenders offering better products and greater flexibility, it’s no surprise more and more business owners are choosing these lenders. All in all, they have completely transformed the way business owners access financing and the expectations surrounding the whole process.
Here are some of the top reasons why alternative small business loans continue to increase in popularity and are a trusted option for entrepreneurs today:
Convenience and Simplicity
The speed at which you can fill out an application and hear back on your funding request (sometimes in as little as 24 hours) is a huge benefit. The convenience of being able to fill out an application online is also an advantage, allowing busy entrepreneurs to avoid lengthy paperwork requirements and wait times with a traditional bank.
Short-Term Financing Needs
Most business owners are not seeking hundreds of thousands of dollars. Rather, they need a quick boost of cash flow to keep operations running smoothly, cover payroll, and increase inventory. Others need quick capital to seize an opportunity for further growth or manage unexpected changes. Alternative lending provides the smaller loans (tens of thousands not hundreds of thousands) they need to fulfill their goals.
Flexible Credit Scoring Criteria
One of the most cited advantages of alternative lenders is their requirements. Traditional banks are known for their rigidity, especially when it comes to their credit score requirements. With an alternative lender, credit scoring is not made or broken for approval. Because they do not have to deal with different brands and other systems, they can operate more efficiently and offer better – or at least equal – rates to borrowers.
The Secret to Choosing an Alternative Lender
There is one key thing to keep in mind when considering using an alternative lender. You need to consider your business type and industry and how you intend to use the funding. It’s important to partner with a lender that specializes in working with your business type. You need them to understand the challenges and opportunities unique to your industry. Knowing how you will use the funds and how you will pay them back will also insure you make the right choice for your business and its goals.