Alternative Lending Finance Options

Have you ever applied for a business loan from a bank or credit union and been denied? This situation can be frustrating, especially if you took care in preparing your application and the bank took a long time in rendering their decision.

There is another way to obtain the working capital you may need. It comes under the general heading of “Alternative Lending”. It encompasses a wide variety of financing types, many of which may be of interest to you.

The Problem With Traditional Lenders

Traditional lenders such as local or national banks are often the first place that small businesses turn to get a loan to propel their activities foreward. In many cases, the small businessperson is denied the loan and can become severely dissapaointed. Banks can deny loans for a myriad of reasons, including their view that you have poor credit, their opinion that your business plan is not sound, and tier assessment that you are simply not “creditworthy”.

Even if you do qualify, their application process can be long and intrusive. Furthermore, your money may not come in a speedy fashion. 

Alternative Lending

There are many other financing options available to small businesses that simply turning to your local bank. Here are a few of the more common ones:

  • Invoice factoring. Selling your unpaid business invoices for quick, up-front cash is a great way to keep your cash flow coming in. 
  • Merchant cash advance. In this option, you receive upfront funding and pay it back via future business credit card sales
  • Business line of credit. This option provides a  set amount of money available for your business use on an ongoing basis.
  • Crowdfunding. A novel approach by which you appeal online for small sums of seed money from a large pool of donors.
  • SBA loans. These are designed for small businesses so that they may obtain financing even when they may have failed to obtain conventional loans. 
  • Franchise financing. This form of lending is a good solution when franchisors do not provide financing and obtaining traditional bank loans becomes problematic.

There are many more. All of these options share the following benefits:

  • Your funding come quickly
  • You have great flexibility in the use of the money
  • There is generally an easy application process
  • Approval rates are higher than from traditional loan vendors

It may benefit you to familiarizing yourself with alternative lending options. One or more of these may offer the solution that best suits your business’ needs.

Conclusion

If you are denied a loan from a bank or credit union for your small business, do not lose hope. Alternative lending options may be a better, quicker way to obtain the money you need.

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