Alternative Lending

Whether you are starting a new business or you need some temporary help through a tough season, you may have been thinking about taking out a bank loan. While this is certainly an option, it is not the only one. Check carefully into the loan you are considering, and also think about alternative lending. Getting an “alternative” loan simply means getting a loan without going to a bank or credit union. This loan can come from a private company, which is typically found online (and there are plenty to choose from!). They also offer other kinds of financing choices, such as equipment financing, invoice financing, or a business line of credit.

The Benefits of Alternative Lending

Bank loans are notoriously difficult to qualify for. The application process can take a long time, and then it can take a while before you can get the money, which is definitely not ideal for most business owners. However, alternative lenders typically grant loans fairly quickly, for one thing, because you can take part in the application process completely online. And, they have more flexible requirements. A short amount of time in business, a bad credit score, or a low annual revenue doesn’t mean they will automatically turn down your loan as traditional lenders might. Because they are mostly online, they don’t have the overhead costs that banks do, and are willing to make loans that are more “risky.”

The Disadvantage of Alternative Lending

Of course, the convenience and greater odds of getting a loan aren’t the only things to know about getting a loan from an alternative lender. The loan can have its downsides, such as a higher interest rate than you would pay at a bank.

What Else You Should Know

If you are thinking of going to an alternative lender for help, you need to be very careful about who you choose to do business with. There are more and more of these companies popping up online, and they generally have fewer restrictions than banks. Check into who you are doing business with – make sure they are reliable and have a good reputation. Check around with a few different lenders to make sure you get the best financing you can.

The good news is that banks are no longer the only option if you need a business loan. However, as always, you should carefully research any lender you are considering doing business with.

SHARE IT:

Leave a Reply